The Xunta of Feijóo granted millions to a bankrupt newspaper whose owner boasted of influencing his Government

The regional government of Galicia, led by President Alberto Núñez Feijóo, granted millions of euros in public funds to a newspaper company facing financial collapse, according to a court ruling released on May 20. The loan was given to the publisher of El Correo Gallego, a publication known for its alignment with the conservative Popular Party (PP). This decision has raised questions about potential conflicts of interest and misuse of public resources, particularly because the owner of the newspaper had previously claimed he could influence the regional administration. The funding came through two state-backed entities: Xesgalicia, a public risk capital management company, and the Igape, an autonomous economic promotion organization. Both operate under the Ministry of Economy, which at the time was headed by Francisco Conde, a close ally and longtime associate of Feijóo. Conde played a central role in the administration during this period and remained a key figure even after Feijóo moved to Madrid. According to the court documents, the loan was part of a broader financial restructuring plan negotiated by Editorial Compostela, the parent company of El Correo Gallego. This restructuring included debt forgiveness agreements with major creditors, notably Abanca, which waived over 5.5 million euros in outstanding debts owed to the newspaper. Despite these arrangements, the regional government still extended a 2.5 million euro loan to the struggling media outlet. What makes this situation particularly controversial is that prior to receiving the loan, José Manuel Rey Novoa, the owner of Editorial Compostela at the time, reportedly boasted before the company’s board of directors that the regional government had the willingness to alleviate the financial burden on the newspaper. He claimed he would leverage his influence to secure the loan, despite the company being in a state of insolvency. Rey Novoa's statements were recorded in official meeting minutes cited in the court ruling but have not yet led to formal investigations into alleged abuse of influence. However, the judge overseeing the case, Ana López-Suevos, has ordered continued legal proceedings against Rey Novoa and ten other individuals and organizations for suspected crimes related to asset concealment and misappropriation. These charges stem from allegations that the company attempted to hide assets to avoid repaying its debts. El Correo Gallego, founded in 1878, has historically maintained a political stance aligned with the PP, especially during the tenure of former leaders such as Manuel Fraga and Feijóo himself. In November 2022, the newspaper changed hands when Editorial Compostela entered bankruptcy proceedings. It was acquired by Prensa Ibérica, a media group owned by businessman Javier Moll, who already operates several newspapers in Galicia, including Faro de Vigo and La Opinión A Coruña. The acquisition took place for 1.6 million euros, with the company carrying a total debt of 20 million euros. Prensa Ibérica assumed responsibility for 32 of the remaining 46 employment contracts from the previous staff. The legal action was initiated following complaints from former employees of El Correo Gallego, many of whom went months without pay. Additional support for the case came from the Social Security Guarantee Fund (Fogasa) and the Public Prosecutor’s Office. Neither Xesgalicia, Igape, nor the regional government itself have taken legal action to recover the public funds lent to the newspaper, which remains unpaid to this day. The trial is scheduled to begin in 2027, five years after the initial complaint was filed. According to Francisco Méndez, the lawyer representing nine former employees of the newspaper, the delay highlights the complexity of the case and the challenges faced by those seeking justice. Meanwhile, the controversy surrounding the loan continues to cast doubt on the transparency and accountability of public spending decisions made by the regional government.