The latest corruption scandal surrounding Spain’s government is the most damaging yet to Prime Minister Pedro Sánchez. Beyond the potential political casualties, it highlights structural issues surrounding lobbying and contracting that companies seeking to operate in the market should be aware of.
In June, a senior official in Sánchez’s socialist party came under investigation for allegedly having awarded public contracts in exchange for kickbacks. It represents just the latest in a series of scandals linked to Sánchez’s close circle, including the country’s attorney general and allegations against his wife and brother.
New faces, old challenges
Sánchez came to power in 2018 following a successful vote of no confidence in the Spanish parliament against his predecessor, Mariano Rajoy. The two leaders come from opposite sides of the political spectrum – but the same existential threat that faced Rajoy now faces Sánchez.
By international standards, and even those of southern Europe, Spain should still be considered a market where companies can operate unobstructed from corruption and bribery pressures. There is nuance to this, of course. Construction and infrastructure contracts, key to the corruption that brought down Rajoy and jeopardises Sánchez’s government, remain weak points.
Spain’s traditional two-party system, highly devolved planning and contracting powers, and a normalisation of practices that tread a fine legal line have all undermined efforts to raise standards.
The normalisation of dubious legal practices presents a particularly complex challenge to international companies seeking to operate in Spain.
When one of our northern European clients came to Control Risks for help understanding the business integrity of a prospective EPC contractor, our sources praised the contractor for having good ties to local public officials, often cemented through dinners. The ambiguity of these practices under Spanish law was unacceptable to the client, who instead had a zero-tolerance approach. Such examples highlight the ongoing tension between local business norms and international compliance standards.
Raising the bar
International-facing Spanish businesses have, by and large, taken great strides to improving their compliance culture and controls vis-à-vis corruption and bribery. This evolution has been instigated in part by the 2010 reform of the Spanish Criminal Code, which introduced corporate criminal liability for certain offenses –including bribery and corruption – committed by employees or legal representatives, whether in the public or private sector.
A further milestone came in 2015 with the introduction of Article 31 bis 1, which provides companies with a legal avenue to mitigate or even avoid criminal liability for offenses like bribery and corruption. Under this provision, organisations can defend themselves against charges if they can demonstrate the existence of an effective compliance programme specifically designed to prevent and detect the offenses in question. This framework has incentivised Spanish businesses to adopt more robust compliance cultures, aligning with international best practices and reinforcing their resilience against legal and reputational risks.
As a direct consequence, our intelligence and forensics teams are often tasked to assess the compliance culture that exists in multinational Spanish groups. This includes how effective controls are in preventing corruption and bribery across the company’s global structure. For example, a recent examination of one global-facing Spanish group uncovered robust processes on paper but also allegations of bribery by a manager in South America.
Spanish law considers the fact that lone-wolf acts of corruption are harder to prevent. As such the legal – by extension, reputational – consequences and costs of these isolated incidents are typically lower than institutionalised practices. It is critical for companies to focus on these structural problems when assessing a prospective investment target or key commercial partner. The resolve and commitment to implementing and continuously improving anti-bribery and corruption programmes falls on leadership. Understanding their motivations and priorities should form a core part of any major third-party due diligence process.
Moving out of the shadows
Another key takeaway from the scandals currently affecting the government is the obscurity around using intermediaries or lobbying services in Spain. Structural reasons, including a lack of strong regulations and independent oversight, are largely behind recurring incidents. In 2024, Europe’s anti-corruption watchdog GRECO reported Spain had made little progress on its 2019 recommendations, including around lobbying legislation.
On 9 July, Sánchez set out 15 anticorruption measures in response to the latest scandal. These include requirements that businesses have anticorruption compliance systems in place when working on public tenders and internal channels that protect the confidentiality of employees when reporting corruption.
Meanwhile, parliament is scrutinising a new law on a national lobbying register. However, in its initial draft, the law only proposes application only at the national level. This creates inconsistencies with regional lobbying, which, due to Spain’s quasi-federal system, is more common than in other European countries. The law also lacks details on specific training for lobbyists, which is required in other comparable countries.
Businesses need to engage with Spain's government – and most do operate through legal routes. However, the lack of structure to lobbying in Spain makes it imperative that businesses carry out internal training of their staff on the legality of engaging with officials as well as regular internal and external audits.
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Article written by: Tom Arnold