BBVA and former chairman to stand trial over spying scandal

Spain's National Court has ordered BBVA and its former chairman, Francisco Gonzalez, to stand trial over allegations the bank hired a private intelligence network to spy on politicians, journalists, and business figures. The court, which handles major financial cases, ruled there was sufficient evidence to proceed against the bank and 15 other defendants. BBVA was placed under investigation for these actions in July 2019.

Gonzalez, 81, who led the lender from 2000 to 2018, will face charges of bribery, disclosure of secrets, membership of a criminal organisation, mismanagement, and falsification of documents. BBVA faces charges of bribery and the unlawful discovery and disclosure of secrets. Several former executives will stand trial alongside Gonzalez for the same offences.

The Villarejo network

The case centres on the bank's use of Cenyt, a business intelligence group linked to Jose Manuel Villarejo, a former police commissioner. Cenyt is suspected of conducting blackmail and making threats on behalf of companies and wealthy individuals for decades. Villarejo himself was sentenced to 19 years in prison in 2023 for secretly recording hundreds of public figures and orchestrating discrediting campaigns.

His past recordings have previously embarrassed former King Juan Carlos I, as well as numerous politicians and former ministers. For investors monitoring Europe's financial sector, the upcoming trial revives critical questions about corporate governance at major lenders.

Although the alleged espionage occurred under previous leadership, the trial forces the current board to defend the institution against accusations of systemic internal failures. The specific charges of mismanagement and document falsification suggest prosecutors believe the bank's internal controls were entirely bypassed. Institutional investors in Europe have grown increasingly intolerant of banks outsourcing sensitive work to unvetted third parties.

Such practices generate severe reputational and regulatory fallout that can weigh on a bank's valuation. By moving the case to trial, the National Court has signalled that the evidence against the bank and its former leadership is substantial. The proceedings will determine whether a major European bank can be held criminally liable for the illicit methods employed by the private intelligence agencies it retained.