Rumasa: The 1983 expropriation and the ongoing legal battle

Rumasa: The 1983 expropriation, an unresolved legal battle

The 1983 expropriation of Rumasa was a theft. And Rumasa was, at the same time, a pyramid scheme. Both are true, and neither stands alone. That is the uncomfortable conclusion reached by any serious attempt to explain the case to someone with basic economic knowledge: there are no heroes or villains here, only a holding company built on sand and a Government that decided to demolish it in the middle of the night, without a prior trial and under the cover of darkness.

On February 23, 1983, an extraordinary Council of Ministers expropriated the entire group. Without a sentence, without a prior global audit, and without time for the company to defend itself. The legal argument was that the group lacked sufficient assets to cover deposits and accounts. The problem, as recurring analyses point out, is that practically no Spanish bank met that requirement back then. Nor any now.

What was Rumasa in a nutshell

A pioneering holding company in Spain during the sixties and seventies. Ruiz Mateos bought every company in his path, issued promissory notes placed among friendly investors—a significant portion of the black money circulating in the country—and used the resources of some companies to finance the losses of others. Wineries, hotels, banks, department stores. Hundreds of companies, many of them shell companies, operating under an obsolete tax legislation that did not know how to classify them.

The most common description: a pyramid scheme where failing banks financed failing businesses. The group's banks attracted deposits at high rates and lent that money to the ruinous companies within its own network. When the house of cards began to shake, the State did not wait for the collapse.

Was the Rumasa expropriation legal?

No, according to the courts. The family appealed and won. The State refused to comply with the ruling for decades. Forty years later, the TSJM (the High Court of Justice of Madrid) ordered a recalculation of the share value trinc an appeal by Ruiz Mateos' widow. The figure circulating in the debate: more than 13,000 million euros in potential compensation. Others speak of 16,000 million. No one knows for certain because the valuation is still pending.

While the legal battle dragged on, the group's crown jewels were sold off at bargain prices. Galerías Preciados was sold for 1,500 million pesetas and resold three years later for more than 30,000. Bodegas Paternina ended up being awarded to regional government offices. A plunder within a plunder.

The argument no one disputes

If Rumasa was a scam, the expropriation was the correct instrument. If the expropriation was a theft, the scam does not legitimize it. Both syllogisms are valid and cancel each other out. That is why the case remains open forty years later: because neither side has clean hands and justice has taken four decades to say something as simple as the fact that the expropriated assets had to be valued.

The prediction, with reservations: the State will pay. Late, poorly, and probably less than what an honest valuation made in 1983 would have dictated. But it will pay. What will not be resurrected are the dismantled companies or the jobs lost along the way.