Spaniards were scandalized when it came out that CAM executives paid themselves 13.3 million euros in compensation as the company was being rescued.
And Bancaja, the largest Valencian savings bank, was forced to merge in 2010 with other cajas to form a new bank, Bankia , which is now the Spanish lender most burdened with toxic real estate assets.
A financial sector source, who asked not to be named, said that even after due diligence on Bancaja’s books, it was not until after the merger that the extent of its exposure to the property sector became clear.
“The banks are the perfect reflection of what happened in the region. Political ties and obsession with short-term profit led to a mad credit policy in which no assessment of the risk was made,” the director of a Bankia branch said on condition of anonymity.
From an unused airport to overbilling during a papal visit, allegations of corruption have touched every corner of Valencian life. Francisco Camps had to step down last year as president of the Generalitat to face charges of accepting expensive suits in exchange for handing out government contracts. He was later acquitted.
Carlos Fabra, who served for 16 years as president of Castellon, one of the region’s three provinces, has been charged with bribery and tax fraud.
Fabra is the man behind Valencia’s most spectacular white elephant, the 150 million euro Costa-Del-Azahar airport.
“Do you like grandpa’s airport?” he asked his grandchildren at the opening last year.
“Grandpa’s airport” has yet to receive a single commercial flight.
Even Pope Benedict’s 2010 visit to Valencia was tainted. An investigating magistrate has charged local politicians and a media group with colluding to overcharge the government for sound and video system services during the visit, then sharing the extra money among themselves.
More recently, several top officials were put under arrest for allegedly diverting money earmarked for building hospitals in poor countries.
“Creating a structure to steal money from poor children: Now that is a case of complete moral bankruptcy,” said Luis Bellvis, a local economist who owns an hotel in Valencia’s old town.
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