The pain in Spain (Marbella corruption scandal)

Article about property and corruption scandals in Marbella for The Sunday Times, 9 April 2006

Arrests last week mean corruption is being tackled on the Costas. But British victims are still fighting for their money, reports Mark Stucklin

It’s a no-brainer.” Those are words Robert Bowden-Smith will always regret saying to his wife, Glynis, in September 2003, as they talked themselves into buying off-plan in Elviria, just outside Marbella. “I’ve had those words ringing in my ears ever since,” says Glynis. Work on their block never started -three years later, they are waiting to execute their bank guarantee and recoup their cash.

The couple, in their fifties, from Haslemere in Surrey, thought they were buying a E360,000 (Pounds 250,000) two-bed, two-bath flat on the Costa del Sol. They had no idea they were sinking a deposit of Pounds 80,000 into one of 200 or so projects granted questionable building licences by an allegedly corrupt town hall.

Goings-on in Marbella were front-page news again last week with the arrest of its mayor, Marisol Yague, and more than 20 local bigwigs, including lawyers and notaries, in all. Yague, her deputy Isabel Garcia Marcos, and Juan Antonio Roca, the town-planning supremo, are among those charged and facing prosecution.

Charges against Roca include corruption and money-laundering: he was, allegedly, heading a gang that obtained Pounds 1.7 billion in bribes and bungs for giving the green light to illegal developments, and changing rules so he himself could launch developments.

It’s the latest turn in a 15-year drama that started when the late Jesus Gil was elected mayor in 1991. A developer-turned-politician, Gil was initially popular: he spruced up the town, created jobs and cut street crime. But he also ushered in a culture where anything from building permits to municipal contracts could, allegedly, be bought.

Last week’s arrests largely concern alleged bribes for municipal contracts. And while these have few implications for British buyers caught up in illegal developments, the licences for which were mainly granted while Gil was still in office (he left in 2002), the latest headlines are a reminder of how serious a problem corruption is in Marbella, and how illegalities inherited from the Gil era remain unresolved.

Gil’s most damaging legacy is his 1998 urban plan. More a “smash and grab”, it generated building licences that he and his cronies could sell for briefcases of cash. As a result, some 30,000 properties, including flats and houses, have been built illegally.

The Bowden-Smiths are among the thousands of Britons estimated to be victims of the culture of greed and corruption in Marbella’s town-planning circles. They find their deposit frozen, because the legality of the development they bought into has been contested by Andalusia’s Seville-based regional government. The legal proceedings could drag on for years, causing them even more stress and anxiety.

The Bowden-Smiths bought into a project that was granted a licence by the town hall to build more homes than the legal limit under the plan parcial, or local urban plan. Such anomalies -either extra properties or building in areas not zoned residential -were common in Gil’s day.

By the time the Bowden-Smiths came along, investigations into such planning irregularities were gathering strength. Seville will say only that it’s a continuing judicial matter.

The couple’s bank guarantee, insurance from a Spanish bank arranged by the developer, which ensures clients’ payments are safe until completion, means they should finally get their money back with some interest, but it’s little recompense for the anxiety and expense. With 18 other disaffected buyers, they have formed an action group, for support and to push for compensation.

Arthritis sufferer Barbara Wellsman, a fellow member, had sold her home in damp Torquay and was renting ahead of her move to the Costa’s warmer, drier climes.

She, too, has a bank guarantee, but plans to sue for Pounds 80,000 in damages, citing lost capital appreciation in her UK property and rental expenses. British buyers who paid deposits without ensuring the developers had bank guarantees in place are in a far weaker position.

Meanwhile, buyers on some illegal schemes that have already been built face the prospect of their homes being demolished, though some experts think this is ultimately unlikely. Manuel Sanchez, a Costa del Sol lawyer specialising in real estate, says: “In 20 years of working in this business, I’ve only known of two buildings demolished, neither of which had been completed.” It will take time, but Seville is expected to legalise most disputed developments in a new Marbella urban plan.

The Costa needs its Britons: they are crucial to the economy. But knowing this doesn’t make the Bowden-Smiths and others affected feel any better.

“We are very unhappy with the way we have been treated,” says Glynis. “If Marbella town hall had never issued a disputed building licence, then none of this would ever have happened. There’s nothing you can do to protect yourself from a corrupt town hall.”

Most property professionals in Marbella welcome the latest twist. It’s a clear signal that corruption will no longer be tolerated. A fresh wind is blowing in Marbella.

CHECK LIST:

  • Always use an independent lawyer
  • Don’t sign or pay anything, even a small reservation, until your lawyer has given you the go-ahead
  • When buying in Marbella, always check with the town hall that the property conforms to the urban plan authorised by the regional government of Andalusia
  • Never buy off-plan without a bank guarantee
  • Ensure your home has a “first occupancy” licence, allowing utility connection and residency

© Mark Stucklin (Spanish Property Insight)

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About Mark Stücklin

Mark Stücklin is a Barcelona-based property market analyst and consultant, and author of the 'Spanish Property Doctor' column in the Sunday Times (2005 - 2008). He can be reached by email on ms@spanishpropertyinsight.com.