How helping a few friends became a public scandal

Francisco Javier Guerrero Benítez hasn't been seen in his hometown of El Pedroso, a mountain village some 70 kilometers north of Seville, for the last month - not since the 55-year-old former head of the Andalusia regional government's employment office testified to the police that senior members of the Socialist Party-controlled administration were "aware" of a 650-million-euro slush fund that over the last decade he used to provide generous early retirement payments, as well as to fund ailing businesses belonging to at least 72 people, including friends, family and political allies.

Little wonder that Guerrero Benítez is keeping a low profile: he stands at the center of a corruption scandal that could lose the Socialist Party control of the regional government of Andalusia, which it has controlled for more than 30 years, in next month's elections.

Among those the judge overseeing the case has called to give evidence are Guerrero's two successors at the General Directorate of Employment in Andalusia. Justice Mercedes Alaya says an "organized network" involving intermediaries, business owners, insurance companies, and politicians was given public money for its political support or simply by dint of personal connections. "Enormous amounts of money were presumably given away arbitrarily and without being subject to any kind of control by the regional government," reads the summary of the investigation. The police are now looking for leads to tax havens, where they suspect more money may have been salted away.

Among the beneficiaries of Guerrero's largesse was Alejandro Millán Torres, a 53-year-old former electrician who after suffering a heart attack in 2005, was living on a 545-euro-a-month state disability pension. He lived in the same apartment block as Guerrero in El Pedroso, and was given a 455,000-euro subsidy with which he bought a 120-square-meter two-story house with a garden in the town, as well as renovated his apartment in Seville. He told the judge he had not been required to fill in any forms before receiving the payment.

"Guerrero asked how I was doing. I asked him for help. We weren't friends. He provided me with income, he gave me my life back. I consider him more than a friend. I never thought that this was illegal. I was contacted by somebody in the employment office," Millán told the judge.

Guerrero had been mayor of El Pedroso before being made director general of Andalusia's employment office in 2000. After he took the job, say local residents, he would regularly invite people whom he knew were facing financial problems to his apartment.

I asked Guerrero for help. He provided me with income, he gave me my life back"

"We have subsidies; bring your papers," he would tell them. Andrés Carrasco, a lifelong friend, did just that after he divorced his wife. "I asked him for a job. He offered to get me a subsidy through the pension fund. I asked him if this was legal, and he said it was," Carrasco told the police.

Rafael Rosendo Villavieja, a former Socialist Party mayor of El Pedroso, was given a 112,000-euro payment as compensation for being laid off from a company he never worked for. His son, a former town councilor, was given 12 million euros from the slush fund to keep his slaughterhouse business running. Again, no paperwork was required.

"Everybody has turned their back on him, but I include him among my friends," says Manuel Meléndez, an independent who eventually managed to oust the Socialist Party from El Pedroso and is now the town's mayor. He doesn't believe Guerrero could have moved so much money so easily without the knowledge of the regional government.

"The same people who say they know nothing about what went on are trying to hang him out to dry. He couldn't have done it alone," he says.

Juan Francisco Trujillo, Guerrero's former official driver for nine years, says he was given 900,000 euros in subsidies, and claims he regularly bought cocaine for Guerrero and organized parties involving prostitutes. "I would pick him up at 7am, and we would have been out drinking until a few hours before. He could drink like a fish and still keep it together. He would talk to everybody. He felt admired, and loved: he knew how to treat people," says Trujillo.

Trujillo was given two subsidies of 450,000 euros to set up a furniture company and another business running rural hotels, neither of which came to fruition. Instead, he used the money to buy land, as well as an apartment in Seville. The rest of the money he handed over in cash to his boss, he says. "Most of the money was used to buy cocaine for us, and to arrange parties," he told police in January. "We became friends over time, and one day he told me he was in a position to hand out subsidies without any kind of paperwork or procedure," he added.

He wanted to help everyone all the time, but with our money," says his ex-wife

But María Ángeles Navarro, Guerrero's former wife, who still lives in El Pedroso with the couple's two children, is surprised by this portrayal.

"This isn't the Javier that I know. We were married for 25 years, and I wouldn't know him from this account. During that time he was never away from home a single night, and he never even went out for a drink with his friends. His was a quiet life, a family life. I haven't had any contact with him since we separated, although sometimes I would see him around the village, and we would say hello."

Asked about the accusations that her former husband had used public money indiscriminately to help friends and the party faithful, Navarro says: "I have the greatest respect for him as the father of my children. When he was mayor, we used to argue because he wanted to help everybody all the time, but with our money. He used to say we had enough money to eat, and that was all that mattered. I would never have imagined he would stick his hand in the till. When I learned he was on the front page of the newspapers, I couldn't believe it."

Guerrero used public money to help out his second wife's mother, taking advantage of the closure of a local factory to put her on the payroll. She was paid compensation of 198,000 euros. "She had fled the Basque Country, and was very stressed," he told police. He also helped out the mother of his driver, Trujillo. She was given 122,000 euros. Guerrero described such cases as "deprived children."

The question that inevitably arises out of what is at best a tale of misguided charity is how Guerrero was able, single-handedly, to manage a slush fund of 647 million euros - a figure that, when commissions and other payments to intermediaries are taken into account, runs to almost a billion euros?

Part of the answer lies in the setting up, in 2001, of a cooperation agreement between the regional government's employment office and its investment institute. It was a tool that in his position as director general of the employment office gave Guerrero the freedom to manage money as he pleased. By 2005, the regional government was sufficiently concerned about Guerrero's use of public money at his own discretion that it prepared two reports saying his office had "managed exceptional subsidies without recourse to the established administrative procedures." Guerrero claims he never saw these reports. "I know nothing about them. They would have been sent to the minister responsible, and weren't transferred to me," he told the police at the end of January.

But that still leaves the question of what checks and balances were in place regarding monies given to companies with financial difficulties by the regional government. "I would visit most of the companies. Control over loans and subsidies would be carried out by telephone after that," Guerrero told police. Needless to say, some of the companies that received public money never existed in the first place, except on paper. Other companies laid off workers so they could receive compensation, and then rehired them; other businesses that were making a profit were closed so their owners could receive compensation.

This would sometimes be invested in new businesses, such as the one set up by Isidoro Ruz, the former mayor of Llanos del Sotillo in Jaén, and a friend of Guerrero's driver. He was given a subsidy to set up a chicken farm, but decided to invest in hotels. More than 300 companies were given money from the slush fund. Among them were companies in the cork industry linked to a brother of the former head of the Andalusian regional government, José Rodríguez de la Borbolla, which received around 7.8 million euros.

"The agreement with the investment office was a key policy instrument for the regional government: it was a way of preventing social unrest, and helping deprived areas," Guerrero told police.

Guerrero was also generous in providing money to towns and villages in the Seville area. Luis García Navarro, a lawyer representing the Popular Party in Andalusia, says town councils would use funds to help local business owners.

The investigating judge's summary lays the blame squarely at Guerrero's door, for the moment: "There has been a complete lack of any administrative procedures, with exceptional subsidies being distributed by one person, the director general of employment, who has no authority in this regard."

Among Guerrero's closest collaborators in the unauthorized administration of public money was Juan Lanzas, a former labor union leader in Andalusia. When companies began to report financial difficulties, he would oversee negotiations, advising all involved: unions, management, and especially insurance companies, who made millions out of the scam. Lanzas charged commissions to all parties, and was in receipt of three different compensation payouts from companies he had never worked for. He told police that he worked for two insurance companies: Vitalia Vida and Fortia.

Lanzas' activities soon raised the hackles of his former colleagues at the UGT labor union. "We knew about his negotiating skills, but since he began working in the private sector we had problems with him and the regional government," says Manuel Pastrana, the UGT's current secretary general in the region. Lanzas soon included his family in the network. His brother-in-law, Ismael Sierra, used his business to provide false surveys and consultancy reports.

"Everybody knew what he was up to, that he was charging people left right and center for his supposed services, and that he was making a mint in the process," says one anonymous source. But nobody ever reported him. "We didn't know the extent of it. There is no excuse whatsoever for what was going on. We have expelled members from the party that were involved, and we want this investigation to get to the bottom of the affair," says Pastrana. The UGT labor union has also expelled several of its members accused of involvement.

The corruption network was finally exposed when two businessmen recorded a conversation with Fernando Mellet, the former head of Mercasevilla, the city's publicly owned food market, who wanted them to pay him a commission. The men gave the tape to the police, who began an investigation into early retirements at Mercasevilla.

Mar Moreno, a spokeswoman for the office of the head of the regional government of Andalusia, says that as soon as the allegations about Mercasevilla were made, the regional government headed by José Antonio Griñán launched its own investigation. Anybody who has received money has been required to return it," she says, adding: "We want to get to the bottom of this. We don't care how high up it goes. The truth has to come out, whatever it is," she says.

Regarding the agreement that allowed Guerrero to so generously distribute public money, Moreno says: "The fund was set up to help companies facing difficulties; if they had closed, we would have had a lot more problems. They needed a quick response," she says. There are more than 6,000 workers on early retirement pensions in Andalusia, a region where almost one in three of the workforce is unemployed.

"Thanks for the help you gave my father. I still don't know what is involved, but we both thank you from our hearts. You are a wonderful person, I knew that as soon as I met you," wrote Cristina Ruiz, a candidate for the opposition Popular Party in Córdoba, and head of a furniture company called Promi, which was involved in bogus early retirement payments, to Guerrero.

Guerrero will likely continue to keep his head down in the run up to the elections on March 25. In the meantime, the regional government will be hoping for no further revelations, and that the case will not prove the final straw for an electorate tired of scandals involving officials abusing their position and spending public money as though it were their own.