The Public Audit Office is warning the Balearic Government that budgeted provision for settling compensation claims is insufficient. The government has set aside €127.5 million for the risk of litigation, when there are already lawsuits demanding compensation of €346 million.
The claims against the government predominantly relate to planning - changes to planning regulations, legislation for territorial protection, updated demarcation of natural areas. Some of these claims go back several years - back to 2008 in the case of developments affected by a decree of urgent measures for territorial protection.
One of the highest profile cases associated with the 2008 decree has been that of Muleta II in Puerto Soller. The current government has been obliged to pay €96 million compensation to German property developer Matthias Kühn. This has been paid, but it is being held by the Balearic High Court because of investigations into Kühn's tax affairs.
By 2024, the government had paid out €356 million in respect of various rulings, the majority of which can be traced back to the 2008 decree. But significant amounts remain. Outstanding claims to do with planning amount to roughly two-thirds of the €346 million identified by the audit office, although the office itself reports that it is difficult to determine exact amounts, "both in terms of what is owed and the timeframe within which the regional government must eventually satisfy the claims".
Another significant amount is for some €100 million due to be paid to the government's own employees. This refers to salaries that were frozen during the pandemic. The government says it will pay this debt in various annual instalments.