Case File

Defex’s Dirty Decades: Arms Sales to Saudi Arabia

Author
B. Arneson, Jack Cinamon & Rhona Michie
Published on
September 2, 2025
Image
The National Court (Audiencia Nacional): Cberbell CC BY-SA 3.0
Spanish Supreme Court
The National Court (Audiencia Nacional): Cberbell CC BY-SA 3.0

Contents

Contents

top

Introduction

Introduction

contents

Spain’s Anti-Corruption Prosecutor is investigating more than two decades of illicit arms deals with Saudi Arabia, a case that traces back to Defex’s earlier scandal in Angola.

Between the early 1990s and 2016, Defex, a state-owned Spanish arms exporter, allegedly diverted more than €100 million to tax havens in connection with arms contracts with Saudi Arabia, prior to its liquidation in 2022. More specifically, between 2005 and 2013, the company secured at least 11 contracts to supply weapons and law enforcement equipment to the kingdom. These deals, currently under investigation, were facilitated through a system of illicit commissions, disguised as consulting fees and embedded within public contracts, artificially inflating costs by up to 20%.

To carry out the scheme, Defex and its associates established a “complex constellation” of companies designed to channel funds to individuals with close ties to Saudi authorities, as well as to Defex’s own executives. Swiss authorities, responding to requests from Spain’s High Court, confirmed that these payments were made without any legitimate commercial services in return.

The alleged crimes include corruption in international business transactions, embezzlement of public funds, money laundering, falsification of documents, and participation in a criminal organisation.

Case Details

Case details

contents
Seller country
Spain
Seller company
Defex
Buyer country
Saudi Arabia
Goods category
Ammunition, Shells, Spare Parts
Equipment sold
9mm calibre cartridges, 12.7mm Sniper cartridges, 105mm projectiles, 155mm ammunition, 150mm HEA-TT projectiles, WP projectiles Spare parts for Saudi army’s AMX-30 battle tanks Rubber track pads for armoured vehicles
Deal value
€48,581,416 ($65.813 million)
Sum involved in corruption
Over €100 million
Start year
1992
Outcome status
Mixed

Actors

Actors

contents

  • Defex: a Spanish defense company founded in 1972 and headquartered in Madrid. It was 51% state-owned and 49% privately owned, with a primary focus on the export of arms and defense equipment. The company’s board of directors included high-ranking government officials, such as the ministers of Defense, Finance, Foreign Affairs, and Economy. Defex was liquidated in 2022 following allegations that it had paid millions in bribes to secure international contracts.

  • Manuel Iglesias Sarriá Fernandez de Navarrete: former commercial director (2004-2013) and director of operations (2014) of Defex; allegedly had executive decision-making on commissions to senior officials of the Saudi regime; convicted of corruption in international commercial transactions for a similar case in Cameroon involving Defex; sentenced to two years in prison for corruption.

  • Ángel María Larumbe Burgui: former Operations Director of Defex; Colonel in the Spanish reserves; had a false identity; took 1% of each contract signed by Defex; accused of corruption, embezzlement, document falsification and money laundering.

  • José Ignacio Encinas Charro: former President of Defex (1991-2013); alongside Ángel María Larumbe Burgui, he took 1% of each contract signed by Defex.

  • Fernando Aguilar Viyuela: former President of Defex (2013-2015), after José Ignacio Encinas; emails show he was aware of bribes to the Saudi authorities; Faces a maximum sentence of 20 years in prison.

  • Álvaro Cervera Pérez: commercial agent of Defex in Saudi Arabia for 25 years since 1991, oversaw transfers totaling $40 million to shell companies in Panama, the British Virgin Islands, the Cayman Islands, and Liechtenstein, among other jurisdictions with lenient tax regulations, without contracts or invoices. Cervera also designated himself and his children as financial beneficiaries of a dozen offshore companies.

  • Carlos Ques Blandigneres: used as an intermediary by Defex executives.

  • Paula Alexandra de Oliveira: used as an intermediary by Defex executives.

  • Verónica Luisa Blanco-Traba: daughter of Juan Manuel Blanco-Traba, former naval attaché at the Spanish embassy in Washington, a key figure in the formation of Navantia and major shareholder of Defex, who later served as commercial director at Empresa Nacional Bazán de Construcciones Navales Militares; faces 29 years in prison as the representative of Defense Development, a contractor for Saudi Arabia.

Timeline

Timeline

contents
1992
  • The beginning of Defex’s commercial relationship with Saudi Arabia. Between 1992-2004, five contracts were signed for the sale of weaponry and other military gear to Saudi Arabia from Spanish arms companies through Defex.
  • From 2005 to 2013, Defex acquired 11 contracts to supply weapons and law enforcement gear to Saudi Arabia:
2005
  • One contract: spare parts for AMX-30 battle tanks (€4,033,760).
2007
  • One contract: 25,000 rubber track pads for armored vehicles (€1,868,530).
2008
  • Two contracts: 11,292,000 9mm caliber cartridges (€5,277,638); spare parts for AMX-30 battle tanks (€1,320,165).
2011
  • Four ammunition contracts: 118,000 12.7mm Sniper cartridges (€484,331); 105mm projectiles (€2,609,402); 155mm ammunition (€8,337,840); 3,000 105mm projectiles (€294,000).
2012
  • Two ammunition contracts: 3,450 106mm cartridges (€4,950,750); two types of 155mm projectiles (€5,913,000).
2013
  • One contract: 7,500 150mm HEA-TT projectiles and 2,000 WP projectiles (€13,492,000).

Outcomes

Investigation Outcomes

contents
2014
  • Defex came under investigation by Spain’s Anti-Corruption Prosecutor’s Office after suspicions arose regarding its dealings in Angola. The investigation later extended to several countries, including Algeria, Brazil, Cameroon, Egypt, Gabon, Saudi Arabia and Senegal.
2017
  • 8 AprThe Board of Directors of Sociedad Estatal de Participaciones Industriales (SEPI), the state-owned industrial holding company, resolved to seek authorisation from the Council of Ministers for the Members’ Voluntary Liquidation of Defex.
  • AugSwiss authorities blocked four bank accounts linked to bribes allegedly paid by Spanish-owned company Defex.
  • 10 OctDefex’s board agrees to its dissolution.
2018
  • 13 JulThe judge finds sufficient evidence to prosecute 27 people and the company Defex for the Angola contracts.
2019
  • 30 JanThe National Court (Audiencia Nacional) proposes the prosecution of Defex and its commercial director for contracts in Cameroon.
  • 6 MarThe judge proposes to try Defex and its former leadership for eleven military equipment contracts with Saudi Arabia.
  • 20 MayThe judge opens a trial against Defex and its former board of directors for police equipment contracts with Angola.
2020
  • 13 JanSpanish prosecutors conclude the corruption investigation into Defex's bribery scheme relating to weapon export contracts in Saudi Arabia.
  • Although unclear whether this relates solely to Saudi Arabia or the entire Defex’s Dirty Decades scandal, it has been reported that the full investigation revealed payments of at least €100 million in tax havens. Through direct transfers alone, without any contracts or invoices, €40 million was transferred to Álvaro Cervera Pérez via shell companies in Panama, the British Virgin Islands, the Cayman Islands, and Liechtenstein among other places. Defex also paid €60 million in Switzerland to a company domiciled in the Cayman Islands, the ultimate beneficiary of which is still unknown. The money laundering aspect of the operation was allegedly facilitated by Defex’s Swiss frontmen.
  • The investigation found that it was standard practice that commissions of up to 20% of the value of the contracts were supposedly paid by Defex to intermediaries and senior government officials to help secure their global business. In general, they ranged between 14.5% and 16.5%, according to the documentation obtained in the records. The money destined for the illicit commissions was camouflaged through fictitious contracts for the provision of services and consultancy. In addition to Álvaro Cervera, Defex executives also used Carlos Ques Blandigneres and Paula Alexandra de Oliveira Silva as intermediaries.
  • The Saudi investigation excluded the five other suspicious contracts signed between 1992 to 2004, totalling up to €68 million, as they were beyond the statute of limitations. Nonetheless, investigators from the Civil Guard’s Central Operative Unit discovered that this same amount had been funnelled to Peninsula Inc Ltd, a Cayman Islands-based company. These payments were recorded in various invoices without both service descriptions and formal contracts.
  • Following the investigation, the Prosecutor’s Office were seeking prison sentences of 20 to 29 years for eight individuals connected with Defex. They were accused of crimes including criminal organisation, corruption in international transactions, embezzlement of public funds, document falsification, and, in some cases, money laundering. In his qualification letter, prosecutor Conrado Alberto Sáiz also requested a fine of €45 million for the company Defex and €29 million for the eight defendants. Additionally, the four defendants accused of money laundering must face additional fines in the millions.
  • The Prosecutor's Office accuses the eight - Manuel Iglesias-Sarria, Ángel María Larumbe, José Ignacio Encinas, Fernando Aguilar, Álvaro Cervera, Verónica Luisa Blanco-Traba, Charles Ques Blandigneres and Paula Alexandra de Oliveira - of organised crime, corruption in international transactions, embezzlement of public funds, falsification of documents and, in some cases, money laundering .
2022
  • 17 SepThe Council of Ministers agreed to the liquidation of Defex.
2023
  • 28 FebThe National Court absolved Defex of corruption charges related to arms contracts with Cameroon. The court argued that the alleged acts occurred prior to the legal reform that extended criminal liability to state-owned commercial companies, and therefore did not apply in this case. However, the court sentenced Defex’s former commercial director, Manuel Iglesias-Sarria, to two years in prison for corruption in connection with the contracts in Cameroon, while acquitting him of charges of document falsification, embezzlement of public funds, and money laundering.
  • 18 OctThe Court of Appeal, in Madrid, confirms the acquittal of Defex for the contracts awarded in Cameroon and the two-year sentence for its former commercial director.
  • The National Court continues its investigation of corruption involving the sale of weapons and military equipment by Defex to the governments of Angola and Saudi Arabia. The Anti-Corruption Prosecutor’s Office is seeking prison sentences and fines for the individuals involved.
  • Caveat: There have been inconsistencies in the reporting of currencies and amounts related to this case. We have opted to use euros, as it appeared to be the most consistently referenced currency.

References

References

contents

  • “DEFEX.” Trace international. Accessed June 25, 2024. https://www.traceinternational.org/TraceCompendium/Detail/967?type=1.

  • “SEPI’s Board of Directors Resolves to Request the Members’ Voluntary Liquidation of Defex to the Council of Ministers.” SEPI, April 8, 2017. https://www.sepi.es/en/sala-de-prensa/noticias/el-consejo-de-sepi-acuerda-solicitar-al-consejo-de-ministros-la-disolucion

  • Biscevic, Tajna. “Spanish Magistrate Accuses State-Owned Agency of Corruption.” OCCRP, March 8, 2019. https://www.occrp.org/en/daily/9326-spanish-magistrate-accuses-state-owned-agency-of-corruption.

  • Bruni, Paola. “La Fiscalía Pide Hasta 29 Años a 8 Acusados Por La Venta de Armas a Arabía Saudí.” elconfidencial.com, January 9, 2020. https://www.elconfidencial.com/espana/2020-01-09/fiscalia-29-anos-8-acusados-venta-armas-arabia-saudi_2404324/.

  • Elena G. Sevillano, and Óscar López-Fonseca. “Spain Signed €48 Million in Irregular Arms Deals with Saudi Arabia.” EL PAÍS, November 9, 2018. https://english.elpais.com/elpais/2018/11/09/inenglish/1541751831_406535.html

  • Elena G. Sevillano. “The Prosecutor's Office is seeking sentences of up to 29 years for eight defendants accused of arms sales to Saudi Arabia”, EL PAÍS, 9 January, 2020. https://web.archive.org/web/20221028164801/https://elpais.com/politica/2020/01/09/actualidad/1578566366_625157.html

  • Elena G. Sevillano and Óscar López-Fonseca. “Switzerland Froze Four Bank Accounts over Probe into Spanish Arms Sale to Saudi Arabia.” EL PAÍS, October 25, 2018. https://english.elpais.com/elpais/2018/10/25/inenglish/1540458976_912394.html

  • López-Fonseca, Óscar, and Elena G. Sevillano. “Spanish High Court Probes 23 Years of Bribery in Arms Sales to Saudi Arabia.” EL PAÍS, October 24, 2018. https://english.elpais.com/elpais/2018/10/24/inenglish/1540364892_173612.html.

  • Pablo Herraiz and Quico Alsedo. “Anti-corruption authorities reveal that Spain has been paying bribes in Saudi Arabia for 25 years”, El Mundo, 9 January, 2020. https://www.elmundo.es/espana/2020/01/09/5e16658efc6c83f12e8b4619.html.

  • Poder Judicial España. “The judge proposes to try the public company Defex and its former leadership for eleven military equipment contracts with Saudi Arabia”, 6 March, 2019. https://www.poderjudicial.es/cgpj/es/Poder-Judicial/Sala-de-Prensa/Notas-de-prensa/El-juez-propone-juzgar-a-la-empresa-publica-Defex-y-a-su-excupula-por-once-contratos-de-material-militar-con-Arabia-Saudi

  • Poder Judicial España. “The judge sees evidence to prosecute 27 people and the company Defex for the Angola contracts”, 13 July, 2018. https://www.poderjudicial.es/cgpj/es/Poder-Judicial/Sala-de-Prensa/Notas-de-prensa/El-juez-ve-indicios-para-juzgar-a-27-personas-y-a-la-sociedad-Defex-por-los-contratos-de-Angola

  • Poder Judicial España. “The National Court acquits Defex for the contracts awarded in Cameroon and sentences its former commercial director to two years in prison”, 28 February, 2023. .https://www.poderjudicial.es/cgpj/es/Poder-Judicial/Noticias-Judiciales/La-Audiencia-Nacional-absuelve-a-Defex-por-las-adjudicaciones-en-Camerun-y-condena-a-dos-anos-de-carcel-a-su-exdirector-comercial

  • Poder Judicial España. “The National Court confirms the acquittal of DEFEX for the contracts awarded in Cameroon and the two-year sentence for its former commercial director”, October 18, 2023. https://www.poderjudicial.es/cgpj/es/Poder-Judicial/Noticias-Judiciales/La-Audiencia-Nacional-confirma-la-absolucion-de-DEFEX-por-las-adjudicaciones-en-Camerun-y-la-pena-de-dos-anos-a-su-exdirector-comercial

  • Poder Judicial España. “The National Court proposes to prosecute the company Defex and its commercial director for contracts in Cameroon”, 30 january, 2019. https://www.poderjudicial.es/cgpj/es/Poder-Judicial/Sala-de-Prensa/Notas-de-prensa/La-Audiencia-Nacional-propone-juzgar-a-la-empresa-Defex-y-a-su-director-comercial-por-contratos-en-Camerun

  • Quico Alsedo and Pablo Herraiz. “‘Send me wine': This is how the bosses of the public company Defex repatriated stolen goods”, El Mundo, 23 November, 2018. https://www.elmundo.es/espana/2018/11/23/5bf59ad0468aeb1a498b460e.html