What happened to the dream?

The tiny village of Lliber nestles beneath the Sierra Bernia in the beautiful Jalon valley in the north Costa Blanca in Spain. To the average tourist it is an unexceptional Spanish village, typical of the region with its stone houses and narrow streets and spectacular mountain views, but behind its picture perfect façade lays one of the biggest property scams in Spain. A scam that has brought unrest and disharmony to the community, has set neighbour against neighbour, ruptured friendships and families and brought financial, emotional and medical hardship to a great number of people. Until the beginning of the 21st century this sleepy little village, with a population of less than 500, had not seen an influx of incomers since the early part of the 17th century, when Majorcans were offered low rent land and houses to come to the village to replace the manpower of the vanquished Moors. Most of the current inhabitants of Lliber – and of surrounding villages – are the direct descendants of these incomers as their names and dialect suggests, and has earned the village the name Llucmajor – from the Majorcan village of the same name. Before this Lliber was occupied only by Moors. The current invasion – which in just two or three years more than doubled the population - began around the beginning of 2000. It was at a time when many northern Europeans were being seduced by the Spanish sun. Its cheaper houses and its promise of a better and cheaper lifestyle than they could have back home in Britain or Germany. It seemed to many like the ideal place to retire, to relax and to reap the benefits of the long years of work. It was also the ideal climate for fraud and its unpleasant accomplice, greed, to flourish. The stage was set for the formation and planning of a major conspiracy – and the unsuspecting buyers fell right into their trap, seduced by the promise of beautiful houses set in a stunning location. At least one of the builders advertised in a major British newspaper. Most people who chose Lliber were intelligent, professional people. Not the sort of people who one would expect to be taken in. They all thought that they had bought prudently and cautiously, with due regard to the law. It wasn’t until several years later that they realized that they had been the victims of a massive fraud involving town hall officials, builders and legal representatives. The building licences that had been obtained to build their houses proved to be worthless pieces of paper, issued to the builders by the then mayor and architect, in exchange for allegedly large sums of money. 2m euros, found by the fraud squad in Andorra, is thought to form a small part of this. Unknown to the unsuspecting buyers who had put their trust in the hands of their legal representatives, the licences were issued for the rebuilding of warehouses (whether or not they existed), on rustic land. The law states now, as it did then, that houses cannot be built on rustic land on a plot less than 10,000 square metres – all were built on smaller plots, in many cases on land owned by third parties and some on protected land. In some cases, people paid for land, houses and swimming pools, which were either not built at all, or were left incomplete. An embargo by the local police meant that people either had to complete their properties at their own expense (and at the risk of prosecution), or find alternative accommodation. It is estimated that the fraud amounts to an astounding figure of between 90m and 130m euros with more than 300 houses deemed to be illegal. In 2009 the Guardia Judicial began a long and arduous investigation and in December of that year, they arrested eighteen conspirators, who still await trial. On the back of this, and in an attempt to minimize the possible infrastructure costs and danger of their houses being demolished, one hundred and forty one people affected by the property fraud, presented themselves to the Denia court as victims. These pensioners have waited over ten years for justice. The waiting has brought untold hardship. Some people have lived without mains electricity – dependent on expensive and unreliable generators, while others, without a mains water supply, have had to have water brought in by tanker. All have struggled to understand a system that could leave them in a no man’s land of uncertainty, trapped in a situation that could not have occurred in their homelands. At least six people have died with their problems unresolved leaving their partners or families to continue the battle. Many have suffered ill health and stress as a direct result of this; all have suffered in some way or another. In January 2009, prior to the police enquiry, and in an effort to bring about some sort of resolution, a group of victims formed an association – AULN (Abusos Urbanisticos Lliber No) under the wider umbrella of the national group AUN, to support each other and to put pressure on the authorities to help them by whatever means at their disposal. This in itself has divided the community, some people choosing to stoically support the perpetrators of the crime, victimizing and harassing those who have chosen a legal and peaceful solution. Many well-earned years of retirement have been spent worrying and actively trying to solve the problems of their illegal houses. Endless hours have been taken up in long and arduous and often fruitless meetings with town hall officials. Often the language is a barrier but more often the barrier is a lack of comprehension at the perplexities of Spanish law and bureaucracy and the corruption that lurks just below the surface. They have seen two different governments occupy the Town Hall, have tried to become actively involved in the administrative process, have heard conflicting reports and solutions from the opposing political parties and still feel no further forward. The former PSOE administration who were in office for eight years, advocated that the only way forward was through a General Plan that would redraw the boundaries of the village, encompassing the illegal houses, thereby allowing them to be legalized on smaller plots. For the past two years the PP party have been in power and brought their own, different criteria to the problem. Some house owners who have until now been without mains electricity have been granted group licences to install it. While others who do have electricity – albeit on the ‘temporary’ basis of builder’s supply, are being urged to either pay out large sums of money in order to update the infrastructure or to face being disconnected. This may sound like progress but to many people who have already sunk their life savings into their dream houses in Spain, it is the straw that could break the camel’s back. All have already paid for mains services in the cost of their houses. None expected to have to find large sums for infrastructure ten years down the line. Some people will not be able to finance this. Meanwhile Spain itself struggles to survive the economic crisis that has befallen it, with 27% of the population unemployed and the figure rising to 50% of those under the age of 25. Thousands of Spanish people, unable to repay their mortgages, have been evicted from their homes, yet still face a life time of debt to the banks as a result of this. At a time when the Spanish economy needs every cent it can get, in Lliber alone, an estimated 1m euros has already been lost in local taxes, with an annual loss of somewhere in the region of 100k euros.. Multiply this by the amount of revenue lost nationwide! Their European and international image has become tarnished as successive governments fail to see the bigger picture and millions of euros are lost in petty bureaucracy. The housing market is at rock bottom as northern Europeans, traditionally their biggest customers, have lost confidence in it. Well documented corruption in the housing sector, draconian land grab laws, coastal laws and the legislation affecting foreigner’s assets all contribute to this. The Spanish government is literally biting the hands that have fed them for many years. More to the point, the human rights of many people, including those trapped in the property scam in Lliber, have been compromised by the lack of justice. As court papers fail to move from judges’ desks, 141 people in Lliber wonder which will come first – death or justice.

TRAMPOLIN HILLS: NO JUSTICE, NO NEWS

Round Town News summed up one of the criminal cases against Trampolin Hills on 2nd May in an article titled NO JUSTICE! We might add that similar unexplained delays have occurred in the court dealing the bankruptcy of Trampolin Hills. http://www.roundtownnews.com/rtn-newsflash/item/41897-no-justice.html FRUSTRATED AND angry at delays in a verdict in a fraud case has left property victim Andrew Wilford despairing over the Spanish justice system. Andrew and his wife Kate gave evidence before a Murcia Judge more than 10 weeks ago against the developer of the Trampolin Solera complex near the city. They maintained their life savings were effectively “stolen” and they were looking to the criminal courts to resolve the issue. However, despite being told Spanish law requires a judgement in a criminal case within five days – they have been told overworked courts in Murcia are running nine months late. And said it was even open to a criminal judge to give an indication as to his findings “without prejudice” to the full written version of the judgement. Justice delayed is justice denied according to the UK court system and Andrew said he was considering taking his “simple fraud case” to the European Court of human rights “since mine have been undeniably ‘assaulted’ by the courts in Spain.” He added: “Quite frankly, this situation is ridiculous. I assume that most ‘participants’ involved in Spain actually die before the cases are resolved – indeed, maybe this is the objective.” DEVELOPER Andrew and Kate were in the process of buying their Murcia home ‘off-plan’ when in 2008 discovered CAM Bank had granted developer Rafael Aguilera a builder’s mortgage based on an allegedly inflated valuation – despite the building being almost completed - and later sold the property to a third party. The couple, from Colwyn Bay, say they have lost 200,000€ in deposits and spent around another 100,000€ in legal fees. He believes they were “clearly defrauded” and the defendant should have been sentenced years ago. “He could have served a prison sentence and been released by now!” And Andrew asked: “What can be so complicated? I signed a contract to purchase a property, paid nearly 200,000€, the defendant then took out a huge mortgage with CAM Bank and then subsequently a sold my property to a third party. How can that be complicated? “In any normal civilised society, that would only take 30 seconds to decide. I fully appreciate that Spain and the banks are in ‘financial meltdown’ largely as a result of corrupt Spanish developers but does that really mean that citizens of other countries who are partners in Europe should be treated so badly?” And in a complaint to the Ministry of Justice, Andrew said: “My life savings were effectively stolen by a Spanish national in 2005 and yet here I am some eight years later still trying to achieve justice through your courts system – does this seem fair? I am sure we both know the answer – it is simply not fair!” He said he was finding it increasingly difficult to understand or appreciate the delay and was frustrated in his attempts to discover the reason. “I am really, after five years of waiting, becoming increasingly concerned as to just what is happening about this matter.”

Lawsuits passed on to national courts after five years

After handling the lawsuits regarding Trampolin Hills for five years, a judge has recently passed the case on to national courts, according to an article in local media (Las Provincias, Murcia/Alicante, 09.12.2012, in Spanish). Please see the links section for more information.

Spain's "bad bank"

Reuters By Tom Bill | Reuters – Thu, 1 Nov, 2012 Reuters - Thu, 1 Nov, 2012 LONDON (Reuters) - Spain's "bad bank" will struggle to find buyers for swathes of empty land, unfinished housing projects and doubtful loans left over from a property crash, hindering Madrid's attempts to overcome the wider economic crisis. Real estate consultants predict that almost two-thirds of assets that the government's newly-created bad bank is due to take over from commercial banks will fail to attract investors, at least in the short term and possibly ever. Spain is setting up the bad bank, known by the acronym SAREB, under a plan to cleanse the banking system of toxic property assets. SAREB aims eventually to buy up to 90 billion euros ($117 billion) of the assets at deep discounts and then sell them to investors over 15 years. Buyers are likely to snap up the likes of prime holiday homes and completed properties, commercial and residential, which already have tenants. But that leaves a majority of assets that will be much harder to shift. Between 60 and 65 percent of the foreclosed property and bad loans to be hived off by the banks will relate to undeveloped land and half-built projects, according to forecasts compiled for Reuters by real estate consultants Jones Lang LaSalle and CBRE . CBRE gave the higher figure for this category which investors will probably shun, put off by high risks and costs such as having to rip down abandoned shells of buildings that no one would ever want to occupy. Together with Ireland, Spain has suffered Europe's biggest property crash, leaving the banks with 184 billion euros of bad real estate debt and incomplete developments around the country. This has brought much of Spain's property market to a halt. "In the last five years there has been virtually no value for land," said Rafael Powley, a Madrid-based director of strategic consulting at JLL. "There are no buyers and if you want to sell it right now, there is no price for it." CBRE and JLL are the world's biggest property advisers and helped consultant Oliver Wyman prepare a report this year that examined how exposed Spain's banks were to souring property loans after the bubble burst. The crash has put Spain center-stage in the euro zone debt crisis, now in its third year, as investors believe a high budget deficit, soaring state debts, and a deepening economic contraction will force Madrid to seek more external help. Spain has already secured up to 100 billion euros of European aid to rescue the banks worst hit by the property collapse. Madrid may now have to take a full sovereign bailout, with the state assuming the bad real estate assets unless it can find private sector investors to buy stakes in SAREB itself. HOPING FOR INVESTORS On Monday the Bank of Spain said property loans would be moved into the bad bank at an average discount of 45.6 percent in the hope of attracting investors. The figure would be 63.1 percent for foreclosed assets and 79.5 percent for empty land. The central bank declined to comment on the CBRE and JLL forecasts. Madrid hopes private investors will own at least 55 percent of SAREB, which was created as a condition of the European aid for the banks and is due to start operating by the end of November. About two-thirds of the assets transferred in an initial wave of 44 billion euros will be loans and the rest foreclosed properties. Investing in land or half-built developments means spending money to start, demolish or complete schemes without any guarantee of selling them or finding tenants. Investors are reluctant to do this due to the Spanish recession and excessive supplies of property built up during the boom years. "The money you need to spend upfront takes you backwards," said Justin O'Connor, chief executive of property fund manager Cordea Savills, which has about 7 billion euros of assets under management in Europe. "With land you need to take a long-term view beyond the five to seven year horizon of most institutional investors," said O'Connor. However, his fund will look at shops and offices in Madrid and Barcelona which have already been rented out. "The only assets of value in Spain are ones with an income stream attached," he said. DEMOLITION COSTS Investors are particularly wary of sites where incomplete developments will have to be torn down and rebuilt from scratch. "Land and unfinished developments are about the same thing right now," said Joe Valente, a managing director at JP Morgan Asset Management , who helps manage 7 billion euros of real estate in Europe. "Land is probably more valuable as it doesn't have any demolition costs." Buying loans secured against land or unfinished schemes is as unattractive as buying the assets themselves in the short-term, particularly given the lower discounts offered by the bad bank, Powley said. "A large majority will be bad loans and a discount closer to the foreclosed asset price would have been more realistic. I wouldn't expect more than 20 percent of the loans to survive." Like Cordea Savills, JP Morgan is looking for income-producing bargains in the bigger Spanish cities. Valente is raising equity to buy assets outside of safe markets such as London and Paris, which he believes to be overpriced, but the CBRE and JLL figures show there will be slim pickings. Only 10 percent of SAREB's assets will relate to commercial property while housing will account for the rest, both real estate advisers said. The commercial property that goes in will be "medium to poor quality" and not what investors are looking for, Powley said. Morgan Stanley and private equity groups Lone Star, Cerberus and Apollo are also hunting for Spanish bargains. They will be attracted to large portfolios of completed housing in areas such as Malaga and Alicante, boosted by Russian, British and German tourists and their proximity to major airports, Powley said. Areas to avoid due to "a huge oversupply" of housing include Valencia, Murcia and Almeria in southeast Spain, said Patricio Palomar, head of research at CBRE in Spain, who made the bad bank forecast for Reuters. Loans backed by rented-out commercial real estate will be the other bright spot but the fact that the good is so outweighed by the bad renders the 15-year disposal time meaningless, property experts said. "About 40 percent of the land that goes into the bad bank will never come out," Powley said. "They may have to eventually get rid of it for a tenth of the price as farmland."

OPEN LETTER TO SR. MARIANO RAJOY

Dear Sr. Rajoy

Congratulations on becoming the new Spanish President.

Our website and petition - www.bankguaranteesinspain.com - is representing all those innocent people who attempted to purchase an off-plan property in your wonderful country.

Unfortunately due to the lack of supervision by the Banco de España and the systemic corruption in the Property and Banking Sectors we are now victims of Bank Guarantee Abuse.

Our off-plan deposits have been stolen by the corrupt developers and negligent Banks. LEY 57/1968 has not been enforced and the Banco de España has failed in its role as the SUPERVISOR OF THE SPANISH BANKING SYSTEM.

Your court system is overloaded and cannot deal with the number of cases. On many occasions Judges are failing to apply LEY 57/68 correctly in their judgements.

LEY 57/68 was introduced in 1968 to protect the purchaser from the abuses and corruption in the property sector.

The rights granted to us by LEY 57/68 are 'Caracter de irrenunciables'. Our rights have been violated.

In your 100 Proposals for Change you make several references to transparency, trustworthiness, credibility and consistent justice. For example:

"A modern state must guarantee values of certainty, legal security and legal trust"

"rigorous tackling of many of the problems which have so far been ignored"

"We must restore our trustworthiness and credibility in the world"

"greater answerability backed up by full transparency"

Your document concludes by stating:

"We must recover our leading role abroad as a reliable, dependable and respected partner. The economic and institutional reforms we are going to undertake will contribute to international respect for Spain and its international role as an advanced Western democracy that is committed to freedom, democracy and the defence of human rights"

To achieve this you must immediately tackle Off-Plan Bank Guarantee Abuse and ensure LEY 57/1968 is enforced in all cases – past, present and future.

During the past year we have been in contact with the advisors of the former Housing Minister - Sra. Beatriz Corredor.

We look forward to working with your Housing Minister, Minister for the Treasury and Minister for Economic Affairs and Competitiveness to ensure that Off-Plan Bank Guarantee issues are resolved and measures are put in place so this corruption and abuse can never happen again.

Please take a look at our website - www.bankguaranteesinspain.com - and feel free to contact me by email: keith@bankguaranteesinspain.com

Yours sincerely


Keith Rule

Buyers take Campos del Rio town hall to court

While still waiting for the bankruptcy proceedings to come to an end, some Trampolin Hills buyers have decided to take the Campos del Rio town hall to court, because they have consistently refused to even consider the claims for refunds solicited since March 2011. They expect this to take months, but see it as a first step to hopefully oblige the town hall to admit their responsibility towards the buyers.

ONE OF THE BURNT ONES (Reuters)

Caja de Ahorros del Mediterraneo (CAM), a 135-year-old Valencia-based savings bank, was one of the profligate ones. CAM sits in a moderately sized Spanish region -Valencia is home to around 5 million people- but it financed grandiose projects like the Terra Mitica theme park in the coastal resort city of Benidorm, which emerged from receivership in 2006, and opened offices in Shanghai, Miami and Geneva. When the government slashed the number of savings banks by more than half last year and forced them to take on private investors or face nationalisation, CAM was one of those that failed to generate interest because of its real estate losses. On taking the caja over in July, the government found much bigger losses than expected. It also found that CAM directors and their equivalents at fellow failed savings bank NovaCaixaGalicia had awarded themselves multimillion euro severance pay packages while racking those losses up. Union data shows the pay packages of CAM directors increased more than sixfold over the 2004-2010 period, while profits grew 3 percent over the same period. Five directors at CAM got payouts of 12.8 million euros in total, while three top staff at NovaCaixaGalicia got 23.6 million between them, press reports say. Both banks were bailed out with public money. "There has been an embezzlement of public funds destined to bail out the bankrupt cajas," said the speaker of the United Left party, Gaspar Llamazares. The reports shocked Spaniards suffering the highest unemployment amongst industrialised nations -- one in five is out of work -- and the threat of deep cuts in health and education. CAM director, Maria Dolores Amoros, was fired and put under investigation for falsifying accounts. Roberto Lopez, a former director at CAM, had to leave an Alicante tennis club in October after people booed and shouted insults at him, according to a local paper. "It is an absolute disgrace that the managers of the bankrupt cajas should receive such massive bonuses," says Jose Luis Corell, lawyer and bankruptcy expert, at a cafe outside Valencia's 17th century basilica. Bank of Spain Governor Miguel Angel Fernandez Ordonez called the behaviour of the CAM executives "scandalous" and said the bank was "the worst of the worst" at a press conference in September.