Pandora Papers: Catalan Popular Party mayor was linked to a firm created in a tax haven

Xavier García Albiol had the power to buy and sell properties or other assets thanks to powers granted to him via a company set up in Belize called Luverne International Inc.

Sr. García
Sr. García

Xavier García Albiol, the current mayor of the city of Badalona and the former leader of the Catalan branch of the conservative Popular Party (PP) until 2018, held the general power of attorney of a company in Belize, a small tax haven in the north of Central America. This was processed via an Andorran firm linked to the private bank Andbank, the second-largest bank by asset size in the microstate.

García Albiol was the secretary of municipal policy at the PP’s Catalan branch when he was linked to the opaque firm in 2005. Before that date he was the president and councilor of the PP in Badalona, and was the PP’s general secretary in Barcelona.

García Albiol’s name is included in the Pandora Papers, a massive document leak to which the International Consortium of Investigative Journalists (ICIJ) has had access, and stories from which are being published in Spain exclusively by EL PAÍS and La Sexta television network. For over a year, more than 600 journalists from 117 countries have been studying 11.9 million documents from 14 offshore service providers across the world.

The analysis of this data reveals that García Albiol was linked to a corporation in Belize called Luverne International Inc. on April 7, 2005. That’s according to a document signed by notary Diómedes Edgardo Cerrud in Panama City. The mysterious firm was created on January 1, 2005 and was dissolved on December 9, 2015.

It is not known what the power of attorney – a generic 23-point document – was used for. But the document gave García Albiol the power to act in the buying and selling of properties, bonds, stocks and companies. It also gave him the possibility to open and close deposit and savings accounts in “national and foreign institutions.”

The document granting García Albiol general power of attorney.
The document granting García Albiol general power of attorney.

What’s more, the document allowed the Badalona mayor to manage safe deposit boxes in “bank vaults.” He could also use the Belize company to create and dissolve firms; present public and private tenders; buy and trade goods, stocks and assets; as well as charge rent and loans, withdraw funds or write checks.

Point number 15 of the legal text outlined the capacity “without any limitation whatsoever” to “take real, tangible or symbolic possession of all class of assets that correspond to the firm.” The document includes the name, surname and Spanish ID number of García Albiol, who joined the ranks of the PP in Badalona in 1990.

Myrna Navarro, who is linked to the company Bahamas Latin American Holdings Ltd., appeared as the secretary of Luverne International Inc., and its director was Edgardo E. Díaz, a lawyer who appears as the frontman for dozens of firms in documents from Alemán, Cordero, Galindo & Lee (Alcogal), the Panamanian law firm which managed Luverne and is at the center of the Pandora Papers data leak. Alcogal is a law firm dedicated to creating convoluted webs of companies in tax havens such as the Bahamas and the British Virgin Islands, and also works in countries such as Switzerland.

The mayor of Badalona did not have to travel to Central America to arrange the paperwork. Afsi, a small law firm in Andorra created by Andbank in 1997, was in charge of processing the company, according to the documentation. Thanks to the microstate’s banking secrecy, which was enshrined in law until 2017, as well as the fact that its laws did not include tax offenses, Asfi secured clients such as Pep Guardiola, the trainer of soccer team Manchester City. This factory of Andorran firms also worked for anonymous clients who, with time, would appear in judicial investigations for belonging to the money laundering ring of Chinese businessman Gao Ping or the Brazilian corruption probe known as Operation Car Wash.

One of the records from the company Luverne International Inc., and which was sent to a manager linked to Andbank.
One of the records from the company Luverne International Inc., and which was sent to a manager linked to Andbank.

A changing story

García Albiol offered two different versions to EL PAÍS and La Sexta when asked about his connection to the Belizean firm Luverne International Inc. “It’s news to me. I have no idea. In Andorra? In my name? I have no idea about that. I have never been to Belize,” he replied on Tuesday, adding that he did not know that firm was created by a company in Andorra. “And the office is in Andorra? I’m flabbergasted,” he said by phone.

In a second phone call on Wednesday, the mayor admitted to the existence of the opaque company and said it was created by his family to open “business projects” in Spain and Central America, but that the firm had not recorded any income. “In 2005, I decided with other people to look at the possibility of creating business projects in Spain or abroad. Back then, I had contacts in Central America, El Salvador, Honduras and Guatemala. It’s true that [the company] was in Belize. It was a company that did not at any time bring me economic returns, increase in wealth. I have not earned a euro,” said García Albiol, who in 2020 was named as the president of the PP’s mayoral committee, an internal group of the conservative party that is made up of 2,000 PP mayors.

Xavier García Albiol during his swearing in as mayor of Badalona for the second time, in May 2020.
Xavier García Albiol during his swearing in as mayor of Badalona for the second time, in May 2020.Europa Press

On Wednesday, after the story came to light, García Albiol spoke to La Sexta to say that he was involved in the company “together with a group of people who had nothing to do with politics nor the PP.” The company was set up, he added, as an alternative to his work life in politics. “They explained to me the option of appearing as having general power of attorney.”

García Albiol’s second responses were in stark contrast to what he said just a day earlier when asked about Luverne International Inc. “I have no idea. Zero, zero,” he said on Tuesday, after confirming via a WhatsApp message that the ID number on the notary document was his.

An analysis of the official estate of this politician, who once led the provincial branch of the PP in Barcelona and has held many public positions over the course of three decades, does not show a disproportionate fortune. In his last municipal declaration of assets in 2019, the 53-year-old reported that he was the owner of three apartments (one in which he is joint owner), two cars – an Audi Q5 and a BMW GT650 – bank accounts with €121,000 in funds, €56,000 in stocks and a Bavaria yacht worth €80,000.

Since December 2004, García Albiol has also been the sole administrator of a a property rental business called Incendo S.L., which has no assets in its name but holdings of €103,973. The firm declared a loss of €1,070 in 2016, the last year that it presented its accounts to the trade registry, according to the database Informa.

Using an offshore company is legal if it is declared to the tax agency of the owner’s country of residence. But many of the owners use these firms to avoid paying taxes, given that they provide low taxation and the protection of anonymity. In this way, through the web of opaque companies in tax havens such as the British Virgin Island and Belize, the equivalent of 10% of gross domestic product (GDP) in the European Union is diverted, according to the European Commission, which estimates that €46 billion in taxes to public treasuries is lost each year thanks to these schemes.

García Albiol was mayor of Badalona from 2011 to 2015. After this first mandate, he recovered the post in 2020. His return to the mayor’s office in the city – which is home to 223,166 people and is the fourth-most populous in Catalonia – was made possible due to disagreements among the left and the resignation of his predecessor, Álex Pastor of the Socialist Party (PSOE), who was caught breaking last year’s coronavirus lockdown and driving under the influence of alcohol.

A key figure in the PP, Gracía Albiol was a factory for headlines during his first mandate as the mayor of Badalona. His hard-line discourse against foreigners – outlined in flyers, xenophobic slogans such as “Cleaning Badalona” and images reminiscent of those used by the French far-right leader Marine Le Pen – made an impact on neighborhoods with immigrants and turned the city into a reference point for the most extreme wing of the PP. His controversial decisions include restricting aid to foreigners and stopping a planned mosque. In one speech, he linked the Roma community to criminality. “They are a plague who have only come here to commit offenses,” he said. The association SOS Racismo took him to court for inciting hate and discrimination, but he was absolved. García Albiol is now facing a new court case over allegations of misuse of public funds and prevarication. The politician will have to explain to a judge why he allowed two cellphone antennas to be installed without a license in the headquarters of Badalona’s local police force, the Guardia Urbana.

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