Madrid city hall is under pressure after it emerged that it spent millions of euro on face masks and other material at vastly inflated prices at the height of the Covid pandemic.
A Spanish court has named businessmen Alfredo Luceño and Luis Medina as suspects in the case after the anti-corruption prosecutor accused them of charging commissions worth up to 400 per cent of the value of the materials they procured for city hall. The prosecutor accuses them of fraud, money laundering and forging documents.
Regulations controlling the awarding of public contracts were relaxed in the early stages of the pandemic, allowing Mr Luceño and Mr Medina to reach the agreement with city hall without going through the normal competitive process.
In total the contracts the Madrid local government awarded the duo were worth around $12 million (€11m) for face masks, gloves and lateral flow tests obtained from China.
According to investigators, the men earned $6 million in commissions from that amount.
The prosecutor said that the prices charged “were set by Alberto Luceño and he imposed them on Madrid city hall”, adding that “he hid the fact that a high percentage of the price offered corresponded to commissions”.
The single most lucrative contract was worth $6.7 million for the procurement of one million FFP2 face masks, and the prosecutor alleges that the two businessmen made a profit of over $4 million from it. They also procured 2½ million pairs of latex gloves, at a cost of $2 per pair, when the same product was selling in Spanish supermarkets for just €0.08.
The duo then ploughed much of their earnings into luxury goods such as a flat, a yacht, 12 sports cars and three Rolex watches in a bid to hide the money’s origins, according to the allegations.
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Mr Medina has denied any wrongdoing. “I understand that a lot of people might not think this is okay,” he told El Confidencial news site, adding that what he had earned “is a normal mediation commission which is often charged” and that it was not illegal.
The case is extremely embarrassing for Madrid mayor José Luis Martínez-Almeida, given that it has emerged that Mr Medina’s friendship with a cousin of the politician apparently gave him access to city hall.
Mr Martínez-Almeida, of the conservative Popular Party (PP), has insisted that he was not involved in selecting the individuals who procured the materials. “I was not aware that my cousin intervened in any way,” he said in a press conference.
This is the second scandal to hit the PP related to protective equipment procurement in just a matter of weeks. In February it emerged that the brother of Madrid’s regional president Isabel Díaz Ayuso had benefitted from a lucrative face mask contract awarded by her administration.
