The demise of corporate spy José Manuel Villarejo and reputational damage to Spanish corporations

By Luis Losada Simon-Ricart, Senior Analyst, Latin America & Iberia Practice, Aperio Intelligence

José Manuel Villarejo (“Villarejo”), a former police commissioner, was a relatively unknown figure in Spain. This changed in 2017 after the Spanish National Criminal Court (Audiencia Nacional) opened an investigation into Villarejo over reported dubious business deals in Equatorial Guinea. A warrant for Villarejo’s arrest was issued after police found extensive evidence related not only to Equatorial Guinea, but also to various espionage campaigns targeting prominent Spanish business leaders, companies and senior officials. Villarejo was in pre-trial detention between November 2017 and March 2021 when he was released after exceeding the legal duration limit of custody pending trial.

Villarejo allegedly led an espionage network which, over the course of approximately two decades, made extensive covert recordings and was responsible for other invasions of privacy of politicians, business leaders, judges, and journalists. This triggered the Audencia National to open over 30 probes against the former police commissioner concerning some of Spain’s largest companies and their principals, either as victims or alleged accomplices.

This includes energy company Repsol, utility company Iberdrola, and Spanish bank BBVA and CaixaBank. In one such probe, investigators are scrutinising allegations that between 2011 and 2012, Repsol and CaixaBank, at the time one of Repsol’s significant shareholders, asked Villarejo to intercept calls made by the chair of Spanish construction company Sacyr SA, Luis del Rivero, and people close to him. The operation’s aim was reportedly to prevent a pact for the acquisition of a controlling stake in Repsol between Spanish infrastructure operator Sacyr SA and Mexican state oil group Pemex. At the request of Iberdrola, Villarejo also allegedly spied on several politicians and sought to damage the reputation of Florentino Pérez, the largest shareholder and chairman of Spanish construction company ACS.

Villarejo was also reportedly part of the “patriot police”, a secret unit allegedly working for the Spanish Interior Ministry led by Jorge Fernández Díaz (2011-2016) to tarnish political opponents, including Spanish far-left party Podemos.

While most of the investigations against the companies and its executives have been dropped, the media and legal scrutiny has resulted in significant reputational damage to their brand in Spain and abroad. For example, in December 2021, The New Mexico Utility Regulator rejected Iberdrola’s $8 billion acquisition of US energy company PNM Resources, in part due to concern over Iberdrola’s involvement in the Villarejo case, according to New Mexico Supreme Court documents. Corporations may and should assess the conduct and reputation of other companies before seeking to do business, but not by any means necessary.