Net tightens on ringleaders in ERE case as four more suspects jailed

Further raft of arrests forecast in rapidly growing public layoff fund fraud

After a marathon session in her Seville courtroom overnight on Friday, undertaken to beat the 72-hour limit on holding suspects without either releasing them or ordering them to be remanded in custody, Judge Mercedes Alaya added four more people to the city's cells in the ongoing investigation into the so-called ERE case.

A probe by Judge Alaya has revealed that 136 million euros of public money are alleged to have been embezzled between 2001 and 2010, in a scheme involving funds destined to cover early retirements.

Over the weekend, Eduardo Pascual and María Vaqué, the former directors of the Eurobank group - whose subsidiary Vitalia was responsible for processing layoff applications submitted to a fund set up by the regional government of Andalusia - were jailed without bail. Eduardo Leal and Ismael Sierra, two of the front men used to divert funds from the public coffers to the conspirators via vastly inflated commissions of up to 20 percent, had bail set at 50,000 euros.

The fund was set up to aid businesses obliged to lay off workers due to the deepening recession. However, the components of the alleged scheme siphoned off huge sums by awarding early retirement packages and grants to individuals and firms who did not qualify for assistance.

The fund was set up to aid businesses who were obliged to lay off workers

Pascual and Vaqué - who, along with 13 other former Eurobank employees, are under a separate High Court investigation for fraud, wrongful appropriation and money laundering - stand accused of bribery, corruption, falsification of documents and embezzlement, among other fiscal crimes. Prosecutors are seeking between five and seven years in jail for the pair.

Pascual rejected the judge's accusations during his testimony: "Tell me where I have put the money. Ask the labor unions and those gentlemen in Andalusia.

His lawyer, Cristobál Martell, also questioned the basis of the charges against his client: "It is wrong to use the term over-commission, because the average rate is 10 percent, which is weighted to the market. Furthermore, [the commissions] were supervised by the Insurance Management Directorate."

The latest custodial orders follow the detentions of former Vitalia director Antonio Albarracín, an intermediary, Juan Lanzas, who is accused of diverting 1.8 million euros through front companies, and former employment chief in the regional government, Javier Guerrero, who was ordered back to prison as a flight risk last week after being initially released on bail.

The ERE case is the largest corruption scandal yet to engulf the Andalusian Socialist Party (PSOE-A), which has governed in the region for three decades. Initially, the PSOE-A attempted to reduce the scope of the case, but Alaya's investigations and the huge suspect count - more than 80 so far - show the rot goes much deeper than suspected.

The Popular Party has claimed that up to one billion euros has been misappropriated in the case and on Sunday its leader in Andalusia, Juan Ignacio Zoida, accused regional premier José Antonio Griñán of acting as the "cashier" for the ERE scandal. Griñán vehemently denies any responsibility. Socialist Javier Barrero, a member of the Congressional Standing Committee, termed Zoida's demand for Griñán to answer to the lower chamber over the case "absurd."

Recomendaciones EL PAÍS
Recomendaciones EL PAÍS