The Mayor of Cantoria, Pedro Llamas (PP), has been condemned to two years in prison and one year and six months of disqualification for falsifying a public document, according to the judgement of the Regional Courts in Almeria , made known yesterday.
The trial, which took place last week, saw the Mayor of Cantoria in the dock for the construction of four illegal houses, for which the ‘town hall was paid 300 Euros’, according to the promoters, which were provided with electricity and water despite being located on non urbanisable land. The Mayor admitted during the trial that he had conceded authorisations ‘for humanitarian reasons’, but argued that the documents issued by the council were ‘neither licences nor certifications’ but ‘merely authorisations’
Bankia receives 23,500 million euros
The new management of the nationalised bank decided it needed 23,500 in new capital; the government has agreed to supply the funding. The share value of bank has nose-dived over the past month, from 2.30 euros on 30th April to 1.08 on Wednesday.
The bank is not expected to pay any dividends to its minority shareholders.
Adicae, the association of users in banks, have protested against the decision and have warned they will reiterate their objections at the shareholders general meeting on 29th June.
2,200,000 children live in poverty
UNICEF reports that 2.2 million children are now living below the poverty level, 53% more than only 3 years ago, resulting in low quality nourishment and relationship problems between the children and their parents. Of the 27 countries in the EU only Romania and Bulgaria have higher levels.
Valencia closes public companies
Valencia Regional government has ceased trading in more than half of their 66 public companies hoping to save 834 million euros over the year. The number of employees has been reduced from 7,555 to between 3,700 and 4,500.
It is known in Himalaya!
I happened to read ‘The Himalayan Times’ the other day and found the following notice about Spain:
‘Spain is in deep trouble, even disregarding any backwash from Greece. The wealthiest autonomous region Catalonia, on Friday said it needed help from the central government because it was running out of options for refinancing it’s debts this year…’
Banks own the Costa del Sol
Half of the dwellings for sale on Costa del Sol are owned by a bank. According to Aguirre Newman (real estate consultants) of the 22,127 properties being offered for sale, 10,300 are owned by banks. In spite of prices falling 12% this year, it is almost impossible to find a mortgage unless the purchase is from a bank.
The number of mortgages agreed in Spain fell 42% in March. This is the 23rd consecutive month the mortgage market has fallen.
Fewer tourists in April
4.2 million foreign tourists visited Spain in April; 17% down on last year. Tourism from the United Kingdom and the Nordic countries saw the biggest falls, whilst the number of tourists from France and Germany increased.
Tourist spending fell 4.3%, not only due to a reduction in the number of visitors, but also shorter stays.
Unemployed for more than 3 years
The number of people out of work for more than 3 years increased 43% in 2011 to a total of 704,900. Of the 4.58 million jobless in this year, 2,390,700 became unemployed because their contract ended.
Retail sales down 9,8%
Retail sales dropped 9.8% in April from same month of last year. The fall is the 22nd monthly decline.
94 % of Directors accept bribes
An investigation by Ernst & Young found that 94% of Spanish company directors accept bribes to get orders, against an average of 56% for Europe. 34% consider the corrupt practice to be ‘normal’ against 22% in Europe.
Oil crisis in Spain
Olive oil consumption has fallen during the crisis, as too has the price. Spanish premium olive oil has fallen to 2,900 $ per ton, the lowest since 2002 and down more than half from the almost 6.000 $ per ton in 2005.
Russian Mafia benefited from corruption in Casares
The Russian mafia was the main “customer” of the network of money laundering and urban corruption allegedly led by Juan Sanchez (IU) the former mayor of the town of Casares (Malaga).
In an operation led by the anti-corruption prosecutor, nine people have so far been charged, including the former mayor and his wife, the municipal architect and several
lawyers. Sanchez has been in jail since Tuesday of last week. The mafia had allegedly created a complex network of more than twenty overlapping companies and were in charge of laundering money obtained from obtained from organised crime.
By ‘leveraging’ the real estate and construction boom experienced on the Malaga coast in previous years, the Kremliovskaya clan of the Russian mafia would have laundered millions of euros obtained through large-scale drug trafficking, say the police.
The Guardia Civil has been investigating suspicious transactions detected in the municipality of Casares since 2008, coinciding with inquiries from the National Police on money laundering by the Russian mafia based on the Costa del Sol.
So far, a massive 236 homes and 19 vehicles have been seized and 165 accounts in some twenty different banks have been frozen. The investigations remain open and further arrests and seizures are not ruled out.
As long ago as 2007, PSOE presented to the anti-corruption prosecutor complaints regarding the alleged illegality of various planning agreements by Town Hall and its then mayor Juan Sanchez.
In late 2004, the municipality allegedly approved the awarding of contracts without competition and the sale of three farms without proper public auction, to the developer Majestic Construction and Development, now known to be a front for the Kremliovskaya clan.
The crisis of the week:
Spain was a hairs breadth from financial collapse on Monday, when the country risk rose to 513 points, and the interest rate on 10 years bonds touched 6.40%. On Tuesday the tension increased, with the country risk touching 515 points and the interest rate 6.50%. And on Wednesday morning the risk was close to 520 and the interest rate 6.526, a historical record.
Even after the Government promised the nationalised bank Bankia a total of 23.5 billion euros in new capital, the bloodletting on the stock exchange continued. Bankia shares, which had a value of almost 4 euro one year ago, dropped to 1.139 on Tuesday afternoon. However. Japanese investment bank Nomura value the share at only 0.20 euros and JP Morgan valued them at 0.31. The revision of the accounts of the mother bank BFA shows 42.785 million euro in toxic assets
Prime Minister Rajoy has categorically denied the possibility of asking for help from the European Rescue Fund for Spanish banks. Foreign Minister Margallo was less forthright, when declaring: ‘It is not determined..’
If not rescued by Europe, Spain will have to raise the funds for Bankia (and other banks about to collapse) on the international money markets at a time when it’s borrowing costs have jumped. A government source said the Bankia rescue would affect both public debt level and the deficit
Aurelio Izquierdo, Financial Director of Bankia and the right-hand man of Jose Luis Olivas (President of the Valencia Government and Bancaja and Vice President of Bankia) got a golden-handshake of 13.91 million euros for assisting to drive the banks into limbo
A court in Madrid has opened proceedings against the Governor of the Banco de Espaňa, Miguel Angel Fernandez Ordoñez, and the Ex-Presidents of Bankia, Rodrigo Rato and Caja Madrid, Miguel Blesa. Fernandez Ordoñez been forced by Prime Minister Rajoy to leave his post
The Euro Group has agreed that each of the member countries must prepare a contingency plan for the possibility of Greece leaving the Euro. The European Central Bank and the state banks are following the example.
It is estimated that the impact on the markets will amount to one billion euros
According to the Financial Times, the European Central Bank has refused the Rajoy plan to use the money in the European rescue fund to save the Spanish banks
Catalonia has asked for financial rescue from Madrid. President Mas has asked for assistance in meeting pending payments and the re-financing of the region.
Foreign investment in Spanish debts is declining and is now 213.428 million euros, 24.1% lower than at the end of last year, and the European Central Bank has not recently bought Spanish debt
The IBEX fell 2,34% on Tuesday, to 6,251 points.
Thinking the unthinkable II. By Per Svensson
Last week a sixty year musician and his ninety year old mother leapt to their deaths from their 5th floor apartment in the centre of Athens. On the Internet the son had left a message describing their impossible financial situation, adding, “the economic crisis came about so fast I didn’t have the foresight to save enough money… we no longer can afford to eat… Is it possible to live this way?…. Do any of you know an answer? “
Any answer came too late for him, and many other Greeks who over the past months have taken their own lives as their personal way out of the crisis. In a country which had one of the lowest suicide rates in the world, in the first four months of the year, the number of people voluntary seeking their death has risen 40%, compared with 2011. In Greece, the crisis is not only financial; it has become a grave social crisis, comparable to the crisis that shook the world in 1929.
‘It cannot happen here’
I am sure most of people think what happens in Greece cannot happen in their country; that the bank where they have their savings is safe as a rock; the pension fund or system sending their monthly check is watertight…..
If anything has been proved during the economic crisis of the past years, it is that the crisis can spread to almost any country. You remember Spanish Prime Minister Rodriguez Zapatero asking in June 2008: ‘Crisis, what crisis?”
Portugal has been hit, as too Ireland and Iceland; Spain and Italy are in grave danger, Belgium and France are under thunder clouds…….
Sometimes it may not even be your country that is being drawn into the maelstrom, but the country where you have been working and which you expect will pay you a pension for the rest of your life. Or maybe the country in the south where you bought a second home for you retirement, with a mortgage on the first home?
Banks safe as rocks?
It is almost like a joke to talk about the solidity of Spanish banks. Many of them have gone bust, been swallowed up by bigger banks or merged under a new name, but nevertheless with the same hole in their solvency, created by the property bubble. There is no bank without bad loans from the period of greed.
Now the new stress test of the Spanish banks, demanded by the European Commission and with foreign experts scrutinizing the size and value of the property assets, has commenced. An indication of what they will find, is illustrated by the sudden nationalisation of Bankia, so rotten that they needed 23.5 billion euros from the government to survive.
We were mistaken
In my first warning to our readers of the approaching crisis, I predicted a fall of 20 to 40% in property prices, but not that the property crisis would develop into a social crisis similar to the one which shook the world in the thirties. I have been proved shortsighted, the social crisis is here, most articulated in Greece, but also unfolding in Spain, Portugal and in other countries.
The time has come for each of us to consider our situation. Sit down and ask yourself the following questions:
- Is my money safe in the Spanish bank where I have it ?
If it is a sizeable sum and you cannot answer with a definitely YES, I would recommend you move it to your home country, or a stable third country.
You may also consider taking Euros in cash out of the bank and placing them
in a strong box at home, waiting for the crisis to pass.
- Can I be sure that my pension is safe and will under any circumstances be paid ?
If you are not completely sure, consider if there are any ways to ensure some additional income during the social crisis ahead of us, like a modest, safe investment or part-time work
- I want to stay put in my Spanish home, but fear rising cost, what to do?
You may consider to selling your home to a private buyer at a low price and use the proceeds to rent a dwelling. Rental prices are falling now.
- Can I be sure to get my health problems attended to in Spain?
To make sure you must have a residence permit, even then you may be asked to pay part of the treatment and medicine costs. Find out what the situation is in your local health centre.
- What can I do if my bank account is blocked, my pension is not paid or the Euro System breaks down?
Buy today some small denomination gold Kruger Rands and put them in a safe place. Paper money may be without value, but the small gold coins will always assure you what you need to survive.
Reserve a part of your garden or buy/lease a small pad of agricultural land and prepare to grow potatoes and vegetables.
Do not be unprepared, think the unthinkable!
The value of guarantees in Spain
This is the sad story of a group of foreigners investing their savings in a scheme to get their dream home in Spain at an affordable price. They bought on plans, thrusting that the Spanish law would protect them.
Press Release:
FINCA PARCS ACTION GROUP vs CAJA DE AHORROS DEL MEDITERRÁNEO (CAM BANK) & SPANISH DEVELOPER, CLEYTON GES SL
FINCA PARCS ACTION GROUP
● No legally required Bank Guarantees for Off-Plan deposits totalling 1.5 million Euros
● Lawsuit against CAM Bank & developer Cleyton GES SL filed in February 2011
● First Instance Court Preliminary Hearing held on 12 January 2012
● Trial commenced Monday 21 May 2012
OUR MISSION
To recover our Off-Plan Deposits paid in good faith to Cleyton GES SL & Caja de Ahorros del Mediterráneo (CAM Bank), which according to Spanish Law, in particular, LEY 57/68 Article 1.2, „must be deposited in a Special Account, with separation from any other funds belonging to the promoter, which may only contain funds deposited for the construction of dwellings. For the opening of these accounts or deposits the Banking institution or Savings bank (in this case CAM Bank), under its responsibility, will demand the bank guarantee to which the previous condition (Article 1.1) refers”.
THE EVE OF THE TRIAL
The trial scheduled to last 4 days commenced on Monday 21 May 2012 in the First Instance Court in Hellín following the filing in February 2011 of a 1000 page Lawsuit against property developer Cleyton GES SL and the sole financial entity of the project, Caja de Ahorros del Mediterráneo. The Lawsuit was filed in order to recover 1.5 million Euros of off-plan deposits paid to CAM Bank between 2005 and 2007 by FINCA PARCS ACTION GROUP members, in relation to their Sales Contracts for the Las Higuericas Finca Parcs development.
On the eve of the trial Juan Munoz, the lawyer representing developer Cleyton GES SL explained that:
“Cleyton GES SL is now in negative equity caused by different factors including lack of support from the financier of the project, CAM Bank”. Munoz says that although they will continue fighting for the ‘continuation of the project’, the current economic situation means they cannot fund the completion of infrastructure works or to fulfil the agreement with the Hellín Town Hall.
For this reason, he added, Cleyton GES decided “to seek a partnership formed with several partners and companies with a proven financial solvency and extensive experience in the construction sector”.
Cleyton GES also regret that, “CAM did not want to discuss the future of the project and therefore does not have any respect for the rights of the buyers. Cleyton GES hoped to expose those company representatives and despite everything hoped to reach a negotiated solution with “all sides lowering their claims to obtain an overall benefit”. In response, Keith Rule, co-ordinator of Finca Parcs Action Group stated: “We have suffered extreme stress and heartache over the past 5 years due to the actions of Cleyton GES and CAM Bank
PROTEST
At 9:30am on Monday 21 May, 70 members of the Finca Parcs Action Group held a peaceful demonstration outside the CAM Branch on the Gran Via in Hellin. They held banners and placards demanding the return of their money and calling for the law guaranteeing these amounts to be enforced. The banner also quoted the words of the Bank of Spain Governor which described CAM as ‘Scandalous’ and ‘The Worst of The Worst’.
From there they marched in an orderly manner to Hellin’s First Instance Court where they held a further peaceful protest prior to the commencement of the trial.
THE TRIAL – DAY ONE
The trial began at 10:45 with the presiding judge Consuelo Romero. The claimants, members of Finca Parcs Action Group were represented by Jaime de Castro. The defendants were represented by Pablo Toran for CAM Bank and Juan Munoz for Cleyton GES SL.
The first session allowed each of the parties to state their position. Although miles apart the positions are quite clear. Finca Parcs Action Group consider that all the promotional material and contracts confirm that the corresponding Bank Guarantees should have been issued by CAM as they did for other buyers in the project who had paid deposits to the same accounts. As no house was delivered both defendants should be made liable.
For Cleyton GES SL, its current owner, Pedro Jimenez Penalver explained that the company he took over about 3 years ago intended to finish the work and deliver the houses. He stated that he did not know what happened prior to his involvement in the company and therefore as the contracts subject to this litigation were signed between 2005 and 2007 he could not answer most of the questions put to him. The most repeated phrase in his testimony was ‘I have no idea’.
OBLIVIOUS
In the case of CAM their argument was that they have honoured Bank Guarantees which they issued to some buyers, but they have no relationship with members of the Finca Parcs Action Group as they did not formalise a contract of guarantee with the Bank.
One issue that gained most attention during the session was that of Bank Accounts. CAM’s Lawyer insisted that, by law, the amounts paid in advance for off-plan property should be deposited in a special account and the funds should be used exclusively for the building of the houses. But he said that Cleyton GES operated 3 accounts at CAM, two of which were ordinary current accounts and that legally bank guarantees can only be issued on money paid to the special account.
However, Keith Rule, who testified for the victims insisted that they were told by Cleyton GES that the 3 accounts were special accounts and in fact 200 Bank Guarantees were issued to other buyers in the project who paid into the same bank accounts as members of the Finca Parcs Action Group. Furthermore the 3 accounts were described as Cuenta Corriente Especial (Special Accounts) on each of the Bank Guarantees issued to other buyers.
Julian Herrera, asset manager of CAM, stated in his testimony that although the accounts may have been called ‘Special’ on other Bank Guarantees, the fact is that “there is only one special account for this promotion and the other two are just ordinary accounts”. He explained that CAM did not receive a request for Bank Guarantees from any of the victims and said that although the Sales Contracts stated that the Bank Guarantees would be issued by CAM, this did not make CAM liable to issue them.
He also confirmed that CAM demanded repeatedly that Cleyton GES transfer buyer’s deposits from the ordinary accounts to the special account, to avoid prejudicing the buyers. He stated that CAM was oblivious to the transactions going through the ordinary accounts.
Jaime de Castro, representing the members of Finca Parcs Action Group stated that although the Special Account was opened in November 2005 the account remained with a zero balance and was not used until June 2007. However, by the time of the first credit into the Special Account on 13 June 2007, CAM had already issued Bank Guarantees to other buyers on the development during the period November 2005 to May 2007 which amounted in value to over 4.5 million Euros.
Of the three persons who testified during Monday’s session, the one who spoke most strongly was Keith Rule, the co-ordinator of Finca Parcs Action Group who himself paid more than 50,000 Euros to CAM. With the help of a translator, he insisted that group members were encouraged to reserve at Finca Parcs due to the promise on all the promotional material and in the contract of Bank Guarantees issued by CAM, who at that time were described as the 4th biggest savings bank in Spain.
The Judge decided with the agreement of all parties that after hearing the testimony from one claimant it was not necessary to repeat a similar questioning of each of the buyers. So the other 46 applicants did not have to testify.
THE SURPRISING OFFER “Would you accept a house from the ones that are built instead of money”
THE REPLY “We cannot trust any of you as we have been robbed and cheated for many years”
Juan Munoz, Lawyer for Cleyton GES, at one point in the interrogation of Keith Rule offered to the victims the possibility of existing houses instead of a refund. Mr Rule was especially forceful in responding to this offer, as he said that Cleyton GES and CAM have ‘stolen the money’, lied ‘over and over again’ throughout the years, violated Spanish Law and its own promises therefore we cannot trust you anymore.
Jaime de Castro responded on behalf of the victims by saying, “Cleyton GES cannot offer these properties simply because they are no longer yours to offer”. In his view the bank and developer have the “same level of responsibility” in this matter.
Pedro Jimenez Penalver, manager of Cleyton GES said that in Las Higuericas Finca Parcs, where he was planning to build more than 600 houses, that after 7 years there are 73 houses finished, and ‘seventy-something’ to which only needed 10 to 15% more work to complete. He also indicated that the urbanisation infrastructure is complete to around 75%-80%, and that the reason that no property has a Licence of First Occupation is because there was no way to solve problems such as the high tension electric cable which runs through the site for which Iberdrola should have carried out an environmental impact study and which was not done. He also criticised the attitude of CAM who took possession of the houses “which were the property of others”.
“CONFIDENCE IN SPANISH JUSTICE” – Keith Rule, one of the victims, who acted as spokesman for the Finca Parcs Action Group, together with their Lawyer Jaime de Castro insisted that they trust in Spanish Justice and that their legal rights will be upheld. “The buyers, said de Castro, trust in the Spanish courts and I will also say that the Bank will respond if they are sentenced to do so. Even in these times where there is so much distrust, to favourably resolve a case like this can be good for the image of Spain around the world”.
THE TRIAL – DAY TWO
On day two several witnesses appeared to testify and each of the three parties to this case delivered their conclusions.
THE LAWYERS
JAIME DE CASTRO for the FINCA PARCS ACTION GROUP
Calls for Cleyton GES and CAM to jointly refund the money
JUAN MUNOZ for Cleyton GES SL
He stressed that the firm is willing to continue the development
PABLO TORAN for Caja de Ahorros del Mediterraneo (CAM)
He claims that CAM has no direct relationship with the plaintiffs and owes nothing……
The trial of Las Higuericas Finca Parcs was completed on day 2, in half the time originally planned.
The plaintiffs, who claim their money was deposited in Cleyton GES accounts at the funding entity CAM, confirmed their evidence and must now wait for Judgment.
The three hours of Day 2 of the trial began at 10:30 with the witness testimony of Enrique Ros, representative of the company Lauara Europea SL (the company that has agreed to take over the obligations of completing the project).
Then ex-employees of Cleyton GES SL were called to testify. The first being Antonio Jose Veas Arteseros, who worked for Cleyton GES from 2004 until April 2009. He said that CAM was fully funding the project and fully endorsing and paying for everything relating to the urbanisation. His involvement with the Bank Guarantees was to send an application to CAM for each of the contracts.
All the witness interrogations, except for that of Patricia Ramos Calderon, architect from the Hellin Town Hall, focussed on the CAM bank accounts to which the buyer’s deposits were paid.
Gerardo Cantore, sales manager of Cleyton GES from 2004 to 2009 revealed that in relation to the Bank Guarantees he went to the CAM offices in person with two lawyers, “because first CAM said one thing and then changed their criteria”
Ramon Ramiro Mauleon, another ex-employee of Cleyton GES from 2001 to 2009 said that “when he initially presented the project to several banks, CAM agreed to fund the project in totality. Banks were queuing to fund the project”.
Fernando Martinez Hernandez, an employee of CAM confirmed that he was the business manager at the Branch in which the Cleyton GES accounts were operated. He confirmed that CAM issued Bank Guarantees for deposits which were not necessarily paid to the special account.
When shown copies of several Bank Guarantees, many of which he had signed, from the 200 that CAM had issued on the development for deposits paid to the same accounts as those deposits paid by members of the Finca Parcs Action Group he said he did not know why this happened and why on each bank guarantee the 3 accounts were described as ‘Special Accounts’.
Furthermore, Fernando Martinez, when shown several bank account extracts, was unable to explain why CAM authorised many withdrawals from the Special Account, in complete contravention of the requirements of LEY 57/1968 including a cash withdrawal in excess of 80,000 Euros.
He added that none of the buyers ever demanded Bank Guarantees directly with CAM and that this issue was only managed between the developer and the buyers.
When questioned he ‘could not remember’ receiving emails from Keith Rule in 2008 demanding CAM to issue Bank Guarantees nor ‘could he remember’ ever seeing Keith Rule or any other buyers at his CAM Branch to demand the Bank Guarantees in person.
Patricia Ramos Calderon, municipal architect, who had visited the site, stated that according to the environmental impact Law of 2007, there was a requirement for the removal of the high tension electricity cable running through the development, which was the obligation of the developer and that no First Occupation Licences could be issued until this was done.
The final witness was a representative from the electric company, Iberdrola. However, during the first question the Judge intervened to state that it was not necessary to question this witness as nothing he may say would affect the case.
After a break of 5 minutes, Jaime de Castro, Lawyer for the Finca Parcs Action Group delivered his conclusions in which he sated that “due to bad practices my clients have been harmed”. He argued that the actions of the Bank and developer must not affect the buyers and that all 3 accounts were presented as special and that it was always understood that deliveries to these accounts must have the corresponding Bank Guarantees, by Law.
He stressed that the involvement of CAM in the project was so intense, something that he had demonstrated since the beginning, that Cleyton GES and CAM “should be condemned jointly and severally” to repay the sums paid by the purchasers that never received their homes.
CAM’s Lawyer, Pablo Toran, argued just the opposite. He said Cleyton GES bore responsibility, accusing it of not fulfilling its commitments, especially when it came to handling money from the promotion in the special account and ordinary accounts. He pleaded therefore that CAM be absolved of any liability in this case, insisting that the plaintiffs did not have any contractual relationship with CAM.
In his concluding speech Juan Munoz, Lawyer for Cleyton GES SL said that there are available sufficient financial means to continue with the urbanisation and to fix the problem of the high tension Iberdrola electric cable. He opposed both the demands for contract cancellation and for refunds. He insisted that Cleyton GES ‘wants to move on’…………..
The trial was completed in 2 days and now sentencing is awaited which in principle may be delivered within 20 days.
Following the conclusion of the trial, Keith Rule, co-ordinator of the Finca Parcs Action Group comments:
“Our relationship with CAM is not primarily derived from the contract, but from the Law, LEY 57/1968. For the opening of the Special Accounts CAM must be vigilant. CAM is responsible for ensuring that all payments to the promoter for the construction of housing is credited to the special accounts, without deviation.
CAM was the sole financial entity of the Las Higuericas Finca Parcs project and received all the off-plan deposits though it’s branch in Murcia.
We must not suffer any prejudice or harm due to the failure in the relationship between CAM and Cleyton GES SL nor as a result of CAM’s negligence and lack of due diligence particularly in respect of its complete failure to observe the requirements of LEY57/1968.
There has been a fraudulent use of our off-plan deposit money which amounts to 1.5 million Euros and CAM has been a party to this fraud over a 5 year period.
CAM failed to control, supervise or audit the activities of Cleyton GES and this is evidenced by the fact that they allowed and authorised illegal withdrawals from the Special Account.
There has been a complete failure by both defendants to observe Spanish Law, in particular LEY 57/1968.
In approximately 25 court judgements during the past 2 years Cleyton GES has been declared as ‘Whereabouts Unknown’. However in this case, not only did they defend our Lawsuit but actually appeared in person at the trial.
We are the innocent victims of this corruption and we are confident that a verdict will be delivered condemning both defendants jointly and severally liable for the refund of our deposits, together with legal interest and costs.
Only then will it be possible for us once again to have trust and confidence in Spain.
We now await the verdict with interest.
The Telegraph: Sun setting on expats’ Costa dreams.
As the financial crisis in Spain deepens, British expats are finding that life is becoming increasingly hard.
By Maxine Frith, Nerja
8:57PM BST 26 May 2012
It was sundowner time at the Cantina tapas bar in the picturesque village of Frigiliana, a few miles inland from the Costa del Sol town of Nerja.
Inside, local men were watching bullfighting on television and smoking cigars in quiet contravention of the smoking ban. Outside, expatriate Britons were discussing the vagaries of living in Spain while downing glasses of tinto de verano, the popular summer drink of red wine and lemonade.
Mark Jones, who runs his own gardening and pool maintenance company, had spent two days queuing at the local municipal office to renew his residence permit.
„I got there at 9am on the first day and my number was 26; by lunchtime they were only up to number 6 and they close at 2pm,” he complained.
„You have to renew every bit of paper here every few years but I can’t afford two days off to queue in an office. There are no staff now because of the cuts, so it all takes longer. It’s like everywhere – as soon as the recession hits, it’s the immigrants who cop it worst.”
Conversation turned to a local couple, who are desperate to leave Spain but who can’t because their house is still unsold after four years on the market – despite dropping the asking price from €1 million to €750,000.
In 1992 the BBC spent millions of pounds launching an ill-fated soap opera, Eldorado, following the fortunes of British expats on the Costa del Sol. The project flopped and was cancelled a year later. Now, 20 years later, the real-life diaspora is experiencing an equally disastrous end to its Iberian dream.
Times are desperate in Spain. More than a million people took the streets earlier this month to protest at budget cuts, 24 per cent unemployment and the rising cost of living.
The price of milk and bread has risen by 48 per cent during the last year, according to a recent study, and of potatoes by 116 per cent.
Electricity bills are up 11 per cent while property prices are in free fall; they have declined for 15 consecutive quarters and are 41 per cent lower than in 2006. ………..
………..Expats are finding life hard in a country where they once basked in a cheaper way of life. Around one million Britons spend part or all of the year in Spain, but thousands are now returning home – and more want to, but say they can’t afford to because their property is no longer worth what they paid for it.
For the first time since 1998, Spain recorded a drop in foreign residents last year, according to newly released figures.
With its narrow cobbled streets, whitewashed houses and children riding horses down the main road, Frigiliana lives up to most tourists’ idea of an authentic Spanish village.
But appearances can be deceptive. Out of its 3,000-strong population, 1,280 are foreign nationals including 700 Britons, making the village one of the most expat-dominated in Spain. The school advertises itself as bilingual.
The British population is so large that the local council pays Kevin Wright, a former travel rep from Leicestershire who has lived in Spain for more than 20 years, to run a „foreigners’ department”.
He helps expats deal with everything from local business permits to burst pipes and land disputes with neighbours, and has noticed changes since the eurozone crisis began.
„Before, I was getting 10 newbies a week moving here from the UK; now I get one,” he said. „Some Brits have lived here for 20 years but now families move out here then six, eight months later pack up and go back because they can’t find work, or didn’t realise what the cost of living would be.”
Mr Wright says many Britons fail to learn Spanish or to assimilate, so that the community becomes dependent on itself – to its cost.
„People think they can set themselves up doing business to other Brits, like finance or house sales and rentals, or pool maintenance, gardening and cleaning.
„But the property market isn’t there any more and people have cut back and do their own maintenance, so there’s less work.”
In desperate economic times, the expat community is increasingly vulnerable to financial trickery.
„The worst people for scamming you are other Brits,” said Gary Smith, a builder, who emigrated two years ago. „You trust them more but they just take your money for an investment and you never see a penny.”
Elderly residents are particularly vulnerable. The exchange rate – still far less favourable than five years ago – has meant British pensions and other income in sterling do not stretch as far as they once did.
Julia Hilling moved from the UK to Fuengirola, along the coast from Frigiliana, 20 years ago with her husband. They bought a spacious, three-bedroomed apartment with two balcony patios in an upmarket area, overlooking the town’s castle.
Six years ago, Mrs Hilling, by then a widow aged 83, was persuaded by an independent financial adviser to take out a full mortgage on the apartment. She was told the equity raised would be invested, risk-free, to provide an income, while the mortgage would help offset Spain’s 34 per cent inheritance tax when she died.
Now 89, Mrs Hilling has never seen any return on her money, owes more than €300,000 to Rothschild Bank on the mortgage and relies on handouts from her children to stay in Spain.
„It’s devastating,” she said. „The man was British, very charming, and said there was no risk. My children said ‘Mummy, please don’t do this’, but I needed the extra income. Now I’m fighting for my life and my home.”
She is one of more than 100 mainly elderly British expats who have banded together in a Spanish court action to have their mortgages voided, arguing they were mis-sold.
Rothschild and several Scandinavian banks also named in the legal action claim the financial advisers are to blame; and the advisers, who are not regulated in Spain as they are in Britain, insist the risk was mentioned in the small print.
In a country fighting for its own survival, Spanish politicians are not unduly concerned with the plight of British residents, particularly when many are retired so do not actively contribute to the national economy.
Spain’s government is currently involved in a dispute with Britain over extent of free health care for Britons under EU law and there are moves to force them to pay 10 per cent of their prescription costs.
But for some, returning home remains unthinkable. Former fitness instructor and gym owner Jo Morrison, 49, moved to Spain from London with her partner Lloyd 11 years ago.
In 2008 she sold her house in Putney so she could open a gym in Nerja but the project failed after her business partner pulled out, and then the global financial crisis erupted.
She now works as a cleaner while renting a one-bedroom home.
„Sometimes we’ve gone without food and I still can’t believe that I don’t have my house or any savings any more,” she said.
„But Spain is my home now. I’d rather sleep on the beach than go back to the UK.”
Mail reported: Fleeing the Costa catastrophe: Thousands hand back their villa keys as Spain’s economy teeters
- Many struggling with their mortgage could be targeted by banks needing to call in bad debts
- But experts are warning of companies offering repossessed homes at knock-down prices
- Fresh fears that savings held in the country may also be at risk
Many of the 400,000 British people living in Spain have been left in financial ruin following the banking crisis. And as the future of the euro is plunged into deeper uncertainty, they are desperate to get back to the UK.
Dennis and Christina Powell have always loved Spain. Over the years they had gone there on holiday many times.
They love its people, culture and climate so much that in 1999, after retirement, they decided to buy a three-bedroom apartment in Torrevieja on the Costa Blanca. It cost them £36,000.
For nine years they escaped the British winter and headed off to their Spanish retreat in the sun.
But in 2008, with the international banking crisis, everything changed.
Suddenly their UK savings and pensions bought a third less after the pound plunged against the euro.
And the property boom came to an end, leaving parts of Spain desolate.
The couple put their once much-loved property on the market — where it remained for more than three years.
They finally sold in February. In that time, property prices slumped by almost 70 per cent — eating into what equity they had built up.
But despite the struggle and the money they have already surrendered, Mr Powell thinks they might have got out just in the nick of time.
‘We had some wonderful times, but our holidays were getting too expensive and I didn’t want to have a home where the property market was in trouble and might take decades to recover,’ says Dennis, 73, a retired airline clerk from Hayes, Middlesex.
Thousands of British expats and second-home owners are fleeing Spain as its economy teeters.
Last week, 15 Spanish banks, and Santander UK, had their credit rating downgraded by agency Moody’s.
Bankia, Spain’s fourth largest bank, became 45 per cent owned by the Spanish government.
Average property prices have plunged by 27 per cent across Spain since 2007, but on the Mediterranean coast, home to thousands of Britons, prices have nosedived by up to 70 per cent.
The country’s biggest banks have huge exposure to the ailing housing market. As much as €170 billion (£138 billion) in property debt looks unlikely to be paid, and huge chunks of this look set to come from mortgages that expats have simply given up on. If Greece leaves the eurozone, the problems could get even worse.
THE HEARTBREAK OF HANDING BACK KEYS
Thousands of expats living in Spain face having their dream homes repossessed because of the country’s economic meltdown.
Many struggling with their mortgage are set to be targeted by banks desperate to call in bad debts.
Expats who are behind on their repayments are seen by local banks as a higher risk than Spanish homeowners and therefore are key targets for repossession.
To avoid this threat, many homeowners who have fallen well behind with their monthly bills are simply handing back the keys before the banks can act.
Many of the 400,000 British people living in Spain have been left in financial ruin following the banking crisis and are desperate to get back to the UK. They have seen a crippling combination of:
- Plunging property prices, which have left many who bought at the top of the market facing negative equity.
- Pitiful UK savings rates that have slashed incomes for those in Spain by a third.
- An exchange rate which, despite recent climbs, is still 16 per cent lower than when many expats bought their homes.
The property boom at the start of the century saw an estimated 750,000 British people buy property in Spain.
Many moved to popular areas such as the Costa del Sol in the hope of a dream retirement.
They typically bought new-build apartments or villas, and often aimed to rent these out to holidaymakers to supplement their income.
Mortgages were cheap and easily available. Thousands took loans with Spanish banks, including Banco Sabadell, BBVA and other smaller regional banks.
As well as mortgages, they also often opened savings and current accounts to take rent payments from guests, and as a way of depositing income from the UK.
These banks are now totally exposed to the growing economic crisis in Spain.
We feel trapped by a lack of buyers
Some expats who want to escape feel trapped because there are so few buyers available. Rob Dawson, 52, and his wife, Ann, 46, are desperate to sell their villa and leave the country.
In 2002, the couple sold their two-bedroom house in Canvey Island, Essex, for £113,000 and moved to Spain full-time.
They used their money to buy a four-bedroom villa with a swimming pool and four acres of land in the village of Barxeta, close to the Costa Blanca. They have spent an extra £80,000 doing up the property.
‘We bought the property as an investment, and we thought I would be able to carry on working in Spain,’ says Mr Dawson, a ceramic tiler.
But as the credit crunch struck and the construction industry ground to a halt, Mr Dawson couldn’t find work and has barely worked for years. The couple are desperate to sell their house, but it has been on the market for more than three years and they have had only a dozen people look at the house.
The asking price was initially set at £235,000, but has gradually been reduced to £150,000.
They also have a Spanish mortgage and are concerned that if the bank collapses they could find themselves struggling further. ‘It’s been hard from day one,’ says Mr Dawson. ‘No one is coming to Spain because of the euro and no one wants to buy our house.
‘We can’t find work. We thought we were going to make money, and now look at us. We don’t have savings and we are really struggling. We just hope the situation doesn’t get any worse.’
I fear a wave of repossessions
There are fresh fears that savings held in Spain may be at risk because of the country’s latest banking crisis.
Many who generated an income in euros from renting out their properties are desperately trying to switch their money back to the UK.
Many others have debts far greater than the value of their home and are just giving up the keys and returning to the UK.
‘Many British people have simply stopped paying the mortgage on their Spanish home because they can’t afford it,’ says Sean Adams, international director at brokers SPF Private Clients.
‘My fear is that this will lead to a new wave of repossessions. The Spanish banks are keen to sell repossessed houses, even at bargain prices, just to try to recoup some of their losses.’
Holiday homeowners wanting to find relief by switching to a cheaper mortgage rate are also likely to be thwarted.
‘Spanish banks will find any excuse not to lend,’ says Fiona Watts, managing director at International Private Finance, another broker. ‘Mortgage lending has fallen off a cliff edge because the banks don’t want to take on each others’ bad debts.
PANIC SETS IN AS EXPATS DITCH EUROS
Foreign exchange firms and specialist financial advisers, such as Guardian Wealth Management, have been swamped with calls from nervous Britons in Spain, Greece, Italy and other troubled nations.Bottom of Form
Moneycorp has seen the number of people changing euros to sterling double in the past month. Rival currency broker HiFX has changed £150 million from euros to sterling in just 30 days.
Caxton FX says the number of euros being cashed in since the first Greek bailout in 2010 has risen by hundreds of millions as Britons try to escape the turmoil.
FairFX, another broker, says that the figures will shoot higher still because some expats are holding out until the value of the euro creeps back from its three-and-a-half year low.
Currency firm HiFX estimates that around a third of expats with Spanish homes are trying to sell up. ‘We’ve seen a huge 175 per cent increase in people selling their European homes,’ says Mark Bodega, marketing director at currency firm HiFX.
Part of the sudden surge is due to recent rises in the value of the pound against the Euro. Switching €20,000 from euros to pounds in May 2011 would have given you £17,551; today, you get just £16,109.
Those who are desperate to sell property in Spain and still have some equity left want to sell before the value of the pound increases further and their home drops even more in value.
BEWARE A CUT-PRICE PROPERTY TRAP
While thousands are leaving Spain, estate agents are reporting a surge in interest from British-based buyers hoping to snap up a holiday home bargain.
They are being lured by the soaring value of the pound and plummeting house prices.
But these buyers may be walking into a trap as a number of companies have sprung up to offer properties repossessed from expats at knock-down prices.
‘It’s a can of worms. The euro is so low that people are flying over to Spain in the hope of getting a bargain, but this is the most dangerous time to buy,’ says Simon Conn, an overseas property finance specialist.
Property websites based in Britain are claiming to offer Spanish repossessed apartments at huge discounts and with a 100 per cent mortgage. But experts say that anyone considering buying in Spain must seek advice from a reputable estate agent, a local lawyer and a good mortgage broker.
The days of making a quick buck from soaring house prices and rental income from tourists are over.
‘House prices in Spain could still fall another 10 per cent,’ Fiona Watts says. ‘We haven’t reached the bottom of the market yet.’
David Vaughan, consultant at Savills estate agent, says he has sold eight new-build apartments in the past few weeks in the marina at Sotogrande.
The development has an indoor and outdoor swimming pool, 24-hour security, a gym and spa.
‘A three-bedroom apartment was on the market for €850,000, but these buyers have got substantial discounts,’ he says. ‘Buyers should make an offer and see what kind of discount they can get — developers don’t want to advertise the deals they’re doing.’
While these are legitimate bargains, some buyers can be caught out if they buy a property that never had planning permission in the first place.
Many of the new-build developments that sprang up along the coastline in the mid-2000s were of shoddy quality and some were even built illegally.
Many Britons were caught out by one of the most notorious pieces of Spanish legislation — the Ley de Costas, or ‘coastal law’ — which effectively nationalises the coastline.
Under this law, many heartbroken homeowners saw their illegally built properties bulldozed and were offered no compensation.
‘Some villas were built by developers without building licences, proper planning permission or habitation licences,’ says Mr Conn.
‘You can be left without access to gas, electricity or water — and if the authorities discover it has been built illegally, they can come along and demolish it.’
Spanish Communist Village – Life in Red Utopia
All of Spain is suffering from the economic crisis. All of Spain? In the Andalusian village Marinaleda, ruled by Juan Manuel Sánchez Gordillo, its citizens have jobs, houses, lush gardens. How can the Communist achieves it?
With his full beard and a keffiyeh around his shoulders, he looks like a mixture between Karl Marx and Fidel Castro. The similarity with the two stars of socialism is intentional, it is not just limited to externals: Juan Manuel Sánchez Gordillo, mayor of the small Andalusian town Marinaleda, rules his village by communist principles. Unemployment and mortgages are words here, right in the crisis-ridden Spain.
The walls of the houses in Marinaleda are peppered with political slogans . «Towards Utopia» can be read most often. «Utopia on the road to peace» even shows up in the coat of arms of the municipality.
The Utopia of Marinaledas began in the early eighties. Day laborers occupied a finca, which belonged to an aristocrat living in Madrid. «The land to those who work there,» they chanted, and were not discouraged by repeated evacuations. Again and again they occupied the 1250-acre agricultural land, politicians were harassed and they went on hunger strike – Juan Manuel Sánchez Gordillo always taking the lead. Finally, the Andalusian government expropriated the aristocrats and gave the land to the community. Since then the population Marinaledas runs it together as a cooperative.
«Another world is possible!»
«All the important decisions are taken by us in in plenary assembly,» says the Mayor. «People decide themselves, how much tax they want to pay or how our surpluses are spent.» The farm workers in Marinaleda receive 47 € for six hours of work per day. Any additional income generated is also spent for the benefit of the whole community. So it is possible that the village with about 3,000 inhabitants has several sports facilities, a park and several smaller, well-kept lawns.
«People do not need a lot of money,» says Mayor Sánchez Gordillo. «Elsewhere, people are groaning under the burden of mortgages and loans, here we make installment to the community of 15 € per month over 70 years for the building materials of our homes, then they belong to us.» The man knows what he is speaking about, he himself lives in one of the pretty houses built by the inhabitants of Marinaledas with their own participation. The village provides land and materials and the inhabitants contribute the work. Already 350 houses have been constructed in this way .
«You can convince people only when you are a role model,» says Sánchez Gordillo, who was recently elected to the Andalusian Parliament. His only income is the same as the one of his fellow citizens.For that he is day and night dedicated to the service of revolution. «Another world is possible!» stands above the entrance to the House of the People, where the regular plenary meetings of the village are held.
«He stucks to his chair.»
Today it is about national politics. Sánchez Gordillo calls his fellow citizens to vote on whether the Communists will take part in the government of Andalusia. It depends on their voice whether the Socialist Party PSOE or PP, the Popular Party are building the regional government. He himself is opposed to any cooperation, he makes no compromises. Finally, however, the majority votes for co-operation between Socialists and Communists at country level.
Before and after the Assembly Sánchez Gordillo will be addressed again and again. A woman has trouble with the working papers of her husband, another needs a nursery place for her son. After more than three decades in office the mayor is no longer easily disconcerted and has an open ear for everybody. . He should be on the bus to catch the train to the state capital. He does not possess an official car or a private one. «Can somebody take me to the station?» he asks. «But first I have yet to get my suitcase at home.» Immediately somebody is found with a car offering a lift to the mayor.
«The unemployment rate is ten percent»
«Yes, he is truly a revolutionary who lives by his convictions,» says Hipólito Aires. «But somehow he sticks too much to his chair and adjusts reality according to his ideals.» Aires is one of the two opposition politicians at City Hall Marinaledas. The two are members of the PSOE, the socialist party. Nothing is existing further to the right. Aires has worked half his life in the only gas station of the village and accuses its mayor of being a liar. «He claims that there is no unemployment in the village.but it is just under ten percent. That’s less than half of the nearly 24 percent in Spain, but not non existent,» says Aires. Moreover, this system of cooperative would not function without subsidies from the EU.
«Even the Duchess of Alba, one of the richest women in Spain, is receiving subsidies for her lands» says Sánchez Gordillo, when he hears the argument. «And unlike us, she grows each year the product that receives the most subsidies, but not caring about the harvest. She cashes in only the money for cultivation. Hundreds of thousands of Euros. But the crops perish on the field.»
As that seems to be really so, because many of the landowners in Andalusia left their fertile land lie fallow or cultivated only what is subsidized by the European Community, the struggle of the peasants of Andalusia is far from over. On March 4, 2012, unemployed Andalusian day laborers occupied the Finca Somonte Privinz Cordoba. On April 26 their improvised camp was evacuated in the early hours by the Guardia Civil. For the first of May more actions are planned.
