Former Finance Minister Montoro Implicated in Tax Evasion Scheme Benefiting Companies

Judge Implicates Montoro and Top Treasury Officials

A court in Tarragona, not the National Court, is the first surprising detail. The investigating court number 2 in that province has implicated Cristóbal Montoro, former PP Finance Minister, and the top officials from his former law firm, for allegedly leading a "incivil organization" from within the ministry itself, altering laws and regulations in exchange for financial benefits. The notice affects 28 individuals and seven alleged crimes, according to the court order. The case spans from 2011 to 2019.

The mechanism described in the case file isn't about envelopes in drawers. It's about legislation: changing a rule so a sector pays less, and profiting in the process.

Allegations Against the Treasury Scheme

The investigating judge has ordered notification of the investigation to former high-ranking officials of the Ministry, the top executives of the law firm Equipo Económico, and several companies. Seven crimes. A structured organization with departments, advisors, and clients, the court order asserts, not an isolated incident. According to reports, it was uncovered by ABC journalist Javier Chicote, and some estimate that 87 PP high-ranking officials are serving sentences in Soto del Real, though the comparison is of little use when the discussion is whether this case will go to trial.

Montoro recently appeared before the investigative commission on the Operation Catalonia. Those who trinc the session say he left with the air of someone who felt untouchable. That feeling is today the main argument of skeptics: the conviction that nothing will happen to him.

85% Tax Reduction and Codere's €679,000

The numbers are the most uncomfortable aspect of the file. The scheme allegedly reduced taxes by 85% for the implicated companies, according to information released from the case documents. Codere, Spain's largest betting company, paid €679,000 to the firm founded by Montoro while key regulations for online gaming were being processed and applied, and, according to the claim, even paid a mere 0.10% VAT after receiving that advice. The company then had Rafael Catalá as a director.

The aggregate impact is measured in billions. Companies linked to the case allegedly saved nearly €1 billion since 2014 in tax benefits extracted from the Treasury. The Electricity Tax alone resulted in €50 to €136 million annually in uncollected revenue, according to estimates included in the case file. Galicia, then governed by Feijóo, appears in the file due to potential claims it could open against the autonomous communities. The full breakdown, item by item, is what should be read carefully: the sum then ceases to appear as a mere accounting anecdote.

Sixteen Shell Companies and Funds to Ireland

The investigation has identified 16 shell companies with no employees, activity, or known headquarters, linked to the law firm's partners. They allegedly served to channel and hide money obtained from the illicit activity towards Ireland, Luxembourg, or Italy, and also received income from Colombia, Panama, or the United Kingdom.

The Public Prosecutor's Office is looking for straw men and has encountered real estate assets: 543 hectares of land acquired by the former general secretary of the Madrid PP involved in the Tamayazo, Ricardo Romero de Tejada, whose daughter worked at Equipo Económico. The Tax Agency also maintains that Montoro sold his shares in the firm at an unrealistic price and has confirmed that his partners' companies had no actual activity. These are indications incorporated into a case that is still under investigation.

Model 720 and the Law Protecting Debt

For many people, the damage isn't in the court order. It's in two regulations. The first, Model 720, the declaration of assets abroad, with a penalty regime described as confiscatory, which pushed taxpayers to leave the country after years of inspections, appeals, and lawsuits. Some won all their cases in the TEAR (Regional Economic-Administrative Court) and still needed to rebuild their lives outside Spain.

The other text came earlier: August 2011, PP and PSOE reforming the Constitution to prioritize debt payment over pensions, public employees, and social spending. That set the framework for the harshest budgets in recent history, with 50,000 evictions, peak unemployment, and a figure attributed to Carlos Sánchez Mato: €140 billion of Spaniards' money in Liechtenstein accounts, unexplained at the time.

The Inner Circle Returns to the PP

Feijóo has brought back Montoro's inner circle to his economic team: former Secretaries of State Ferre, Fernández Currás, and Nadal are collaborating in designing the fiscal program. In Madrid, Ayuso faces scrutiny from a report by the Mossos' anti-corruption unit pointing to €2 million paid to Montoro's company from a regional entity, in addition to a public salary for Catalá's son.

The court order speaks of an organization within a ministry. The political response, so far, has been a fiscal program designed by the ex-minister's inner circle.