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Spain police arrest 752 people over fake companies

Spanish police said on Wednesday they had arrested 752 people in a massive probe into fake businesses created to obtain social security benefits as well as residence or work permits for foreigners.

MADRID: Spanish police said on Wednesday they had arrested 752 people in a massive probe into fake businesses created to obtain social security benefits as well as residence or work permits for foreigners.

It was "without a doubt" the biggest police operation yet against such scams, said Spanish police chief Ignacio Cosido, estimating the overall cost to the state of the frauds under investigation at 20.5 million euros (US$28 million).

"We want to send a very clear message that social security fraud is a crime and whoever commits this crime must know that they have a huge probability of being detained and facing justice," he told a news conference.

Police targeted a total of 142 companies across the country, supposedly working in hotels, construction, courier services, gardening and cleaning.

"Among those arrests are 30 managers of the fake businesses, which, without undertaking any real activity, registered employees with social security so as to illicitly obtain benefits or to obtain residence or work permits for foreign citizens," a statement said.

The companies registered more than 8,400 new hires with Social Security, obtaining 2,100 benefit payments or unemployment subsidies.

A total of 362 foreign citizens sought to obtain work or residence permits through the scam, the statement added.

The authorities said the investigation, dubbed "Operation Espa", remains open and more arrests are possible.

Police have named another 1,256 people as suspects in the probe.

Fighting social security fraud was a "strategic priority" for Spain's national police.

Police have doubled the number of officers and resources assigned to this type of crime and have greatly boosted their cooperation with the labour ministry, leading to a rise in arrests, he said.

Arrests for social security fraud are already three times higher this year than the whole of 2013, he added.

"The fight against fraud is key to maintaining our welfare state," Cosido said.

Tax avoidance is another major problem in Spain, with a study by tax inspectors' union Gestha finding cash transactions worth 253 billion euros (US$348 billion) were carried out behind the taxman's back in 2012, up 15 billion euros (US$20.6 billion) compared to 2008.

This underground economy deprived state coffers of 85 billion euros (US$117 billion) in 2012 alone, according to the union.

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