Spanish Court Places Leading Spanish Bank BBVA Under Formal Investigation in Villarejo Inquiry

On July 30, El País reported that the Audiencia Nacional, a Spanish court with nationwide jurisdiction, has launched a formal investigation of multinational Spanish bank BBVA.  The investigation is part of the long-running investigation that Spanish authorities have been conducting regarding former Spanish police commissioner José Manuel Villarejo Pérez.

Villarejo is reportedly “at the heart of an espionage network spanning two decades’ worth of phone taps, undercover recordings and other invasions of privacy against scores of politicians, business leaders, judges and journalists.”  According to the New York Times, he allegedly “worked an illicit and lucrative sideline for years as a secret fixer for Spain’s rich and powerful, who they say used his services to spy on their rivals and smear their enemies.”

In connection with those allegations, the investigation of BBVA is focusing, at Spanish prosecutors’ request, on alleged bribery, disclosure of secrets, and corrupt business practices.  In particular, prosecutors believe BBVA “to have employed the services of a company run by Villarejo to secretly spy on rivals and on officials from the construction giant Sacyr, which launched an unsuccessful takeover bid for BBVA in 2004.”

The prosecutors have argued to the investigating judge that “BBVA hired and made illicit payments to Grupo Cenyt, which Villarejo owned, “affecting several sensitive areas of the bank and various executives for a prolonged period of time.”  They want to investigate “whether BBVA hired Cenyt to spy on individuals with the goal of obtaining information about Sacyr,” which allegedly sought to oust former BBVA Chairman Francisco González in 2004 and 2005.  Previously, the investigating judge had expanded his investigation to eight former BBVA employees.

In response to the reports of the BBVA investigation, BBVA Chief Executive Onur Genc stated that BBVA had been strengthening its internal compliance controls and would “continue to do so,” and was treating the allegations “very seriously.”  He also reiterated BBVA’s “’firm commitment to clarifying the facts and complying with the law’, adding that BBVA’s internal investigation could follow new lines.”

Note: If BBVA is now conducting an internal investigation, as Genc’s remarks indicate, it needs to move quickly in getting a complete and accurate picture of any involvement by BBVA executives and employees in the alleged misconduct.  Under the Spanish Criminal Code, corporate entities can be held criminally liable for certain specified crimes such as bribery, corruption, fraud, and money laundering.  If the allegations concerning Cenyt can be proved, the bank would not be able to avail itself of the “adequate procedures” defense, similar to that in the United Kingdom Bribery Act 2010, to corporate criminal charges.

BBVA should also look beyond the internal-controls improvements that Genc mentioned, and strengthen other aspects of its compliance program to emphasize its commitment to a culture of compliance.  Both the Spanish Supreme Court and the Spanish Public Prosecutor’s Office have stressed the importance of companies’ maintaining a culture of compliance, and the bank should be prepared, before it is charged with criminal conduct, to show prosecutors (as well as the media and the public) that that commitment is genuine.

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