Dubbed Operation Lezo, the investigation is headed by Judge Eloy Velasco of the Audiencia Nacional, Spain’s central High Court. Velasco is trying to determine whether public funds were channeled from the water company to benefit members of González’s administration.
Other sources said that the court is also investigating alleged illegal party financing through Canal de Isabel II, and purchases made by the water company in Latin America, where it allegedly overpaid for business acquisitions.
The arrests prove that Spanish institutions are doing their job
Interior Minister Juan Ignacio Zoido
Interior Minister Juan Ignacio Zoido, also of the PP, said that the arrests prove that Spanish institutions are doing their job and “are the greatest guarantee that there is no impunity.”
On Wednesday, González’s home and office were searched for evidence of wrongdoing. His brother Pablo was also held in connection with the case, and is believed to have acted as the ex-premier’s frontman. Another suspect, Edmundo Rodríguez Sobrino, is considered “Ignacio González’s man in Latin America.” María Fernanda Richmond, the former financial director at the water company, was also arrested.
Sources familiar with the case linked Rodríguez Sobrino with the acquisition of companies for sums above market prices. His name showed up in connection with several offshore companies created in Panama.
Under González, Canal de Isabel II acquired controlling shares in more than 20 companies in the Americas. Current premier Cristina Cifuentes ordered the water company to divest itself of a dozen of them after detecting “anomalous” procedures, and even sent prosecutors a report asking for an investigation.
In 2013, for instance, Canal de Isabel II purchased a Brazilian company named Emissao. In March of this year, opposition parties at the Madrid Assembly sent prosecutors a report showing that the water company paid €21.5 million for the Brazilian firm; just one month later, Emissao was worth half that amount, a year later it was worth a fourth, and it is currently in the red.
González has been involved in a number of unresolved scandals over the years. In February of last year, it emerged that his government allegedly used money from two government agencies to pay for work to improve the online media profiles of González and two top aides. The allegations were part of a larger investigation into the Púnica graft case, which affects former officials in Madrid and other parts of Spain.
He was also involved in a “spy case” in which leading PP politicians were allegedly wiretapped. But his most serious problem to date had been his purchase of a penthouse in Marbella for €300,000 from a dummy corporation based in Delaware, Maryland. González was summoned to testify over the purchase, believed to be a cash payment for favors rendered to the construction company Martinsa in connection with the rezoning of land in Arganda del Rey (Madrid).
Meanwhile, the editor and president of the conservative newspaper La Razón, Francisco Marhuenda and Mauricio Casals, have become official suspects in Operation Lezo, legal sources have confirmed. Both men have been summoned to appear in court on Thursday at noon for a deposition.
Edmundo Rodríguez Sobrino, González’s nephew, is also CEO of the company that publishes La Razón.
Sources familiar with the investigation said that Marhuenda and Casals allegedly pressured the current Madrid premier, Cristina Cifuentes of the PP, to prevent her from reporting irregular activities at the water company – activities that Rodríguez Sobrino was involved in.
Cifuentes was called in to testify as a witness on Wednesday to provide additional information that may be relevant to the case.
English version by Susana Urra.