A Spanish court will investigate whether huge commissions charged by an aristrocratic entrepreneur and his partner on the sale of vital health supplies to Madrid city hall at the height of the COVID-19 pandemic constituted illegal profiteering.
Well-known socialite Luis Medina and his partner Alberto Luceno sold $12 million worth of surgical gloves, face masks and rapid testing kits to Madrid, pocketing commissions of between 60% and 70% that they spent on luxury cars, lavish hotel stays and a yacht, the anti-corruption prosecutor's office said on Wednesday.
The prosecutor said the pair obtained "an exaggerated and unjustified economic benefit" and accused Medina and Luceno of aggravated fraud, forgery and money laundering.
The prosecutor also alleged Luceno falsely claimed he was the supplier's exclusive agent.
Medina, who first contacted Madrid city hall and proposed Luceno as a supplier, told Spanish news site El Confidencial that his 1 million euro ($1.09 million) commission was legal.
"I understand that a lot of people may not like it. But it is 8% of the contract. It is a normal brokerage fee, which is charged many times," he was quoted as saying.
Luceno received a total of 5.1 million euros in commission and concealed part of it from his partner, the prosecutor said. He did not answer a request for comment.
Both men were commissioned to purchase 1 million KN95 masks, 2.5 million gloves and 250,000 rapid tests. Neither the gloves nor the tests met procurement criteria, the prosecutor said.
With the money Medina bought a yacht named "Feria" after his family's duchy while Luceno bought three Rolex watches, twelve luxury cars - including multiple Aston Martins, a Ferrari and a Lamborghini - and an upmarket Madrid flat, the prosecutor added.
Madrid mayor Jose Luis Martinez Almeida, who is facing calls to resign over the case, recognised that the contract was a mistake but defended the city's actions at a time when authorities everywhere were scrambling for scarce supplies.
"With the information we had and the situation we were in, I fully support the decision that the council's technicians took," he said. "We never knew that money was going to end up where it did."
The court said on Thursday it will call both businessmen and some witness to testify and has asked Madrid if the city wants to be part of the judicial proceedings.
Reuters was not able to contact Medina.
($1 = 0.9166 euros)
(Reporting by Emma Pinedo; Additional reporting by Christina Thykjaer and Belén Carreño; Editing by Nathan Allen, Kirsten Donovan)
