Spain’s main stock index, IBEX 35, started trading in 1992, a crucial date for the country’s young democracy, only 15 years after the first free election took place following four decades of Franco’s military dictatorship.
That year Spain flexed its muscles to prove the world it could successfully host the Olympic games in Barcelona and the Universal Exposition of Seville, while also joining the single market of the then European Community. To underpin these three milestones, investment in the economy’s 35 flagship companies provided major financial backing; or so the story goes.
Rubén Juste, PhD and lecturer in Sociology, has delved deep into the origins of the IBEX 35 to tell a different tale.
Juste’s thorough investigation into the boardroom composition of the IBEX 35 constituents, from the index’s inception until today, tells a story where revolving door appointments were common practice. Juste says a class of “ business-politician people” (drawn from the Francoist elites that later morphed into respectable democrats and from the barons of the new democracy’s political parties) have always managed to reach the upper echelons of the IBEX 35’s boardrooms.
Either the government or the leading business groups of the day have appointed friendly directors who, as Trojan horses, can safeguard their interests. Behind the book is long hours of research conducted at the archives of Spain’s securities regulator to trace the family trees of those who have been pulling the strings. The final product is an unexpected ESG guide to navigate Spain’s idiosyncratic corridors of power and corporate governance practices.
It also gives a detailed account of the country’s most notorious financial fiascos and mismanagement, including the housing bubble which culminated in the bailout of Spanish banks in 2012 by the European Stability Mechanism. Of interest for the reader would also be the analysis Juste makes of the evolution in the ownership and leadership of the index’s stocks.
The bailout’s terms required restructuring of the cajas or saving banks which had ended up in the politician’s pockets and once dominated the IBEX 35. Since then, as Juste notes, the main players and largest owners of the index are foreign investors, particularly BlackRock and JP Morgan. With his writings Juste says he is attempting to hold accountable those who rule the country without having won an election.
After the success of his book earlier this year, Spain’s second opposition party Podemos, hired him as a political advisor. One of his tasks is to assist in a forthcoming parliamentary commission that will investigate responsibilities for the bailout of the financial system. Fellow MPs who have not hired his services can still find in Juste’s book a useful tool to grill those who will testify in parliament.
