Transcript
Take one building boom, add chaotic planning laws, sprinkle with a generous dash of Russian mafia money and you have Spains biggest corruption scandal in years.
Chris Clark reports from Marbella and the tourist mecca of the Costa del Sol but instead of the romantic images of the glossy brochures, he finds a real mess.
Billions have gone missing in crooked development deals and the courts have ordered the demolition of more than 30 thousand illegally built apartments.
Francisco Bugallal bought an apartment at the Banana Beach development, right on the beach at Marbella; 5 years later the courts ordered its demolition because it was built on public land.
They will have to take me out with the machines, with the cranes, or a squad of police. Ill lock myself inside the flat, he tells Clark. Local activist Mercedes Vazquez says its vital that some of the buildings are demolished, as an example to others.
Its very, very important, she says, standing outside the abandoned shell of the six storey Senator Hotel, which is one of the illegal buildings. If theyre not demolished, a lot of people will think, no problem its illegal, but after a time, you will have it legal. Former Marbella Deputy Mayor, Isabel Garcia Marcos is one of several former Marbella councillors facing gaol, if convicted of corruption charges. Police says they found more than 300 thousand Euros (A$ half a million) in cash in her house she says it belongs to her daughter.
Retired Supreme Court Judge, Jose Antonio Martin Pallin says its not just about dodgy developers.
Its money laundering by the mafia, especially the Russian mafia, Its a time of a massive building boom in the country. About 3 million houses have been started or finished in Spain in the past 4 years, more than half of them on the coast. Since the Marbella scandal broke dozens of other similar cases have come to light across Spain. CHRIS CLARK: The Costa del Sol has to be seen to be believed. Its the centre of a nationwide building boom. Three million houses started or built in Spain in the last four years, and more than half of them on the coast. By some estimates 40% of all construction in Europe is happening in Spain. Even the Spanish are starting to feel the squeeze. MERCEDES VAZQUEZ: Whats happened is a real disaster for the city which would have been a paradise if it had been developed properly, if the builders had wanted that. CHRIS CLARK: Mercedes Vazquez came to Marbella more than twenty years ago to live in the countryside. Her once uninterrupted view to the sea now contains a huge apartment block illegally built. Shes leading a fight back by locals. MERCEDES VAZQUEZ: A group of people who live nearby got together and saw that it wasnt an isolated problem. The building behind us should have been seven single family villas and instead they built eighty-one apartments. CHRIS CLARK: In Marbella now, there are more than thirty thousand apartments originally approved by council and later judged illegal. Its a complete mess. There are the apartment blocks on either side of the motorway, illegal because theyre too close to the road. Theres the Senator Hotel, the police were called in to stop work after a court order was ignored. Mercedes Vazquez says it should be demolished. MERCEDES VAZQUEZ: Its very, very important because if no one is demolished, a lot of people will think no problem. You make illegalities and after a time you will have it legal. CHRIS CLARK: And in Marbella, none is more infamous then the seductively named Banana Beach. In the language beloved of real estate agents the world over, Banana Beach is absolute beach front in fact a bit too absolute. Its on public land and a court has ordered its demolition. FRANCISCO BUGALLAL: If its demolished, then itll be a banana republic where there are no laws and people can ignore the laws whenever they like. CHRIS CLARK: Francisco Bugallal and his wife Choni retired here from Madrid. The demolition order came five years after they bought the apartment. Francisco argues he bought in good faith and has title deeds and a mortgage that should protect him from the threat of demolition. FRANCISCO BUGALLAL: When a bank gives you a mortgage its because theyve already found from the property register that everythings in order. CHRIS CLARK: So whatll happen if the court order is followed and the wreckers move in? FRANCISCO BUGALLAL: Well, I cant really imagine it. They would have to take me out with the machines, with the cranes, or a squad of police. Ill lock myself inside the flat. CHRIS CLARK: The attractive old centre of Marbella seems quite at odds with the image of rapacious and corrupt development which has catapulted the place into the headlines. Its other reputation is as one of the smarter, more up market tourist destinations on the Costa de Sol. Marbellas problems really go back fifteen years when the town elected a new mayor, now dead, who promised to clean up the place and attract new investment. The money poured into property but not it seems into the Town Hall Treasury. The citys bankrupt and a clutch of former councillors and officials are facing charges of bribery and corruption. The councils been dissolved and Diego Martin whos a criminal lawyer by training, is administrator until new elections are held. So how much money is missing? DIEGO MARTIN: Its difficult to say how much exactly but were talking about properties that have grown to a value of 2.4 billion euros. Mind you, thats only what we can see. We suspect several billions more should have gone to the council, but didnt. CHRIS CLARK: Among those accused of accepting illegal payments is a former Deputy Mayor, Isabel Garcia Marcos. Did you ever take bribes or money that wasnt yours while you were a councillor in Marbella? ISABEL GARCIA MARCOS: Never, ever will anybody to be able to say that I received any money illegally from any source or for any motive. They simply wont be able to prove it. CHRIS CLARK: Police say that they found three hundred and fifty thousand Euros in your house. Can you explain where that money came from? ISABEL GARCIA MARCOS: Only a very small part of that belongs to me. What they found was just over 300 thousand euros. More that 300 thousand of it belongs to my daughter. Its her property, and comes from her grandparents. CHRIS CLARK: The courts might eventually decide the truth of the matter but part of the problem is the time its taken for the courts to get this far and declare tens of thousands of apartments illegal let alone chase down the missing billions. Since the Marbella scandal broke, dozens of other examples have come to light across the country and according to Diego Martin, the problem is that local councils rely too heavily on fees from development to fund their services. DIEGO MARTIN: The root of the problem is the funding of town councils. Theyre not properly funded, and Spanish law hasnt dealt with it satisfactorily so many councils rely on development to get the money they need. Some people take advantage of that to obtain their own benefits. CHRIS CLARK: Jose Prado Sesena is President of the regional Developers Association. He agrees. JOSE PRADO SESENA: Until there is a change in the financing of local councils that is the law by which councils get money to function we cant change the current system. CHRIS CLARK: And the scale of development on the coast has also changed. In the 60s and 70s it was a week or two in the sun and a cheap hotel. Now millions of northern Europeans are retiring here with their golf clubs even those on short breaks want their own apartment. You can almost see the development spreading day by day, back up the valleys from the coast such is the pace of this building boom and it shows absolutely no sign of stopping any time soon. And just as important as new land for development, is water to go with it. Mind you, finding an umbrella seems the more pressing issue the day were in Cuevas del Becerro, an hour and a halfs drive inland from the coast. The eighteen hundred souls though of this quiet village worry deeply about water. The banner on the town hall puts it plainly, when the spring runs dry, its too late. This is the spring in question. Its fed from an aquifer in the next valley up where the neighbouring council has just approved a huge golf course, hotel and apartment project. Juan Antonio Garcia organises the opposition. JUAN ANTONIO GARCIA: The property is 80 hectares, and we know from the press there are going to be 800 luxury villas, two hotels, a retirement home, shopping centre, a race course a huge complex. CHRIS CLARK: The sites all laid out ready to go, accommodation for fifteen thousand people, a decent sized town to be built from the ground up. JUAN ANTONIO GARCIA: We may get less water or none and the aquifer could be contaminated by the pesticides and fertilisers used on the golf course as well as the grey water from the houses. CHRIS CLARK: In protest, the entire town went on strike for a day. Shut up shop. They got national and international media coverage. Juan Antonio Garcia has followed the Marbella saga and knows that once the bricks are laid it might be too late. JUAN ANTONIO GARCIA: What happened in Marbella can happen here. In ten or twenty years theyll say this is illegal, but the damage will have been done. CHRIS CLARK: You can understand his fear because in Marbella, theres a sense that arguments about compensation might delay or prevent the demolition of any illegal buildings. As we chatted to Francisco Bugallal at Banana Beach and speculated on the likelihood of the wreckers ball ever being deployed, the door bell rang. It was a lawyer, Jose Cosin, gathering support from apartment owners to challenge the demolition order. FRANCISCO BUGALLAL: Do we have to sign them? JOSE COSIN: Theres a legal way of doing this and so weve written this report for all the tenants so a solution can be found. CHRIS CLARK: So did the lawyer think the demolition order would ever be acted upon? JOSE COSIN: It is a political problem and when youre talking about politics you never know, okay? You never know. CHRIS CLARK: Plenty of the money going into Spanish property is legitimate but no one doubts that its also the perfect environment for organised crime to launder money. Jose Antonio Martin Pallin has just retired as a judge of Spains Supreme Court. JOSE ANTONIO MARTIN PALLIN: What we see in the papers now are not land development crimes. Its money laundering by the mafia, especially the Russian mafia. CHRIS CLARK: He says as well as changing the way councils are funded, there need to be tougher penalties for related crimes. JOSE ANTONIO MARTIN PALLIN: For those cases we need to change the law. Its not right that the penalty for stealing a television set from a flat carries five years in prison and these other crimes carry only two to three years. CHRIS CLARK: What began as a local scandal in Marbella has become a national issue as Diego Martin concedes. DIEGO MARTIN: The case of Marbella and others in Spain the east and the centre of Spain near Madrid has forced a debate about changes to the law to bring in some external control over council planning. CHRIS CLARK: Even Jose Prado Sesena the developer wants national planning laws. JOSE PRADO SESENA: Weve been asking for a federal pact between the major political parties a federal pact for a land law, so that its the national government in charge of land development. CHRIS CLARK: In Cuevas del Becerro, Juan Antonio Garcia wants that too so the towns water supply is safe. There are signs the government might be listening. JUAN ANTONIO GARCIA: The President was saying the other day that if local governments dont do their duty with planning the national government will intervene. CHRIS CLARK: For decades the Spanish coastline has been developed with little thought beyond the jobs its provided. Perhaps, and only perhaps, those days are coming to an end.
They will have to take me out with the machines, with the cranes, or a squad of police. Ill lock myself inside the flat, he tells Clark. Local activist Mercedes Vazquez says its vital that some of the buildings are demolished, as an example to others.
Its very, very important, she says, standing outside the abandoned shell of the six storey Senator Hotel, which is one of the illegal buildings. If theyre not demolished, a lot of people will think, no problem its illegal, but after a time, you will have it legal. Former Marbella Deputy Mayor, Isabel Garcia Marcos is one of several former Marbella councillors facing gaol, if convicted of corruption charges. Police says they found more than 300 thousand Euros (A$ half a million) in cash in her house she says it belongs to her daughter.
Retired Supreme Court Judge, Jose Antonio Martin Pallin says its not just about dodgy developers.
Its money laundering by the mafia, especially the Russian mafia, Its a time of a massive building boom in the country. About 3 million houses have been started or finished in Spain in the past 4 years, more than half of them on the coast. Since the Marbella scandal broke dozens of other similar cases have come to light across Spain. CHRIS CLARK: The Costa del Sol has to be seen to be believed. Its the centre of a nationwide building boom. Three million houses started or built in Spain in the last four years, and more than half of them on the coast. By some estimates 40% of all construction in Europe is happening in Spain. Even the Spanish are starting to feel the squeeze. MERCEDES VAZQUEZ: Whats happened is a real disaster for the city which would have been a paradise if it had been developed properly, if the builders had wanted that. CHRIS CLARK: Mercedes Vazquez came to Marbella more than twenty years ago to live in the countryside. Her once uninterrupted view to the sea now contains a huge apartment block illegally built. Shes leading a fight back by locals. MERCEDES VAZQUEZ: A group of people who live nearby got together and saw that it wasnt an isolated problem. The building behind us should have been seven single family villas and instead they built eighty-one apartments. CHRIS CLARK: In Marbella now, there are more than thirty thousand apartments originally approved by council and later judged illegal. Its a complete mess. There are the apartment blocks on either side of the motorway, illegal because theyre too close to the road. Theres the Senator Hotel, the police were called in to stop work after a court order was ignored. Mercedes Vazquez says it should be demolished. MERCEDES VAZQUEZ: Its very, very important because if no one is demolished, a lot of people will think no problem. You make illegalities and after a time you will have it legal. CHRIS CLARK: And in Marbella, none is more infamous then the seductively named Banana Beach. In the language beloved of real estate agents the world over, Banana Beach is absolute beach front in fact a bit too absolute. Its on public land and a court has ordered its demolition. FRANCISCO BUGALLAL: If its demolished, then itll be a banana republic where there are no laws and people can ignore the laws whenever they like. CHRIS CLARK: Francisco Bugallal and his wife Choni retired here from Madrid. The demolition order came five years after they bought the apartment. Francisco argues he bought in good faith and has title deeds and a mortgage that should protect him from the threat of demolition. FRANCISCO BUGALLAL: When a bank gives you a mortgage its because theyve already found from the property register that everythings in order. CHRIS CLARK: So whatll happen if the court order is followed and the wreckers move in? FRANCISCO BUGALLAL: Well, I cant really imagine it. They would have to take me out with the machines, with the cranes, or a squad of police. Ill lock myself inside the flat. CHRIS CLARK: The attractive old centre of Marbella seems quite at odds with the image of rapacious and corrupt development which has catapulted the place into the headlines. Its other reputation is as one of the smarter, more up market tourist destinations on the Costa de Sol. Marbellas problems really go back fifteen years when the town elected a new mayor, now dead, who promised to clean up the place and attract new investment. The money poured into property but not it seems into the Town Hall Treasury. The citys bankrupt and a clutch of former councillors and officials are facing charges of bribery and corruption. The councils been dissolved and Diego Martin whos a criminal lawyer by training, is administrator until new elections are held. So how much money is missing? DIEGO MARTIN: Its difficult to say how much exactly but were talking about properties that have grown to a value of 2.4 billion euros. Mind you, thats only what we can see. We suspect several billions more should have gone to the council, but didnt. CHRIS CLARK: Among those accused of accepting illegal payments is a former Deputy Mayor, Isabel Garcia Marcos. Did you ever take bribes or money that wasnt yours while you were a councillor in Marbella? ISABEL GARCIA MARCOS: Never, ever will anybody to be able to say that I received any money illegally from any source or for any motive. They simply wont be able to prove it. CHRIS CLARK: Police say that they found three hundred and fifty thousand Euros in your house. Can you explain where that money came from? ISABEL GARCIA MARCOS: Only a very small part of that belongs to me. What they found was just over 300 thousand euros. More that 300 thousand of it belongs to my daughter. Its her property, and comes from her grandparents. CHRIS CLARK: The courts might eventually decide the truth of the matter but part of the problem is the time its taken for the courts to get this far and declare tens of thousands of apartments illegal let alone chase down the missing billions. Since the Marbella scandal broke, dozens of other examples have come to light across the country and according to Diego Martin, the problem is that local councils rely too heavily on fees from development to fund their services. DIEGO MARTIN: The root of the problem is the funding of town councils. Theyre not properly funded, and Spanish law hasnt dealt with it satisfactorily so many councils rely on development to get the money they need. Some people take advantage of that to obtain their own benefits. CHRIS CLARK: Jose Prado Sesena is President of the regional Developers Association. He agrees. JOSE PRADO SESENA: Until there is a change in the financing of local councils that is the law by which councils get money to function we cant change the current system. CHRIS CLARK: And the scale of development on the coast has also changed. In the 60s and 70s it was a week or two in the sun and a cheap hotel. Now millions of northern Europeans are retiring here with their golf clubs even those on short breaks want their own apartment. You can almost see the development spreading day by day, back up the valleys from the coast such is the pace of this building boom and it shows absolutely no sign of stopping any time soon. And just as important as new land for development, is water to go with it. Mind you, finding an umbrella seems the more pressing issue the day were in Cuevas del Becerro, an hour and a halfs drive inland from the coast. The eighteen hundred souls though of this quiet village worry deeply about water. The banner on the town hall puts it plainly, when the spring runs dry, its too late. This is the spring in question. Its fed from an aquifer in the next valley up where the neighbouring council has just approved a huge golf course, hotel and apartment project. Juan Antonio Garcia organises the opposition. JUAN ANTONIO GARCIA: The property is 80 hectares, and we know from the press there are going to be 800 luxury villas, two hotels, a retirement home, shopping centre, a race course a huge complex. CHRIS CLARK: The sites all laid out ready to go, accommodation for fifteen thousand people, a decent sized town to be built from the ground up. JUAN ANTONIO GARCIA: We may get less water or none and the aquifer could be contaminated by the pesticides and fertilisers used on the golf course as well as the grey water from the houses. CHRIS CLARK: In protest, the entire town went on strike for a day. Shut up shop. They got national and international media coverage. Juan Antonio Garcia has followed the Marbella saga and knows that once the bricks are laid it might be too late. JUAN ANTONIO GARCIA: What happened in Marbella can happen here. In ten or twenty years theyll say this is illegal, but the damage will have been done. CHRIS CLARK: You can understand his fear because in Marbella, theres a sense that arguments about compensation might delay or prevent the demolition of any illegal buildings. As we chatted to Francisco Bugallal at Banana Beach and speculated on the likelihood of the wreckers ball ever being deployed, the door bell rang. It was a lawyer, Jose Cosin, gathering support from apartment owners to challenge the demolition order. FRANCISCO BUGALLAL: Do we have to sign them? JOSE COSIN: Theres a legal way of doing this and so weve written this report for all the tenants so a solution can be found. CHRIS CLARK: So did the lawyer think the demolition order would ever be acted upon? JOSE COSIN: It is a political problem and when youre talking about politics you never know, okay? You never know. CHRIS CLARK: Plenty of the money going into Spanish property is legitimate but no one doubts that its also the perfect environment for organised crime to launder money. Jose Antonio Martin Pallin has just retired as a judge of Spains Supreme Court. JOSE ANTONIO MARTIN PALLIN: What we see in the papers now are not land development crimes. Its money laundering by the mafia, especially the Russian mafia. CHRIS CLARK: He says as well as changing the way councils are funded, there need to be tougher penalties for related crimes. JOSE ANTONIO MARTIN PALLIN: For those cases we need to change the law. Its not right that the penalty for stealing a television set from a flat carries five years in prison and these other crimes carry only two to three years. CHRIS CLARK: What began as a local scandal in Marbella has become a national issue as Diego Martin concedes. DIEGO MARTIN: The case of Marbella and others in Spain the east and the centre of Spain near Madrid has forced a debate about changes to the law to bring in some external control over council planning. CHRIS CLARK: Even Jose Prado Sesena the developer wants national planning laws. JOSE PRADO SESENA: Weve been asking for a federal pact between the major political parties a federal pact for a land law, so that its the national government in charge of land development. CHRIS CLARK: In Cuevas del Becerro, Juan Antonio Garcia wants that too so the towns water supply is safe. There are signs the government might be listening. JUAN ANTONIO GARCIA: The President was saying the other day that if local governments dont do their duty with planning the national government will intervene. CHRIS CLARK: For decades the Spanish coastline has been developed with little thought beyond the jobs its provided. Perhaps, and only perhaps, those days are coming to an end.