Urban Planner Becomes Billionaire

Allegedly corrupt Spanish urban planner became billionaire

January 2009

By BEN SILLS
and SHARON SMYTH
Bloomberg News

SAN DIEGO – As an urban planning adviser in the sun-drenched Spanish resort town of Marbella, Juan Antonio Roca had after-tax income of less than 150,000 euros a year.

When he was arrested for corruption in March 2006, police seized assets worth 2.4 billion euros ($3.4 billion), including a century-old palace in Madrid, a country estate equipped with a helipad over-looking the Rock of Gibraltar and a stud farm guarded by a tiger.

According to a 451-page July 2007 indictment by Marbella prosecutor Miguel Angel Tones, Roca also owned a ranch to raise fighting bulls, a private jet, a helicopter and a painting by Spanish master Joan Miro.

Known in Marbella as “The Boss,” Roca has become Spain’s national symbol of municipal corruption amid the boom and bust of the country’s real estate industry.

“Marbella is a special case, but the conditions which allowed it to occur exist across the country,” says Jesus Sanchez-Lambas, a law professor and general secretary of Madrid’s Ortega y Gasset University Institute. “Corruption in town planning is institutionalized.”

Roca, 55, who was convicted of bribing a judge in August by the High Court of Andalusia in Granada, is currently standing trial at Spain’s National Court in Madrid where, along with five other defendants, he’s charged with embezzling 36 million euros of public funds.

Prosecutors are preparing to go to trial in connection with the 2007 indictment, dubbed Operation Malaya, against Roca and 85 others in Marbella, Madrid, Barcelona and San Sebastian. The charges include embezzlement, money laundering, dereliction of duty and bribery.

Roca’s lawyer, Jose Anibal Alvarez, said in December that none of the evidence proves that Roca took bribes, embezzled from city hall or laundered money. Spanish officials are making him a scapegoat for the corruption that’s widespread in city halls across Spain, he says.

Graft and bribery thrived along the Costa del Sol as the country rode a 15-year real estate boom, fueled by a plunge in interest rates, rising incomes and strong demand for second homes by sun-starved Northern Europeans.

The newfound wealth and borrowing power created a potential bonanza for Spain’s 8,111 town halls, which have limited powers to raise taxes yet have to pay for local police, garbage collection and sports facilities. Spanish law does give the municipalities power to grant all permits for new homes, shopping centers and factories.

Even many legal projects involve the mayor’s cutting a deal with developers, who may agree to build fire stations or put up street lamps in addition to paying for building permits.

Some officials also demand bribes.

“Local administrators have the power to decide who gets rich and who stays poor,” says Victor Tone de Silva, a professor of law at Madrid’s Instituto de Empresa business school. “There’s a great temptation to share in the wealth that you can create.”

That temptation may have ensnared Roca, who began his career as anything but wealthy.

A native of Cartagena in the region of Murcia, which neighbors Andalusia, Roca trained as a mining engineer and then set up a property development company called Comarsa that was declared bankrupt in 1990. The following year, he moved to Marbella.

At the time, the town was known for its celebrity residents, including King Fahd of Saudi Arabia, who built a palace modeled after the White House in Washington, except that the bathroom fittings were made of gold, according to Gorka Zamarreno, communications director of real estate company Aifos SA, who attended a party there.

Until shortly before Roca’s arrival, Marbella had also been known for the drug dealers and prostitutes who plied their trades on its streets.

Mayor Jesus Gil changed all that. Elected on a platform of cleaning up crime, Gil wanted to attract more wealth to the town whose population was then less than half the current 200,000.

Gil hired Roca, a stocky man with dark, greased-back hair splashed with white around the temples, as the head of a property management company owned by the city, Planeamiento 2000, in 1992.

The two men then used the company to siphon off 36 million euros from city coffers, according to a press note issued by the National Court on behalf of the prosecutors.

Roca took bribes for granting building permits and adjudicating public works contracts at inflated prices to bidders who would pay him under the table, according to Tones, the prosecuting magistrate in Marbella.

Roca also sold at a cheap price to his holding companies undeveloped land that belonged to the town, prosecutors say. He then reclassified it as suitable for development and resold it at a huge markup to another developer.

As demand for new construction grew, so did the power of municipal firms like Roca’s across Spain. In many places, it could take as much as four years before a developer had all the permits required to begin work on a site, Instituto de Empresa’s Torre says.

Builders such as Aifos would start work on projects under the assumption that they would get all of the necessary permits before it came time to occupy the building. Once the builder had spent heavily on the construction, Roca would demand a bribe in return for the permits, prosecutors say.

Aifos paid 5 million euros of bribes to Roca over two years in a bid to get him to license two hotel developments in Marbella and Puerto Banus, according to the indictment.

Aifos Chairman Jesus Ruiz Casado, who has been indicted for bribery, declined to comment.

The Roca years will have a long-term effect on the economy of Marbella, says Angeles Munoz, who was elected mayor in 2007.

In the race to build without permits, developers wrecked the coastline and city officials neglected infrastructure such as roads, Munoz, 48, says.

“People have lived very, very well here,” she says. “Imagine what it could have been like if they had invested as they should have.”

Source Code: 20090107tdg