Europe & Central Asia
Spain risk report
While petty bribery is not widespread in business dealings in Spain, companies still cite corruption as a business impediment. Many corruption cases have been initiated in recent years, revealing corruption risks and mismanagement in local-level public procurement in urban planning and construction. The Criminal Code (in Spanish) makes it illegal for individuals to offer and accept bribes, and corporate entities can be held criminally liable for corruption offenses committed by their representatives. Facilitation payments are prohibited, and gifts and hospitality may be considered illegal depending on the intent and benefit obtained. Spain's attempts to limit corruption have intensified, following a string of corruption cases, particularly involving politicians. Criminal liability for corporations has also increased. Nevertheless, the Council of Europe's anti-corruption group has repeatedly criticized Spain for its lack of integrity measures in government institutions.
Judicial system Moderate risk
There is a moderate risk of corruption in the Spanish judiciary. Companies report insufficient confidence in the independence of the judiciary and the ability of the legal framework pertaining to settling disputes and challenging regulations (GCR 2017-2018). Bribes and irregular payments in return for favorable judicial decision are perceived by businesses to be fairly uncommon (GCR 2015-2016). Nearly two-thirds of the general public perceive the independence of the judiciary to be fairly or very bad (JS 2017). About one in five judges indicate that they believe cases are sometimes allocated in a manner inconsistent with established procedures in order to influence the outcome of a particular case (ENCJ 2017). Almost two-thirds of judges believe that judges in Spain are sometimes appointed on basis other than experience and merit (ENCJ 2017). The judiciary is independent and generally has the ability to ensure that the Spanish government acts according to the law (SGI 2017). The judiciary and prosecutorial service are generally of high quality (GRECO 2016). Complaints from companies mainly concern bureaucratic obstacles, case handling, and very slow enforcement; a situation that has been further exacerbated by the current economic crisis in the country (ICS 2017). Enforcing a contract in Spain is slightly less time-consuming and significantly less costly than elsewhere in OECD high-income countries (DB 2018).
Alternative dispute resolution mechanisms have increased in popularity (ICS 2017). Spain is a signatory to the New York Convention 1958 and the Convention on the Settlement of Investment Disputes.
Police Low risk
Corruption is not widespread among Spain's police forces. Two out of five of Spanish citizens believe bribery is widespread when interacting with the police (Eurobarometer 2017), but no respondents reported being asked for a bribe (Eurobarometer 2017). The police services are considered reliable in protecting companies from crime (GCR 2017-2018). The necessary mechanisms are in place to investigate and punish abuse and corruption in the police services (HRR 2017). There are isolated reports of police corruption, but there are no reports of impunity and civilian authorities maintain effective control over security forces (HRR 2017).
Public services Moderate risk
There is a moderate risk of corruption when dealing with Spain's public services. Businesses report that bribes and irregular payments when interacting with public services are fairly uncommon (GCR 2015-2016). Companies cite inefficient government bureaucracy as the biggest obstacle to doing business (GCR 2017-2018). Irregular payments and bribes are sometimes paid when obtaining public utilities and licenses, with more than three-quarters of business reporting that bribery and the use of connections are often the easiest way of obtaining certain public services (European Commission, Feb. 2014). Nepotism and cronyism are also reported by more than two-thirds of companies to be a problem within public institutions (European Commission, Feb. 2014). Nearly half of citizens perceive officials issuing business permits to be corrupt (Eurobarometer 2017). However, no respondents report actually having been asked for a bribe to obtain a business permit (Eurobarometer 2017).
The regulatory process in Spain is generally consistent and uniform, but investors do sometimes complain about unpredictable decisions by government officials (SGI 2017). The efficiency of the regulatory system in the different regions is uneven (ICS 2017). To streamline the uneven regulatory requirements between Spain's 17 regions, the government has introduced a 'single license system that enables companies to operate throughout Spain with only one license, instead of having to request one from each region (ICS 2017). Spain also eased the process of starting a business by improving the efficiency of the commercial registry and eliminating the requirement to obtain a municipal license before starting a business (ICS 2017). Starting a business is more time-consuming, costly, and takes more steps compared to other OECD countries (DB 2018).
Land administration Moderate risk
There is a moderate risk of corruption in Spain. Companies express moderate confidence in the ability of the government to protect property rights (GCR 2017-2018). However, half of Spanish citizens perceive bribery and abuse of power to be widespread among officials issuing building permits (Eurobarometer 2017). The Land Register provides evidence of land titles (ICS 2017). The system is rigid and formalistic, but generally functions efficiently (ICS 2017). Multiple cases of fraud, bribery and money laundering have emerged in urban planning and the construction sectors since the ending of the Spanish building boom in 2008; the magnitude and scale of the problem is exemplified by almost 1,800 judicial proceedings being opened in illegal land use cases in one year alone (EUACR 2014). Land management is vulnerable to corrupt practices due to the broad discretionary powers given to mayors and city councils in the areas of urban planning and related public procurement decisions (EUACR 2014). To increase municipal oversight, a specialized prosecution services and a police unit specialized in land-planning crimes have been created (EUACR 2014).
Dealing with construction permits is more time-consuming and more costly on average compared to other OECD countries (DB 2018).
Tax administration Low risk
There is a moderately low risk of corruption in Spain's tax administration. Bribes and irregular payments when making tax payments are uncommon (GCR 2015-2016). However, one-third of citizens believe bribery and abuse of power are widespread in the tax administration but none of the respondents reported being asked for a bribe (Eurobarometer 2017). The Spanish tax collection agency (AEAT) is generally effective, but its resources are limited (SGI 2017). Paying taxes has been made less costly by reducing the rates for corporate income, capital gain and environment taxes, and the time required to pay taxes is slightly lower than the OECD countries' average (DB 2018).
Several cases of political corruption involved tax fraud. Former president of the region of Catalonia Jordi Pujol admitted to concealing large sums of undeclared money in secret foreign bank accounts for more than thirty years (Reuters, Dec. 2015). Pujol was charged with money laundering; the case is still pending as of 2018 (El Mundo, Feb. 2017). In a separate case, the king’s sister, Princess Catarina was accused of aiding her husband to evade taxes (BBC News, Apr. 2015). Princess Catarina was acquitted in February 2017, but her husband was convicted to six years and three months of imprisonment and a fine of over EUR 500,000 (The Guardian, Feb. 2017).
Customs administration Moderate risk
There is a moderate risk of corruption in Spain's customs administration. Bribes and irregular payments are fairly uncommon during customs procedures (GETR 2016). Companies express moderate satisfaction with the efficiency and time-predictability of customs procedures (GETR 2016).
Importing and exporting to/from Spain (along with the Schengen zone) is ranked number one in the world with regards to the ease of trading across boarders with just one document required for import and export (DB 2018).
Public procurement Very high risk
There is a high risk of corruption in Spain's public procurement sector. Almost half of businesses believe corruption has prevented their company from winning a public tender in the past three years (European Commission, Feb. 2014). A majority of firms report that too close links between politicians and businesses leads to corruption (European Commission, Feb. 2014). Businesses believe that favoritism in the decisions of public officials and diversion of public funds are both common (GCR 2017-2018). Nearly half of Spanish citizens believe officials issuing public tenders are corrupt (Eurobarometer 2017). Alleged corrupt practices, particularly kickbacks, are endemic in the construction and waste-collection sectors. Other common irregularities in public procurement procedures involve tailor-made specifications for particular companies, abuse of negotiated procedures, conflicts of interest in the evaluation of the bids, collusive bidding, and amendments of contractual terms after conclusion of the contract (EUACR 2014). Added to the list in a report published by the Spanish Court of Auditors is the use of unjustified emergency procedures, the splitting of contracts into minor ones, unjustified contract modifications, and unjustified exceptions for the obligatory publishing of tenders (Corruption Research Center Budapest 2015). Procurement corruption and mismanagement is particularly widespread in local politics, where municipalities often suffer from poor oversight mechanisms and where local officials can act with discretion (European Commission, Feb. 2014; EUACR 2014).
In Spain’s biggest corruption case, 40 people are to stand trial. Among them several politicians and businessmen, including three former treasurers of the ruling Popular Party (PP) and even former Prime Minister Rajoy himself. The date has not yet been set. The case revealed the far-encompassing kickback scheme maneuvered by the politician and leader of a group of corrupt businessmen, Francisco Correa Sanchez. The businessmen allegedly paid kickbacks to PP governments in Madrid, Castilla-La Mancha and Valencia, in return for lucrative contracts. Luis Barcenas, former PP treasurer, allegedly handed out envelopes of money to PP ministers for as long as he managed the finances of the party, while former Prime Minister Rajoy was at the receiving end of an annual sum of EUR 25,200 in cash. The courts have ordered 36 of the 40 suspects to pay a combined bail bond of EUR 449 million. The 40 suspects will stand trial on crimes carried out between 1999 and 2005, yet investigations are still looking into the connected crimes which have continued into 2006 and 2009 (Olive Press, Feb. 2014; The Local, Mar. 2015). As of late 2017, the case is still ongoing; Rajoy testified in court that he had no knowledge of the illegal funding racket in his party (The Guardian, Jul. 2017). In May 2018, Spain's High Court convicted 29 people, including a number of senior officials from the PP, to a combined 351 years of imprisonment (Politico, May. 2018). In addition, the PP was ordered to repay EUR 245,000 it had received in kickbacks (Politico, May. 2018). Mariano Rajoy was forced to resign in the wake of the scandal after losing a vote of no-confidence in parliament (BBC News, Jun. 2018).
Companies are recommended to implement special due diligence procedures to counter the likelihood of encountering corruption in Spain's procurement process.
Natural resources Very low risk
No companies report being asked or expected to pay a bribe for environmental permits (including waste and water treatment) in Spain (European Commission, Feb. 2014).
The anti-corruption legal framework in Spain is fairly strong, and law enforcement has shown good results in investigations of alleged corrupt practices (EUACR 2014). The Criminal Code makes it illegal for individuals to engage in passive and active bribery to/from corporate individuals, along with Spanish and foreign public officials. The Criminal Code also criminalizes embezzlement, trading in influence, and abuse of function. Penalties for bribery include fines and up to six years’ imprisonment, and public officials risk being disqualified from public employment for up to 12 years (CMS 2016). Corporations may be fined up to five times the amount of the benefit obtained, in addition to a number of other measures including, for example, being barred from bidding on public tenders and qualifying for tax breaks for up to 15 years (CMS 2016). Corporations' administrators can be given prison sentences and heavy fines for receiving illegal financing (ICS 2017). Corporate criminal liability may be mitigated if the organization has established effective preventive measures and monitoring systems (NRF 2017). Facilitation payments are prohibited, and gifts and hospitality may be considered illegal depending on the value, intent and benefit obtained (CMS 2016). Other relevant legislation includes the Anti-Money Laundering and Terrorist Financing Act, which ensures compliance with the EU Money Laundering Directive, and the Regulation of Conflicts of Interests Law, which obliges members of the government, parliament and high-ranking officials to disclose their assets and interests. Companies cannot donate to political parties, while donations by private citizens are limited to EUR 100,000 per year (ICS 2017). The legislation also stipulates compulsory publishing of Parties’ accounting and pending financial credits (ICS 2017). Spain does not have a strong whistleblower protection law (WLG 2016). The Council of Europe's anti-corruption arm has criticized Spain's government institutions for lacking strong integrity safeguards (GRECO 2016). The OECD has criticized Spain repeatedly for not prosecuting and investigating cases of alleged foreign bribery (OECD 2015).
Spain is a signatory to the OECD Anti-Bribery Convention, the United Nations Convention Against Corruption (UNCAC) and the Council of Europe’s Civil and Criminal Law Conventions against Corruption.
Spain guarantees freedom of expression in the constitution and respects freedom of the press in practice (HRR 2017). The media environment is dynamic, and many journalists have effectively investigated high-level corruption cases (FitW 2016). The media environment in Spain is suffering from ownership consolidation (FitW 2016). Spain has a Freedom of Information Law which has significantly improved access to government information since its adoption in 2013 (SGI 2017). The media environment is considered 'free' (FotP 2017).
The law provides for the freedoms of assembly and association and the government generally respects these rights (HRR 2017). Spanish civil society groups operate without government interference, but their capacity to influence policy-making is reportedly limited. Organizations often depend on public funding, reducing their ability to independently monitor public authorities. Their role in controlling corruption is limited (NISA 2012).
- World Bank: Doing Business 2018.
- BBC News: "Mariano Rajoy: Spanish PM Forced Out of Office", 1 June 2018.
- Politico: "Spain's Ruling Party Rocked by Major Corruption Case", 24 May 2018.
- World Economic Forum: Global Competitiveness Index 2017-2018.
- Freedom House: Freedom of the Press 2017.
- US Department of State: Investment Climate Statement 2017.
- European Commission: EurobarometerCorruption Perception 2017.
- Bertelsmann Stiftung: Sustainable Governance Indicators - Spain Report 2017.
- European Network of Councils for the Judiciary: Independence, Accountability and Quality of the Judiciary, Performance Indicators 2017.
- European Commission: EU Justice Scoreboard 2017.
- Norton Rose Fulbright: Changing Anti-Bribery Landscape in Spain 2017.
- US Department of State: Human Rights Report 2017.
- The Guardian: "Mariano Rajoy Becomes First Serving Spanish PM to Testify in Criminal Case", 26 July 2017.
- El Mundo: "El Pendrive 'Perdido' de los Pujol Reunía su Plan de Negocios para Africa", 23 February 2017 (in Spanish).
- The Guardian: "Spain's Princess Cristina Acquitted in Tax Fraud Scandal", 17 February 2017.
- Freedom House: Freedom in the World 2016.
- GRECO: Fourth Evaluation Round - Spain Compliance Report 2016.
- CMS: Guide to Anti-Bribery and Corruption Laws 2016.
- World Law Group: Global Guide to Whistleblowing Programs 2016.
- World Economic Forum: Global Enabling Trade Report 2016.
- World Economic Forum: Global Competitiveness Report 2015-2016.
- Reuters: "Catalonia's Pujol Charged with Money Laundering for Hiding Fortune", 30 December 2015.
- Guardian: 'Spain's Princess Cristina to stand trial on tax fraud charges', 6 October 2015.
- Local: 'Judge withdraws passport of ex-IMF chief Rato in corruption case', 6 October 2015.
- BBC News: 'Spain's Rato corruption inquiry another blow for Rajoy', 28 April 2015.
- OECD: Follow-up to Phase 3 Report & Recommendations - Spain 2015.
- Corruption Research Center Budapest: Mapping high-level corruption risks in Spanish public procurement, February 2015.
- The Local: 'Scandal: 40 to stand trial in Gurtel case', 6 March 2015.
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- Olive Press: 'The Gurtel/Barcenas case: the story so far', 22 February 2014.
- Transparency International: National Integrity System Assessment Spain 2012.