Iberdrola, the European utility that’s an expert in renewables, is one of the world’s largest wind power generators, is embroiled in a murky case of alleged corporate espionage that’s now an official criminal investigation in Spain. Its chairman and chief executive officer, Ignacio Galan, will appear in court alongside other top executives on Jan. 18 as suspects, which in Spanish law refers to unindicted subjects of official probes. The probe is part of a broad scandal involving other blue-chip Spanish companies. According to investigators, several companies — including Iberdrola — allegedly hired a firm owned by a former senior police officer to spy on rivals and their executives.
According to court documents, Iberdrola allegedly asked the former policeman turned private investigator to dig up information on the chairman of a local competitor. Iberdrola also allegedly asked for intelligence on a local tycoon Florentino Perez (better known as the chairman of the Real Madrid soccer club) and his family amid a takeover fight, according to the filing. Iberdrola strongly denies the charges, arguing that hiring the former cop was part of normal business and all payments were for proper services.
So far, shareholders have taken Iberdrola’s legal troubles in stride. The company is trading at a price-to-earnings ratio of nearly 18 times, compared to the 13 times of Enel SpA, the Italian company that is its closer and larger rival, according to Bloomberg data. Iberdrola shares have outperformed too. Over two decades, Galan has turned a parochial coal-fired electricity producer in northern Spain into a global renewable giant, with subsidiaries from the U.K. to Mexico. Its green credentials have won plaudits; and few investors have complained about governance. That may change as the criminal probe starts to affect the company’s ability to grow in a key market. Iberdrola is trying to expand aggressively in the U.S. but its most recent attempt — buying a New Mexico-based utility called PNM Resources Inc. for more than $8 billion, including debt — failed when regulators blocked the deal citing the probe in Spain, among other factors.
The case is still ongoing.
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