Spain : EU Orders Textile Firm To Repay 104m Euros

The European Union said the Barcelona-based company must repay the money it received in tax and social security breaks from the government after they were deemed to be state aid and illegal.

The company, which has reduced its workforce to 600 from 1,600 in the past five years, will also have to pay interest on the sum.

"The Commission assessed the way the tax authorities and the social security responded to the increasing debts throughout the 1990s. By the year 2000, these debts had grown steadily to around 104 million euros," the EU said in a statement.

"A significant part of the debt remained outstanding for over five years. The Spanish authorities made efforts to secure part of the debts by mortgages and embargoes, but the value of the properties appears insufficient to guarantee the outstanding debts.

"Finally, the authorities did not proceed with enforced collection procedures, even as Puigneró breached debt rescheduling agreements it had reached with the authorities.

"The Commission concludes that under the same conditions a private creditor would not have allowed a similar accumulation of debt and would have proceeded with enforced collection procedures. In these circumstances, the lack of appropriate action by the Spanish tax and social security authorities amounts to State aid in favour of Puigneró."