Spain’s National Court is examining the 2001 purchase of Colombian water company Inassa, with former Madrid president Alberto Ruiz-Gallardón and his cabinet called to explain their roles in the first trial of the ‘caso Lezo’ investigation. Prosecutors say the public may have paid up to €29 million more than Inassa was worth, but the figure is disputed: some estimates put the overpayment at €19 million, others at €29 million.
The case centres on Canal Isabel II, Madrid’s public water utility, which bought 75% of Inassa through a Panamanian shell company. Prosecutors argue that this structure inflated the price and concealed the true nature of the assets, including a Dominican software firm unrelated to the original deal. The acquisition, financed with more than €50 million in debt, was approved by Gallardón’s cabinet based on Canal Isabel II’s reports. The Madrid Assembly did not object at the time. Prosecutors continue to focus on offshore companies as a possible sign of wrongdoing.
The Lezo trial began on September 7, 2026, nearly a decade after the investigation opened, reflecting the complexity and length of the proceedings.
Gallardón, who was initially charged but later cleared, told the court he had never doubted the deal’s legality. He said his government simply approved what Canal Isabel II’s board proposed, relying on technical reports and standard procedures. Gallardón said the cabinet knew nothing about the Panamanian company or the Dominican firm, and that he learned of these details more than 15 years later, when he was called as a suspect. He argued that the acquisition did not harm Madrid’s finances, rejecting the prosecution’s claim of a multi-million-euro loss. In his testimony, Gallardón described the operation as “prudent and legal.” He said the decision was based on positive legal opinions and intended to benefit both Canal Isabel II and Madrid residents.
Other former cabinet members gave similar accounts. Luis Peral Guerra, a former regional minister, described the process as routine: the council approved 96 items that day and trusted the public company’s due diligence. Manuel Cobo, Gallardón’s former deputy, said the Assembly of Madrid reviewed the deal and raised no objections, calling it a technical matter rather than a political one. Cobo also mentioned a recorded conversation in which Ignacio González, another former Madrid president, allegedly tried to damage Gallardón’s reputation for political reasons. He suggested the scandal was used in internal power struggles. By contrast, former Canal Isabel II board member Rafael Merino called the Inassa purchase “quite murky,” backing the prosecution’s view that the deal lacked transparency and involved irregularities.
The Spanish Anticorruption Prosecutor’s Office continues to accuse Canal Isabel II board members who approved the Inassa deal of serious violations. Case files highlight the alleged use of offshore structures and impressive overpayment. Multiple independent reports support the prosecution’s position and point to unresolved questions about the assets’ real value and the transaction’s transparency.
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Prosecutors maintain that offshore companies and the purchase of unrelated assets point to deliberate concealment and financial misconduct. Investigators say the final price, $73 million, was far above the company’s real value, benefiting the sellers and costing Madrid’s public funds. The trial also involves former officials Pedro Calvo Poch and Juan Bravo, for whom prosecutors are seeking seven-year prison sentences.
Ignacio González, though not charged in this part of ‘caso Lezo’, faces separate trials over alleged contract rigging and kickbacks involving Canal Isabel II and other public works. The broader investigation has exposed deep divisions within Madrid’s political class, as seen in earlier efforts by the Assembly to block scrutiny of public spending.
After years of investigation and nearly 25 years since the original deal, the trial’s outcome will test Spain’s anti-corruption system. The defense relies on claims of bureaucratic routine and technical reports, while prosecutors point to offshore deals and gaps in oversight. The Inassa case comes as the region continues to contend with repeated scandals, and the court’s verdict will determine whether procedural ignorance can protect those in power.
