The newly appointed chief of Spanish bank BBVA has sent employees a letter discussing its alleged involvement in a spying case aimed at fending off an attempt by construction company Sacyr to purchase a stake in the lender and get a place on the board in 2004. Group Executive Chairman Carlos Torres confirmed that an internal investigation has been underway in relation to the accusations since June 2018.

Even former Spanish king Juan Carlos I was caught up in a scandal involving Villarejo’s activities

The espionage was allegedly conducted by a retired police chief, José Manuel Villarejo, who is currently in jail awaiting trial over “Operation Tandem,” an investigation into two decades’ worth of shady work he is alleged to have carried out for a long list of wealthy clients.

Anti-corruption prosecutors have established that Villarejo’s main activity for years was essentially to sell sensitive information to clients who could then use it as leverage against their own adversaries. The investigation has yielded evidence that Villarejo worked, among others, for a law firm, for a construction entrepreneur and for a wealthy family whose members were fighting among themselves over inheritance issues.

Threat to tell all

Last week, Villarejo sent an open letter to Spanish Prime Minister Pedro Sánchez from prison in which he threatened to unveil, in his own defense, the “real reasons” why he is being portrayed as “the country’s public enemy number one.”

The jailed ex-cop, who faces charges of bribery, trading in confidential information and money laundering, said he might soon disclose why “certain judges who sit on the High Court [Audiencia Nacional] were threatened with revelations about their intimate lives so they would stop investigating issues affecting the CNI,” the latter being Spain’s intelligence service. Or why CNI director Félix Sánz Roldán has been “allowed to work against national interests and in favor of foreign powers such as Venezuela.”

The Interior Ministry suspects that Villarejo has been issuing instructions from prison to have certain audio recordings deliberately leaked to the media. Last month the head of Estremera penitentiary, where Villarejo was sent in November 2017, decided to keep tabs on the inmate’s communications in case he is “conveying data affecting state security,” said ministry sources.

Many targets

Villarejo spied on politicians, judges, prosecutors, business leaders and journalists for clients who paid him handsomely for compromising information about their enemies. In the BBVA case, Villarejo is also believed to have spied on EL PAÍS reporters.

Even former Spanish King Juan Carlos I was caught up in a scandal involving Villarejo’s activities due to his ties to a businesswoman named Corinna zu Sayn-Wittgenstein, who was heard in a leaked recording claiming that the former monarch, who abdicated in 2014, used her as a front to conceal his wealth. More recently, Justice Minister Dolores Delgado came under fire over a private conversation she had with Villarejo over a decade ago, a secret recording of which came to light in September of last year.

BBVA case

The targets of Villarejo’s alleged espionage on BBVA’s behalf included executives from Spanish construction giant Sacyr, which was trying to buy a stake in the bank, and members of the former Socialist Party (PSOE) government of Prime Minister José Luis Rodríguez Zapatero, which Spain’s second-largest bank believed to be favorable to the operation. Sacyr ultimately desisted from its plans in February 2005.

In his letter to employees, the new BBVA chief Carlos Torres admitted that the bank hired Villarejo’s services through a company called Grupo Cenyt, and called the spying “deplorable” if proven to be true, according to an internal memo reported on by Bloomberg. In a public statement on its website, BBVA said that “with regard to media reports related to Grupo Cenyt, which if found to be true would be extremely serious, BBVA reports that in June 2018 it opened an investigation into the hiring and services rendered by this company.”

According to the online Spanish news sites El Confidencial and Moncloa.com, Torres’ predecessor Francisco González, who still serves as BBVA’s honorary chairman, hired Villarejo’s services in 2004 to fight off an attempt by Sacyr to acquire a 3.1% stake in the banking group and name one or more board members, a move that would have undermined his own power.

González allegedly told his security chief to hire Villarejo, who used phone taps to listen in on private conversations by individuals such as Sacyr president Luis del Rivero, then-Deputy Prime Minister María Teresa Fernández de la Vega, and Miguel Sebastián, who was then serving as head of the Zapatero administration’s Economic Office.

Sacyr’s share-buying move was viewed by BBVA and by the Popular Party (PP) as politically motivated, and Sebastián was believed to be the brains behind an operation against González. Villarejo allegedly spied on up to 15,000 conversations in connection with this job.

Who gave Villarejo access?

The judge at Spain’s High Court in charge of Operation Tandem has ordered telecommunication companies, banks and even the Tax Agency to provide information about any employees who may have given the retired policeman access to confidential information such as tax returns, bank accounts and call records.

These types of documents are normally only available through court warrants, yet Villarejo had access to them thanks to a network of insider contacts whom he allegedly bribed.

In a conversation recorded by Villarejo himself and used in the investigation, the retired police chief explained how the system worked: “I just need the cellphone number, the first name and the last name [of the target].” After that, all that was required was large sums of money. “The provision of funds is essential, because do you really think that the Tax Agency guy is going to give away [the information] for free? People are putting themselves on the line, and they need to be paid for that... all of this costs a lot of cash.”

An analysis carried out by EL PAÍS in 2015 revealed that at the time, Villarejo held a stake in 12 businesses with a combined capital of €16 million. His simultaneous police work and entrepreneurial activity was, he claimed, above board and was sanctioned by his superiors. But in the wake of the revelations the Interior Ministry announced it would launch an investigation into Villarejo to determine whether his police work and his business activities were compatible.