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11/12/2016

Almunia counter-attacks in high-profile Spanish football tax case

Competition

Almunia counter-attacks in high-profile Spanish football tax case

Competition Commissioner Joaquín Almunia was "astonished" at claims of a conflict of interest. January 2009. [European Parliament/Flickr]

Joaquín Almunia, the Spanish Commissioner in charge of policing the EU’s antitrust rules, has denied accusations of a conflict of interest in the handling of an investigation into unfair tax breaks worth billions of euros given to Spanish football clubs, including Real Madrid and Barcelona.

Almunia criticised the European Ombudsman for issuing a press release revealing a confidential state aid investigation into four clubs the day before it was officially announced. 

In a letter to the EU’s Ombudsman Emily O’Reilly, the Spanish Commissioner also branded “intentionally misleading” a second press announcement, which claimed credit for the probe being opened.

O’Reilly, who handles complaints about the EU from the public, yesterday (16 June) published the 20 December letter and her 17 January response on her office’s website before publicising them on its official Twitter account.

Investors in other European football clubs complained to the Ombudsman because no investigation had been opened since a 2009 objection over the tax advantages. The other two clubs are Osasuna and Athletic Club Bilbao, who Almunia supports.

According to the 17 December release, the investors alleged, “the Commission’s inaction in this case might be linked to the fact that the commissioner responsible supports one of the football teams in question and was a minister in the Spanish government that decided on the tax advantages at the time.”

O’Reilly was quoted in the bulletin, “The Commission has failed to act on this complaint for more than four years. Not only is this bad administration, but to the European public it can look like a conflict of interest given the Commissioner’s strong links to one of the football clubs in question.

“I trust, however, that the Commission will decide to open an investigation tomorrow in order to investigate the facts and dispel any suspicions.”

Almunia’s letter said, “It is no secret that I am a supporter of Athletic Club Bilbao. Let me tell you I am also a Spanish citizen, member of the PSOE, keen opera-goer, I enjoy cinema and I use the internet every day.

“These elements are however irrelevant when it comes to the Commission adopting decisions of state aid regarding Spanish cases, or granted by centre-left governments, or benefitting cinema or culture in general or to tackling antitrust issues with Microsoft and Google. The very opening of a state aid investigation into Athletic Club Bilbao is the best proof that this allegation is misplaced.”

In her response, O’Reilly, who took up her post in October 2013, said it was not the Ombudsman but the complainants who had suggested the conflict of interest. She added, “As my press release of 18 December states, I am satisfied that the Commission is now investigating the faces, thereby dispelling any suspicions of a conflict of interests.”

Two press releases

O’Reilly’s office issued two releases about the long-running probe into the clubs. According to Almunia, the first gave away the fact the Commission planned to open the investigation the next day. Such decisions are not made public by the executive to avoid “last minute lobbying,” Almunia told the Ombudsman.

“Public announcements of the kind your office chose to make in this case defeat these very purposes,” he added.

The second release, according to Almunia, was “intentionally misleading” and claimed credit for the investigation being opened.

“The allegation in your 18 December press release that the Commission’s decision was instigated by your office’s request is factually wrong  and – much to the Commission’s worry – intentionally misleading,” he wrote.

Almunia said the Ombudsman had given the Commission a six month extension but had not mentioned that in the releases. He said the decision to investigate was taken after months of work and the adoption of a case by the Commission is fixed weeks in advance.

In her reply, O’Reilly said the release referred to the investigation being opened the next day but that the news was already being widely reported in the media.

“By the time of the press release, it was public knowledge and thus clearly no longer confidential,” she said.

Discussing the second release she said the press release did not claim credit for the investigation, “nor was it understood in that sense by the media.”

 The second release began, “The European Ombudsman, Emily O’Reilly, has welcomed the European Commission’s decision to open an investigation […] this follows her call on the Commission to stop delaying a decision on a complaint about the matter from investors in other European football clubs.”

In her reply O’Reilly said, as there was no complaint reference on Almunia’s letter, it would not form part of the complaint file. If it was part of the file, the complainant would be invited to submit comments on it, she said.

Background

The European Commission began disciplinary action against seven Spanish clubs including Real Madrid and Barcelona over possible illegal state aid.? Barca, Real Madrid, Osasuna and Athletic Bilbao are accused of contravening European Union rules because they are still owned by their members, or socios, and had benefited from favourable tax treatment.

The Commission is also probing Real over their training facilities at Valdebebas near Madrid's main airport and Bilbao over aid they received for the construction of their new stadium, which opened this season.

Further Reading