A Madrid court has ordered FCC to pay 102 million euros to the investment fund Avenue Capital and the Catalan construction company CRAP 3 for having breached a contract signed in 2012. The company, controlled by the Mexican billionaire Carlos Slim, has appealed the ruling . The plaintiffs, represented by the firm Abencys, will request its provisional execution if FCC does not consign any amount (which, for the moment, it has not done). The company provisioned the debt in its 2012 and 2013 annual accounts, but never paid it off. Probably, they understand from Abencys, due to their poor financial results in recent years.
The 1,000 houses of Tres Cantos: from protected housing to victims of a vulture fund
However, the construction company returned to black numbers in 2017. In the latest accounts presented, 2019, FCC declared profits of 267 million euros. The conviction represents 40% of this amount.
The conflict between FCC and Crap 3 —the owner of the original loan against FCC and the current 20% holder, since it sold the other 80% to Avenue— is urban, dates back to 2003 and is located in Tres Cantos, a municipality near north of Madrid.
In May of that year, the City Council approved the General Urban Planning Plan, which defines a new and huge area of developable land. The built part of Tres Cantos had an area of about 7 square kilometers and 38,000 people lived there. The new one – called ‘new Tres Cantos’ – was 3.3 square kilometers. Urbanizing it meant increasing the size of the city by 50%. When Mayor José Folgado (former Secretary of State of Aznar, former president of Red Eléctrica and died of coronavirus a few months ago) gave the green light to construction in 2007, declared that the population would grow in the same proportion and the municipality would reach 60,000 inhabitants (it fell short: there are still 47,000).
Once the General Plan was approved, two things happened. The first: that the then mayor, María de la Poza of the local TCU party, dismissed five councilors of the PP with whom she governed in coalition. It was just before the 2003 elections, which resulted in a new government between the two parties led by De la Poza. The second: that a few months later, the City Council called a tender to award the development of the new Tres Cantos to a private company. This is where the doomed FCC comes into play.
“I was a councilor for urban planning until 2003,” explains Juan Andrés Díaz Guerra, today the spokesman for Ciudadanos. “We approved the general plan and the next day the mayor dismissed us. We formed a new party, APTC, and it was a time when we denounced the irregularities that had occurred. We believed that the municipal housing company would lead the process, but they awarded it to them. everything to FCC “.
FCC had reached an agreement with CRAP 3, which in turn had negotiated with the owners of the original land. The Catalan construction company grouped 51% of the land in the plan, an essential condition to enter the competition. “This makes it impossible for other offers to be presented,” they explain from Abencys. In other words: without CRAP’s work, FCC would not have won the contest. The City Council was looking for a company that would manage, urbanize and exploit the new neighborhood: the company put up the streets, lampposts and so on and in return kept land on which to build.
More than three million square meters are not nonsense and awards like that, explains Díaz Guerra, are not common in such large developments. In Madrid there is the example of the Paseo de la Dirección, in Tetuán, whose expropriation and urbanization was awarded to Dragados. That bag of soil does not reach 200,000 square meters.
At the end of 2004, the competition for the ‘new’ Tres Cantos opens. Only FCC is presented, on behalf of an entity that had formed with the owners. The contest has a defect of form and is void. This defect, recalls the spokesman for Ganemos Federico Mas, was that the contest established that the City Council should keep a small percentage of the land and, in the offer, “the uses they gave us were industrial land, neither residential nor endowment. Morralla, to give us an idea. ”
The City Council then made a negotiation without advertising to which it invited only FCC, which kept the concession. Previously, FCC and Crap had signed their own private contract establishing a 50% profit sharing, knowing that FCC would win the contest. That distribution is the one that never came: between 2005 and 2012, according to the plaintiffs, there were agreements that it would be paid. And in 2012, even without having seen anything, both entities signed a contract of “reciprocal promise of dation in payment” by which FCC agrees to satisfy its debt with 21,000 square meters built in Arroyo del Fresno, another juicy land north of the city from Madrid. The breach of this contract is what gives rise to the litigation that now condemns FCC with 102 million.
An allotment full of shadows
The agreement for the new Tres Cantos not only caused problems between FCC and CRAP (and Avenue, later). That a company took a contract to the finger to exploit such a large bag of soil raised suspicions in the municipality. The country published in 2006 a recording in which a councilor threatened to vote against awarding the general plan to a company, and not to a public consortium as planned.
His position was explicit: “I have learned that there are 30,000 million, who is going to take them? I’m like an asshole raising my hand for you to take 30 kilos. We are eleven [concejales] and I want my 11%. ”
Díaz Guerra believes that FCC submitted its first offer on purpose, given that the previous contract law allowed going to a business without advertising if a contest was void.
“Here everyone knew that it had been a laziness and that it had been agreed with the municipal government,” he adds. As if that were not enough, the original plan provided for the construction of 4,200 homes and FCC presented a modification to raise it to almost 8,000. Of these, a part – that of the Young Plan, a thousand homes announced as official protection for young people – ended up in the hands of the vulture fund Fidere (from Blackstone).
Putting a company to manage a general plan is like putting the wolf to take care of the chickens
“They sold them for 60,000 each. I was a spokesperson for Izquierda Unida and I proposed to the then mayor, Folgado, that the City Council buy them to have a public park. He told me they wouldn’t even think of it,” concludes the Ganemos spokesperson. For his part, Díaz Guerra considers that the biggest mistake in the history of the young municipality was putting all that land in the hands of FCC. “We have had problems with the thousand houses, the facades fall, the neighbors have suffered the unspeakable … There are even technical reports saying that not even the urbanization has the stipulated quality. Putting a company with interests to manage a general plan is like putting the wolf to take care of the chickens. ”