Layoff-scam judge accuses labor unions of complicity in massive fraud

The judge investigating the so-called ERE case in Andalusia, Mercedes Alaya, has accused leading labor unions CCOO and UGT of profiting from the slush fund set up by regional government employees that drained money meant to help companies in financial trouble to meet the severance pay of workers laid off as part of a labor-force reduction plan (ERE).

It is alleged that some 136 million euros of public money was embezzled by high-ranking regional government officials between 2001 and 2010. The case has so far netted some 80 suspects including two former Socialist labor chiefs in Andalusia and the former directors of the Eurobank group, whose subsidiary, Vitalia, was responsible for processing layoff applications submitted to the regional government. It is alleged that the suspects employed a system of awarding early retirement packages and grants to individuals and firms who did not qualify for assistance.

Now, Alaya has accused the very institutions whose job it is to protect workers' rights of complicity in the racket.

"The unions, in addition to membership fees and public subsidies, during a decade also found another formula in Andalusia for irregular financing." According to the judge's report, Vitalia and its partner companies Uniter and legal firm Estudios Jur¨ªdicos Villas¨ªs, paid 7.6 million euros in commissions to UGT and CCOO in "periodic payments that do not correspond to any definitive service."

There is no scheme to bring about EREs or receive money for the benefit of UGT"

Alaya laid out these findings last Tuesday in her detention order for Uniter chairman Jos¨¦ Gonz¨¢lez Mata, who said the payments were made to the unions for their work as intermediaries in processing EREs, above all for their actuarial calculations. Alaya also questioned the former chief of Vitalia, Antonio Albarrac¨ªn, who also said the unions carried out actuarial work and were paid a commission of 0.5 percent from the money allotted by the regional government to cover the ERE.

"It's not just in Andalusia - this happens in all of Spain," said Albarrac¨ªn, who added that the payments to the unions were "a genuine pressure tool" and that if the fee was not paid "the unions go in person to the company and say they will not sign off on the restructuring agreement."

UGT and CCOO deny Judge Alaya's allegations. "There is no scheme to bring about EREs or receive money for the benefit of UGT; we are not fixers or intermediaries, nor do we form part of a group whose objective is to feather our own nest," the Andalusia UGT said.

CCOO also responded on Thursday. Francisco Carbonero, secretary general of the union in Andalusia, said it had not received "a single euro for anything illegal. The state federations of CCOO that have invoiced for any service have done so legally and declared it to the corporate tax authorities."

Placing Gonz¨¢lez Mata in preventive custody on 600,000-euro bail, Alaya described the Uniter chief as "one of the principal participants in the looting of Andalusia's coffers, with the circumstantial connivance of the unions and public office holders in the regional government."

The judge alleged that Gonz¨¢lez Mata is the author of a series of financial crimes based on the payment of unnecessary commissions, adding that he acted in cahoots with former regional employment chiefs, Javier Guerrero and Juan M¨¢rquez, plus Antonio Fern¨¢ndez, a former director of the Andalusia Development Institute. All three men are in prison awaiting trial.

Alaya stated that Gonz¨¢lez Mata's companies - Uniter, Ingotor and Cure?a - received 32.9 million euros of regional government funds, of which 20 million came through overcharging for commissions. Gonz¨¢lez Mata said that he worked "under considerable pressure, because in many cases the regional government demanded the policies be agreed before the elections.