The Lezo case, which investigates a network of politicians and executives who allegedly took advantage of the international expansion of the Canal de Isabel II to collect juicy kickbacks, festers like a poorly healed wound amid the struggle between Colombia and Madrid for control of the Triple A of Barranquilla. This company, which was owned by the Madrid public company, was expropriated in 2022. The reason? The Colombian Prosecutor’s Office considered that it paid for supposedly nonexistent technical consulting services to generate kickbacks. Since then, the two parties have been litigating in an arbitration court (ICSID). In response to Colombia’s arguments, the Canal has just commissioned a legal study to determine whether the criminal offenses investigated by the Spanish justice system in the Lezo case include (or not) the analysis of whether the funds to buy Triple A “had an illicit origin.” And not only that. It must also detail whether the Spanish court “analyzes the alleged corruption in the investment in Colombia in relation to the technical assistance contract, or the violation of any Colombian law.” A recorded conversation helps to understand much of the conflict.
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— I call the presidency counselor, Ángel [Garrido, number two of then-president Cristina Cifuentes], and he tells me: “No, no, Edmundo, thanks, I don’t need any explanation. What I need is your resignation.”
Hotel Villamagna. Madrid. July 21, 2016. On one side is Edmundo Rodríguez Sobrino, president of Inassa and right-hand man in America of Ignacio González, former regional president (2012-2015) and also of the Canal (2003-2012). On the other, José Manuel Daes, alias Yuyo, an important Colombian contractor and businessman. Rodríguez Sobrino is telling him the regional government’s reaction to his name appearing in the Panama Papers as owner of several companies in Hong Kong (a tax haven until 2012) managed by the Mossack Fonseca law firm.
—[They want to] dismantle everything, his interlocutor is surprised by the government plan to sell the Canal’s companies in Colombia, Brazil, Peru, Dominican Republic…
—Dismantle everything, well in fact Yuyo a year ago that billed 320, 330 million dollars.
—How much did the Canal get?
—The Canal has received, I tell you the total figure, the Canal has received 65 million. That’s what it has received.
—It’s not understood.
—Look, it invested 95 million in an operation you know in which they stole 25 million (…) Canal collected 65 million in dividends that I gave (…) It’s more than enough everywhere.
The conversation, recorded by investigators and included in the Lezo case file, is one of the seeds of the current conflict. It increases the suspicions of the Spanish and Colombian authorities. By the end of 2017, the Americans already argued that the Canal charged the Triple A through Inassa for years for technical advisory services that were never provided. Any doubt, according to Colombian investigators, is cleared by a later statement by Rodríguez Sobrino before the judge.
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“Canal charged for technical assistance, in parentheses, that it did not provide, that it did not provide, and charged monthly,” he said when asked about the Dominican Triple A, another company in the group, but specifying that the system worked in “all” the companies of this group. “The Canal charged monthly about two million euros for technical assistance that it has never provided, that it has never provided,” he emphasized. “It was a hidden pact among the shareholders (…) That money has been collected by the shareholders to pay less taxes.”
That alleged embezzlement of funds, and the need to guarantee the service provided by Triple A, which manages the treatment and purification of water in several Colombian municipalities, supports Colombia’s decision to expropriate the shares of the Spanish company in the Colombian one, applying an anti-narcotics law. It does not matter that Madrid has tried to justify the existence of the advisory services with different expert reports: “The Canal and Inassa carried out said work,” reads a report by the consulting firm Grant Thornton on the advisory contract that linked both parties between 2002 and 2033, and which implied that Inassa received 4.5% of what Triple A collected each month. The reality is that the two parties have been in open conflict for almost a decade, and that Madrid’s hiring of a legal report valued at 36,300 euros is just the latest step.
Thus, the study responds to those presented by Colombia, and seeks to clarify, among other points, “whether the Colombian State or the Barranquilla City Hall, if harmed by the investigated facts, could have had standing to appear in the criminal proceeding (of the Lezo case in Spain) as injured parties.”
Favorable awards
This is what a spokesperson for the Madrid Community government says. “The Republic of Colombia or the District of Barranquilla have not appeared in the proceedings followed in Spain, nor is there any record that they will formalize their appearance as injured parties,” he assures. “In the international arbitration, references have been introduced to actions and documents linked to a proceeding in Spain for this circumstance,” he continues. “It is common in these cases to gather technical reports from independent specialists to describe procedural situations,” he specifies. And he details: “The reason for the contract is to commission an independent expert in Spanish law to prepare a technical-legal report to reinforce Canal Extensia’s response to reports and allegations presented by the other party in the international arbitration.”
The conflict reflects that the Canal de Isabel II has failed in its national expansion (to Lanzarote and Cáceres) and international (to Brazil, Dominican Republic, Mexico, or Colombia), generating multimillion losses that make it advisable to redirect the situation as quickly as possible and leave behind the plan devised at the beginning of the century.
Thus it is recorded in that urges the largest public company of the Madrid Community, along with the Metro, to “as far as possible, accelerate the disposal of entities based in Latin America, particularly those that generate expenses” and to “ensure that the concessions of Lanzarote and Cáceres reach financial balance.” A failure that the government tries to mitigate with the promise of income from sales and favorable awards, while the Lezo case festers in its conflict with Colombia.
