Four years ago, the Government took control of a publicly traded company, INDRA, through SEPI (the State-Owned Industrial Holding Company). To do so, it had the help of the owner of the newspaper El País and two brothers, the Escribanos, owners of a small company dedicated to manufacturing defense vehicles. There was a reshuffle at the top, a change of control without a mandatory takeover bid (OPA)—as required by law—and evident shareholder agreements, yet the CNMV (the National Securities Market Commission) chose to look the other way.
No one disputed the Government’s desire to seize control of Spain’s largest technology and defense firm—even though the fact that INDRA also manages electoral processes raised significant suspicions—but no one could understand how the Government itself could run roughshod over the regulations governing Spain to take control of a listed company. And that the CNMV did nothing.
The Government appointed Marc Murtra as Chairman of INDRA, a man close to the Socialist Party of Catalonia. Shortly after, he would leave the chairmanship of INDRA to take charge of Telefónica, another listed company in which the Government has also taken control through more or less obvious agreements.
And that is where the problem began, because the next Chairman of INDRA, Ángel Escribano, has insisted that the listed company buy—at an exorbitant price, of course—his small family business. The conflict of interest is so blatant that a reputable Spanish foundation—Hay Derecho—opted to buy a single share to report the case to the CNMV. Finally, the Government decided to intervene—through SEPI, which controls nearly 30% of INDRA—and proposed to Escribano that he either step down as Chairman or forget about the purchase of the family business.
However, the new Chairman feels secure in his position and has rejected the Government’s proposal, declaring himself in “rebellion.” He boasts of having carried out magnificent management that has led to a significant revaluation of INDRA’s stock. But the Government argues that with more than €7 billion in direct contract awards, it was impossible for INDRA’s shares not to appreciate… And that is where things stand now. With the Government seeking Escribano’s dismissal from the chairmanship of INDRA and the latter resisting both leaving his post and abandoning the purchase of his family business. Surreal.
