On March 13 of this year, three weeks after EL PAÍS published its first story about a scam involving phony training programs headed by businessman José Luis Aneri that had fleeced the regional government of Madrid out of at least €15 million, the newspaper received a letter providing background to the fraud, which dated back 25 years and allegedly involved the Madrid Chamber of Commerce and the regional confederation of businesses, CEIM.
The author of the letter claimed to have been hired in 1991 by the Madrid Chamber of Commerce to set up a training department. As its director, he initially set about trying to prevent the misuse of public money. He says he soon came under pressure: “I was being hassled the whole time. I was threatened by different people. When I refused to sign bogus salary payments I was thrown out. I suffered depression that required treatment, and now live far from Madrid, and have never gotten over this.”
The more students sign up for a course, the more money they receive. This means falsifying signatures or using databases of real people
His story was subsequently confirmed by non-official sources in the Chamber of Commerce. The allegations he makes are not backed up by any documentary evidence, but further substantiate long-standing allegations that many companies providing training programs are fronts for the financing of business confederations and labor unions, and that the government and regional administrations have failed to implement checks to prevent this.
A €21-BILLION PIE
The Spanish state has spent €21 billion on training programs over the last decade. Around 80 percent of the money comes from Social Security, and the rest is made up by the central government and EU funds.
The money is managed by regional governments and the state employment office, SEPE, which every year put tenders out for subsidized training courses that are won by labor unions and business organizations, which then subcontract delivery to private schools and consultancies. This is where the problems begin.
With minor differences over the years, the way that companies swindle money for training courses remains unchanged, say police investigators. The more students sign up for a course, the more money they receive. This means falsifying signatures or using databases to get the names of real people. The police say that in the majority of cases, to provide a veneer of legality, a small number of courses will be delivered.
How do the fraudsters avoid discovery? This is where the chambers of commerce or business associations come in. Consultancies give part of the money they have received for outsourcing contracts back to them. The law even allows for 10 percent of a subsidy to be paid back by a course provider to a business association to cover administration and other costs. But much larger amounts can be siphoned off via false invoices. In effect, chambers of commerce and other business organizations are able to finance themselves through public money.
In effect, business organizations are able to finance themselves through public money
The Aneri case provides a perfect illustration. According to the police’s UDEF anti-corruption unit, the network of bogus courses it uncovered in March worked like this: Aneri would pay back 20 percent of the money he received from a business organization for delivering courses. Around 10 percent would be used to cover administrative costs, and the remaining 70 percent was net profit, although he would also pay senior business people in cash, or give them expensive gifts or provide them with prostitutes.
“AN INSPECTOR CALLS”
Official connivance and turning a blind eye
The police say that in some cases, public officials, tax inspectors and local politicians were bribed. But most of the time these scams go undetected because of a lack of mechanisms to check what is being done with public money, say government officials who have talked to EL PAÍS. “When the inspectors were due to visit a course to check that it really was being delivered, they would never do so unannounced,” says one anonymous source. “The schools always know when somebody is due to make an inspection.”
Workers at one Madrid-based business association involved in the Aneri case have told EL PAÍS: “We would be told that an inspection was to be carried out on such and such a day, and so we had to make sure that there would be people attending the courses.”
The schools always know when somebody is due to make an inspection”
The life-span of a publicly funded course is three years. An application has to be put in one year before the course will be delivered. The paperwork accrediting the course is handed in the year after delivery. If the regional government in question does not detect any irregularities, the public audit office might, but that would likely be some years after the fraud has been committed.
THE ROOTS OF THE PROBLEM
A complex system
It is impossible to know how much money has been swindled over the decades, but every year, the police uncover new scams. The system dates back to 1984, when labor unions and employers’ organizations signed an agreement to improve skills training in Spain, by contributing to a national fund overseen by the Social Security system.
In 1993, Forcem, the foundation for lifelong learning, was set up by the labor unions and employers’ organizations to oversee training courses. Aside from managing state subsidies, Forcem was also given EU money. It was beset by problems from the beginning.
In 1998, it was discovered that business networks with close links to the Popular Party had set up front companies to deliver training, and been given €8.41 million of public money since 1996. In 1999, two teachers working at schools run by Andorran entrepreneur Fidel Pallerols, who earlier this year was found guilty of accepting EU funds for training unemployed Spaniards, then channeling money to Unió Democrática de Catalunya, one half of the nationalist coalition in power in Catalonia. In Galicia, the president of the regional employers’ federation, Antonio Ramilo, had to resign in 2000 after it was discovered that around €6 million had been diverted from training subsidies to the organization he headed.
In 2002, police uncovered a €100-million fraud at Forcem involving EU subsidies for non-existent training courses. The High Court called in business and labor union leaders to testify. The case dragged on, and was eventually time-barred.
The perfect students
As a result of the Forcem scandal, some changes were introduced. The organization was replaced by the Tripartite Foundation, with government representatives joining a board with labor union and business leaders. But the scams continued. Labor union UGT is suspected of swindling around €7 million of public money between 2008 and 2012, and an investigation is underway.
The first thing the IT firms say is how easy their platform is to manipulate so as to falsify the number of enrolled students”
In the most recent scam to make the headlines, a nation-wide fraud headed by José Luis Aneri, courses were delivered online. When inspectors looked into the digital platforms, they detected data showing that students were attending his distance courses, but in reality Aneri had designed a computer program that simply multiplied the number of students supposedly enrolled. Inspectors began to suspect something was amiss when they noticed that his students were too perfect: most people do the minimum amount of coursework required for a pass, around 75 percent, whereas Aneri’s robot trainees were putting in 100 percent.
The usefulness of the courses
A quick search through some of the online courses on offer shows that while they may not be fraudulent, they may not be of much use in today’s labor market. The Spanish Taxi Confederation worked with Aneri, receiving 20 percent of funding back in return, and offered its members courses in basic mechanics or how to use a GPS system. Another online option was for a blacksmith’s assistant. “Online training is one big lie, and everybody will tell you,” says David M, who runs a training company in Seville: “The first thing the IT companies selling these digital platforms do is say how easy theirs is to manipulate so as to falsify the number of students you have enrolled.”
LET’S TRY AGAIN
The latest reforms
At the same time as the police are investigating 20 companies for their involvement in bogus training courses funded by the Andalusian regional government, the Labor Ministry is talking to labor unions and business leaders about further reforms to the system.
Meanwhile, in the rest of Europe, the French authorities have changed the way their training programs are funded following a €20 million scam in 2007 involving the metalworking industry. A parliamentary commission was set up, a highly critical report prepared, and a more transparent system of financing put in place.
In Germany, professional training is carried out within companies and during work time. Little public money goes into training, which is paid for by industry and individuals. An additional program was set up in 2007 whereby those taking part in schemes can receive partial funding, but must match state subsidies out of their own pocket.
Spain now wants to put in place a more open tendering system and involve a large group of organizations in administering funding. Time will tell whether this will mark a turning point, or if, as in the past, things will simply continue as normal.