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11 Twilight ofthe Regime 1969-1973 The ceremony of July 1969 finally solved the immediate question "After Franco, who?" It did not necessarily answer the accompanying query "After Franco, what?" The general assumption was that despite the increase in dissent and a certain decline in the internal coherence and determination of the regime, Franco had managed to institutionalize a system that would sustain its main features for at least a certain period after his death. The cautious, mild, smiling, somewhat diffident young Prince was given little credit for political insight or ability, and general opinion in 1969 held that if he really expected to reign he could do so only by living up to his oath and affirming the laws and institutions of the regime in order to gain the support of the military and the leaders of other state institutions. Though there was little confidence that the system could continue for very long after Franco's death, neither was any drastic alternative within view. Informed interest therefore focused much more on further changes and reforms within the system than either its prospective overthrow or its replacement. A new cabinet took office on October 29, 1969, three months after the recognition of Juan Carlos. It was a different sort of government from any of its predecessors and it is not clear that Franco had had any such alteration in mind at the time the Prince's oath was sworn. The change was precipitated rather suddenly by the greatest financial scandal in the history of the regime and of all Spanish government-the MATESA affair, which first became news on August 13. The acronym stood for the first multinational corporation in Spanish industry, Maquinaria Textil, S.A., which manufactured textile machinery in Pamplona with outlets and subsid543 544 IV. Developmentalism and Decay, 1959-1975 iaries in the process offormation in Latin America. Its director, Juan Vila Reyes, was an entrepreneur ofunusual breadth ofinterest and ability who had developed a new mechanical loom for export. Even though the new development program was geared for increasing exports, financial regulations still did not readily assist sales of machinery abroad but had been designed to encourage finished consumer goods. Vila Reyes was unable to obtain export credits without being able to present firm orders for his products; since these were slow to develop, he inflated orders through his own subsidiary firms to gain credits from the government's Banco de Credito Industrial. Vila later insisted that officials were adequately informed beforehand of his modus operandi, required by the rigidity of the Spanish financial structure. The credits involved were quite substantial and the irregularities eventually became more widely known. They were formally denounced on July 17, 1969, by Victor Castro San Martin, an old-guard Falangist and director general of Spanish customs. The charges were debated by the cabinet in August. There was no doubt that Vila had been involved in irregular procedures, but considerable uncertainty existed as to the extent ofcomplicity in higher circles of government. The issue was quickly seized by Movement leaders to discredit the Opus Dei economics ministers, who were at a loss to quiet the affair, even though irregularities in official financial dealings had been a way oflife in much of big business since the start of the regime. The scandal was made public in mid-August and was investigated by a Cortes commission the following month. The press was given broad freedom to report the case, and indeed, the Movement organs led the charge in denouncing fraud,l hoping thereby to discredit the economics ministers who had gained the upper hand in the cabinet during the past decade and secured the recognition of Juan Carlos. Vila Reyes had enjoyed good relations with government personnel who were members ofOpus Dei, and it was loudly whispered that some of the funds unaccounted for had been sent abroad to finance the activities of Opus Dei in other countries. The facts in the affair were so complicated that they have still not been fully clarified after nearly two decades. The defense claimed that MATESA's basic operations were in order until widespread negative publicity provoked massive cancellation of orders, and that all losses on orders supported by government credit had been fully insured, though the government made no effort to require the insurance company to pay. A subsequent investigative report released only in 1981 concluded that the firm had total assets of more than 14,000 million pesetas and despite outstanding debts 1. The...

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