Ayuso’s PP Blocks Investigation into Multi-Million Euro Losses at Madrid’s Public Company
Madrid, Spain – The Popular Party (PP) in Madrid, led by regional president Isabel Díaz Ayuso, has successfully blocked a proposal by the Socialist Party (PSOE) to establish a commission to investigate the substantial financial losses of Canal de Isabel II, the region’s public water company. The PSOE’s initiative, which sought to scrutinize the company’s costly national and international expansion, was supported by Vox and Más Madrid but ultimately rejected by the PP, which holds a majority in the Madrid Assembly.
The Mounting Losses and the Call for Transparency
Canal de Isabel II, nearing its 175th anniversary, is under intense scrutiny for a diversification strategy initiated at the turn of the century. This strategy, now deemed ill-advised by current management, has led to significant financial setbacks. The PSOE’s proposal for an investigative commission is bolstered by a series of recent events and reports that highlight the company’s precarious financial state.
- February 2026: The Court of Accounts urged Canal de Isabel II to expedite its withdrawal from its American ventures.
- Mid-April 2026: The company issued a tender for a contract to bolster its defense in an international arbitration case following Colombia’s intervention of its American subsidiary, Triple A.
- Late April 2026: Lanzarote removed Canal de Isabel II from managing the island’s water supply, citing a “serious, structural, and continuous disruption of the system.”
Diego Cruz, a PSOE deputy in the regional parliament, expressed strong criticism of the PP’s decision: “They don’t want the people of Madrid to know why their great public company is losing money in Brazil, Colombia, and Lanzarote while they remain silent.” Cruz cited alarming figures, backed by a Court of Accounts report, including 90 million euros lost in Brazil, 145 million euros in debt in Lanzarote, and a negative equity of 85 million euros. He emphasized that these “extremely serious” issues cannot be resolved by a mere “tailored appearance” by the Canal’s CEO, as proposed by the conservatives. “They are resolved with transparency, public scrutiny, and serious proposals. After years of scandals, corruption, poor management, and worse decisions, Madrid cannot expect anything less.”
PP’s Justification: Alternative Oversight Mechanisms
The PP, exercising its absolute majority, argued against the necessity of a study commission. The party stated that deputies have various parliamentary tools at their disposal to obtain information, including appearances, information requests, written and oral questions, and the entity’s transparency portal. This argument effectively dismisses a deeper, more structured investigation into the financial mismanagement.
A History of Controversial Expansion and Corruption Allegations
The roots of Canal de Isabel II’s current woes trace back to 2001 when Alberto Ruiz-Gallardón presided over the Community of Madrid. During this period, public companies, including the Metro, embarked on international ventures. Canal de Isabel II acquired Inassa in Colombia, marking the beginning of its international expansion into countries like Brazil, Ecuador, the Dominican Republic, Mexico, and Uruguay.
The scandal erupted in 2017 with the ‘Lezo case,’ leading to the arrest of Ignacio González, a former regional president, and ex-directors of the public company. Nearly a decade later, González awaits trial for allegedly pocketing over four million euros in kickbacks from the alleged overpricing of the Brazilian company Emissao.
Adding to the company’s troubles, its Brazilian venture is reportedly on the verge of bankruptcy, according to two audits by Ernst & Young. These audits, obtained by EL PAÍS, indicate a “material uncertainty that could cast significant doubt on the Company’s ability to continue as a going concern.”
Furthermore, Canal de Isabel II lost a multi-million euro contract in Santo Domingo, Dominican Republic, for “harming” state interests. The company is also pursuing a claim in the Court of Arbitration against the Colombian government for the expropriation of a subsidiary under an anti-drug law. In Brazil, it seeks compensation exceeding 60 million euros. These contentious issues are expected to dominate the upcoming appearance of Mariano González, the CEO of Canal de Isabel II.
The Lanzarote Fiasco: A Case Study in Mismanagement
Beyond international disputes, Canal de Isabel II faces various legal battles within Spain and other countries like Uruguay, Panama, and Peru. Efforts are underway to rebalance the economic concession for water management in Cáceres (Extremadura), valid until 2039. However, a significant blow came with the loss of the Canal Gestión Lanzarote concession, which began in 2013 and was supposed to run until 2043.
A report by the Court of Accounts acknowledged the persistent difficulties in meeting the financial projections made at the time of securing the concession from the Lanzarote Water Consortium. The report noted that the business was expected to generate profits from 2020-2021, but these forecasts proved “unrealistic,” coinciding with a failure to implement agreed-upon tariff increases. Consequently, the concession has entered a state of “recurrent losses.”
Despite this ruinous legacy, the Madrid Assembly will not conduct a comprehensive study. The PP maintains that existing mechanisms are sufficient, effectively closing the door on a thorough analysis of a monumental operation still under judicial investigation.
The PP’s decision to block the investigative commission raises serious questions about accountability and transparency within Madrid’s public administration, leaving the public in the dark about the true extent and causes of Canal de Isabel II’s financial quagmire.
Source: https://elpais.com/espana/madrid/2026-05-04/el-pp-de-ayuso-veta-fiscalizar-el-agujero-millonario-por-el-fiasco-de-la-expansion-de-la-gran-empresa-publica-de-madrid.html
