All the irregularities of the Ciudadanos Party: accounting errors, a discordant treasury and an opaque charitable foundation

Catalan MonitorNews Roundup

Photo: Arrimadas having a photo taken with some followers, with a picture of Rivera in the background.  (Credit: Adrià Costa)

By Roger Tugas

December 30th, 2017

The claim that Ciutadans (Citizens) Party spent €2.1 million on their campaign for the 21st of December elections, not including coffee costs, made the audience laugh, during the recording of [popular show] Frequently Asked Questions. The accounting of the party is very complex and a report made public by the Spanish Court of Auditors, relating to the party’s economic activity and adherence to legality during 2014 and 2015, as well as that of its charitable foundations, has for the first time put Ciutadans under the microscope.  And there are some surprises.

First of all there are no oddly large donations or irregular disproportionate income, as had been speculated, such as when an account linked to Anonymous made such claims, without evidence. Albert Rivera’s party declared 2015 donations by individuals worth €270,851 euros, which fell just below those of the Leftist Republican Party (ERC) at €231,316, and well below the Socialist Party of Catalonia (PSC) at €877,120,  or CDC at €649,531.  On the other hand, they declared much more in membership fees (€2,248,474) and the bulk of their declarations were for electoral subsidies totaling €10,262,476.

Another issue is the management of these resources. The Court of Auditors makes it clear that the annual accounts of 2015 presented by Rivera “do not adequately reflect the financial situation and equity of the party at the end of the year due to the quantitative importance” of various errors. This is not the only case where the regulating body has flagged up errors in the accounting of a party, as this has also been done for CDC, IU, Compromís, Aralar, EH Bildu, Eusko Alkartasuna and the Aragonese Party, however none of them cases displayed anywhere near as many irregularities.

Autonomous Community and local groups excluded

To begin with, the report warned that “the fiscal procedure was not followed, as the annual accounts do not include activity from the institutional arm of the party”.  The accounts only include economic and financial activity from 9 of the 12 parliamentary groups and left out the Valencian, Extremaduran and that of Castile and Leon, as well as only incorporating 241 local level groups, which implies 541 were ignored, including five provincial councils. In 2015, in fact, it was the municipal and autonomous community elections which allowed Rivera to make the jump to State level, an operation which, apparently, was not accompanied by centralized rigor in financial control.

For example, the accounts do not declare the €145,272 collected from the Generalitat Valenciana, the €41,789 from the Province of Malaga or the €91,377 from various provincial capitals, the €220,997 from the Ministry of the Interior for security costs, the €42,169 from the European Parliament or the €678,023 from the Parliament of Catalonia. Not exactly minor amounts…

As far as outgoing payments are concerned, there are many notable discrepancies and errots as well, and the Court of Auditors states that “there are many disagreements between the supporting documentation provided by the party and accounting records, such as omissions of certain movements in the Treasury, errors in the monitoring of balances and payments to creditors, as well as duplicate accounting of expenses”.

A balance with numerous errors

The report goes on to state that “the end-of-year balances in the accounts held by their institutional groups contain, in general, numerous errors and omissions which significantly affect the validity of the accounting documents, and relate to a variety of subjects, among such as errors in the record-keeping of subsidies received, documentation of payments and financial expenses, of cash withdrawals, as well payments registered in duplicate or made incorrectly”.

The report continues by stating that the Ciutadans treasury is endowed with a balance of €5,206,538, which consists of €15,304 euros in cash, and twelve funds across different bank accounts totaling €5,191,234. However “the analysis of the cash flow provided by a sample of the institutional groups results in an undervaluation of the balances held in cash totaling €5,919.49”, which actually sums to an amount higher than the asserted total held by the treasury.

Photo: Ciutadans publicity poster in Barcelona (Photo: Adrià Costa)

The analysis of the handling of electoral expenses also highlighted several irregularities, such as the fact that Cs “did not declare, as electoral expenses, a total amount of €166,281” for items which, by law, should have been recorded. Likewise, payments made by third parties for electoral invoices issued by the party were registered as donations, and these totaled €14,37, which violates the financing law for parties, which states that they cannot “accept, directly or indirectly, that third parties effectively assume the cost of expenses generated by their activity”, which “could constitute a sanctionable offense”. This amount, in addition, also does not include or identify donors who paid up to €2,037 of electoral expenses.

Similarly, Rivera’s party risks skirting the law by financing other electoral expenses valued at €24,329 euros from the budgets of various municipal and parliamentary groups.  These undeclared payments, were obviously not intended for the operation of the institutional group, as the regulations state they ought to be.

Party staff paid by municipal groups

In the same way, some Cs groups in city and provincial councils have spent around €166,393 on the “payment of staff remuneration” for the party, which could also violate the law, with regards to how local regimes are paid. These remunerations, in fact, are the source of several more irregularities, since 17 temporary employees were hired for various election campaigns without being declared as an electoral expense. The Court of Auditors also detected the payment of payroll in duplicate, and that the Gavà council group did not pay personal income tax or social security contributions to two scholarship holders who received €4,000, and that the Sant Cugat group “incorrectly recorded payroll amount of four months”.

The list of errors that the report outlines is remarkable, to the point that the deviation it detects between the registered accounts and correct accounting would add to €9.6 million. Of this amount, €7.5 million represent long-term debts with credit institutions that would appear to actually be current liabilities, since they expire the following year, but also that “the incidents arising from the accounting of the bonds of the various headquarters of the party led to the fact that the expenses of the year were underestimated by €191,875 euros and liabilities by €176,132 euros”, that “the non-current assets of the party were overvalued at €28,378.31” and that the results for the year are “overvalued by a net amount of €47,103”.

On the other hand, Ciutadans had creditors balances adding to a total amount of €108,990 “registered in duplicate”, and maintained a short-term debt of €2,930 which had been canceled for more than a year, and obligations arising from the rental of premises which were not reflected in the accounts as an expense, totaling a value of €31,748 euros with respect to the headquarters in L’Hospitalet de Llobregat, Lleida, Valencia and Madrid. The accounts also present many minor errors, such as the incorrect registry of €5,769 for the purchase of computer equipment, while the document does not reflect – as it should – the existence “of guarantees provided by the party to third parties, for a total value of €1,065,876 euros”.

Photo: Rivera, Girauta and Asunción, at the presentation of “Citizens Movement” (Credit: Roger Pi de Cabanyes)

Opaque Foundations

Finally, with regard to its foundations, Citizens only recognize Civic Tribune as one of their own, while two more were left out: the Catalunya Constitucional association, founded by Ciutadans leaders, and which received grants as a party-linked entity, but has not submitted an audit of accounts, as the law specifies; and the “Citizens Movement for Regeneration” association. In this second case, three members of the board also are leaders of the party; it was the platform which helped Rivera make his first tour and expand the party to state level, and as if this was not enough,  the Court of Auditors found incorrectly entered expenses relating to Ciutadans, issued in the name of this very association, totally €6,147.

However, the Citizen Movement for Regeneration entity did not present either annual accounts or an audit report when it was requested to do so in the first instance and, in fact, Ciutadans delivered a list of donations received in the name of this association during 2014 at the very last minute. This was too late, however, for it to be audited and endorsed in accordance with the law, and written up in this recent report.

Original Link: https://www.naciodigital.cat/noticia/145796/totes/irregularitats/cs/desviacio/comptable/tresoreria/discordant/fundacio/opaca

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