Madrid studies possible irregularities in Gallardón contracts with Lehman Brothers


Ayuntamiento de Madrid

The Palacio de Cibeles, headquarters of the Madrid City Council. EUROPA PRESS / TOWN HALL OF MADRID

Madrid City Council is studying possible indications of administrative irregularities in the contracting with Lehman Brothers produced in 2007, under the mandate of Alberto Ruiz-Gallardón , the Consistory said in a statement.

Thus, the City Council is studying a loan, a loan that a credit institution grants to a public administration, hired in 2007 with the company Lehman Brothers. According to the documentation studied, the offer could have been modified after it was submitted and became more expensive after closing.

It is a debt issue, financing formula that turned out to be tremendously expensive, ” well above the average financing of the Madrid City Council”.


In 2007 the Consistory of Madrid was forced to obtain more than 400 million Euros to face the payment of the investments that it was undertaking during that same exercise. Then it received the approval of the Ministry of Finance to issue debt, an essential requirement because it exceeded the permitted ratios, and opted for the public call.

In 2007 the Consistory of Madrid was forced to obtain more than 400 million Euros to face the payment of the investments that were undertaking during that same exercise In September of that year it was sent to 35 credit entities from the area of ​​Economy and Finance , directed at that time by the current president of ADIF, Juan Bravo , an invitation to present tenders to issue a loan for ten years of 200 million euros (fixed interest and variable interest), another loan to fifteen years of the same amount (fixed interest and variable interest) and a loan of 95 million.

The offer selected for the issue of ten-year debt was presented by Lehman Brothers , an entity that had not previously signed contracts with the Madrid City Council, while Barclays Capital, Dexia and JP Morgan were awarded the loan for fifteen years and Depfa He took care of the loan.

The official invitation sent by the City Council underscored the need for the offers they submitted to be insured, that is, that the financial institution would guarantee the necessary funds even if there were no financiers in the market (buyers of the debt).

According to the file studied, several offers presented did not contain this assurance , for which reason they were declared null and void without the possibility of correction.

However, in the award report it is specified that the Economy and Treasury area contacted Lehman Brothers, who had not specified this requirement in the officially submitted bid, to clarify whether their offer was firm and insured. He got a reply by fax confirming it. “Everything indicates that it was accepted as clarification what could be considered an essential change in the offer, ” they point out from the Consistory.

New added cost

The contractual conditions specified in the invitation sent to the 35 entities indicated that costs that were not duly detailed in the offer would not be accepted. In the case of Lehman Brothers, a communication was sent days after the offer was presented in which a new cost could have been added. He was referring in particular to an annual remuneration of 4,000 euros as payment agent.

The Madrid City Council will study the signs detected to clarify whether there were irregularities . Among the possible irregularities detected is also the modification of a competing offer.