Gas companies saved 59 million in taxes thanks to the Economic Team's mediation.

It only took two months for the Ministry of Finance to change its position. If the tax reduction demanded by the gas companies accused in the Montoro case in April 2014 represented "a considerable and costly administrative and control effort for the State Tax Administration Agency" for the ministry, by June it was already more than feasible. In that short period of time, according to the judge investigating the alleged scheme, the mediation of Equipo Económico, a consulting firm founded by former minister Cristóbal Montoro and members of his first ministerial leadership under the Aznar government, was decisive. The tax reduction demanded by the companies involved—an 85% reduction in the taxable base of the Electricity Tax—represented a loss in revenue of €59 million for the Treasury in 2015, the first year it was applied.

For this and other events, the judge of Tarragona Court No. 2 has charged 28 people. One of them is Cristóbal Montoro, Minister of Finance on two occasions, during the governments of José María Aznar (2000-2004) and Mariano Rajoy (2011-2018). Also charged are senior ministry officials during his two terms as head of the department, as well as executives and advisors of private companies.

The heart of the scheme traced by the judge is the Economic Team, founded in 2006 by Montoro himself and some former senior officials from his first term at the Treasury. When Montoro returned to lead the ministry in 2011, this first team pressured the private sector to force the new leadership of the ministry to modify the legislation to benefit the companies that contracted its services, according to the court rulings. Companies belonging to the Association of Industrial and Medicinal Gas Manufacturers (AFGIM) have been beneficiaries of the alleged scheme.

We have to go back more than 10 years to unravel the truth. In 2013, the government passed a law adapting to an EU directive that, among other things, introduced an 85% reduction in the taxable base of the Electricity Tax for certain sectors: electricity used for chemical reduction and electrolytic, mineralogical, and metallurgical processes. The gas companies had unsuccessfully petitioned for the reduction, so they decided to hire Equipo Económico (EE), according to the judge. "AFGIM, after failing to obtain the desired reforms, decided to change its strategy and decided to hire EE, knowing, as stated in one of the seized emails, that it was an economic office that had access to the Ministry of Finance to obtain this tax reduction," the ruling states. "It is even said that the most direct route, as always, is to pay EE, which has direct contact with Finance Minister Cristóbal Montoro."

In fact, everything changed in 2014. In March, the AFGIM—which had met with Montoro that same month—sent a letter to the ministry. The sender was José Luis Cañedo, president of the board of directors and also a defendant, requesting a meeting with the Secretary of State for the Treasury, Miguel Ferre. In the letter, he requests that the 85% reduction be extended to industrial activities whose electricity consumption represents more than 50% of the product's cost, which would extend the tax benefit to gas companies. The Treasury initially responded with a negative response, emphasizing, among other things, that extending the benefit in the manner suggested by the association "would entail a considerable and costly administrative and supervisory effort for the State Tax Administration Agency," according to police reports.

The extension of the tax cuts requested by the gas companies appeared in June, "just two months after the rejection sent by the Director General of Taxes," in a draft of the bill that would later amend the electricity tax and other taxes, a bill in which the then Director General of Taxes, Diego Martín-Abril Calvo, participated. The economic impact report stated that the extension would not cause "a significant reduction in public revenues," since it would benefit a small number of companies.

“Regarding the cost of including industries that consumed electricity in more than 50% of the product's cost, [the ministry officials] decided that no cost was contemplated.” The police report adds that the drafting of the standard also lacked a report from the Economic and Social Council, the preparation of which would “possibly” have overturned this regulatory change.

Finally, the extension of the tax benefit to gas companies was approved in Law 28/2014, which reformed several taxes, including the Special Tax on Electricity. Shortly after, Royal Decree 1074/2014, which regulates these discounts, was approved, simplifying the process for applying for them. Contrary to what was stated in the economic impact report on the law, the Tax Agency's annual revenue report for the 2015 fiscal year does record a loss of revenue related to the extension of the 85% tax reduction, "valued at €59 million."

According to the judge, there is evidence that AFGIM's payments to Equipo Económico were intended to "allow access to the Minister of Finance and the Secretary of State," as well as to obtain "an ad hoc modification" that "would exclusively benefit the gas companies." Furthermore, he emphasizes that allegedly "AFGIM was responsible for drafting the proposed text for the regulation that would include them in the aforementioned tax benefit." "It is significant that EE's intervention allegedly achieved, in less than a month, the consecutive modification of both Law 28/2014 and Royal Decree 1074/2014, which modifies the Special Tax Regulations. The only differentiating element that led to such a significant change in criteria in such a short period of time was EE's entry into the scene, following an agreement on the price they should pay the firm," the ruling adds.

Later in 2018, according to the investigation and always thanks to the mediation of the Economic Team, the gas lobby obtained another tax reduction by changing the heading of its activity in the Economic Activities Tax. The then Deputy Director General of Local Taxes, Óscar del Amo, was dismissed this Friday .