The government of Pedro Sánchez officially confirmed before the Congress of Deputies of Spain that it maintains contracts with Grupo PALCO, a Cuban state company linked to the military conglomerate GAESA, to provide support staff for the Spanish Consulate General in Havana.
The agreements awarded to the entity, related to the operation of Spanish diplomatic representations during the surge of nationality requests under the so-called "Grandchildren's Law", amount to over 1.6 million euros, according to public procurement records.
In a parliamentary response dated September 23, 2026, the Spanish government acknowledged the contractual relationship with PALCO and defended its legality, arguing that the contracting was carried out in accordance with Law 9/2017 on Public Sector Contracts.
The response was sent following a written question submitted by deputies of the Partido Popular on July 10, after the Spanish press revealed the million-dollar contracts awarded to the Cuban company and the economic conditions under which it provided workers to diplomatic missions.
The Sánchez government justified the operation by arguing that Cuban legislation requires foreign embassies and consulates to hire local staff through state-owned companies, with no possibility of establishing direct employment relationships with those workers.
"The requirement to hire through a Cuban state-owned company in order to employ local personnel, whether they are Cuban citizens or foreign residents, is outlined in Cuban regulations," the executive explained.
According to the parliamentary response, any hiring of local personnel carried out by the Consulate General of Spain in Havana must be channeled through a state-owned company, in this case PALCO. The Government clarified that this mechanism has been in use since 2017 and that there is no other hiring modality permitted by the Cuban authorities.
More than 1.6 million euros in contracts with PALCO
The documents published on the detail three contracts awarded to Grupo PALCO for a total amount exceeding 1.6 million euros.
The principal, identified with the file 2024SWs00114, was awarded by the Undersecretary of Foreign Affairs on March 5, 2025, for 1,131,295.68 euros, for the provision of office and domestic staff to the General Consulate of Spain in Havana.
Only one bidder participated in the procedure, the Cuban state company itself, and the contract is valid until December 2028.
This agreement is supplemented by two others: one for 242,743 euros for the provision of personnel to the Embassy of Spain and another for 228,000 euros for the rental of a property designated for personnel.
The hiring allowed for the incorporation of around 87 office assistants to the Spanish consulate to manage the high volume of nationality applications generated by the Law of Democratic Memory, popularly known as the Grandchildren's Law.
Until last July, Cuba had recorded more than 350,000 applications for Spanish nationality, a figure that made the consular office in Havana one of the main centers for processing this procedure.
Spain paid more for the workers than what they received
One of the most controversial aspects of the contracts is the discrepancy between the amounts paid by Spain to PALCO and the salaries that Cuban employees ultimately received.
The Spanish government paid the state company between 205 and 210 euros per month for each worker, while employees received between 133 and 135 euros.
The difference, approximately 70 to 77 euros per month per person, was left in the hands of PALCO, which acted as a mandatory intermediary between the Spanish authorities and the Cuban workers.
This contracting mechanism allows the Cuban state to control access to employment in foreign diplomatic representations and to generate income through labor intermediation.
The official confirmation of the contracts with PALCO documents a contractual relationship that had already been revealed by the Spanish press in July. Although Sánchez's government defends its legality and argues that Cuban legislation requires it to engage a state-owned company, the mechanism implies that part of the resources provided by Spain to hire workers ends up in the hands of an entity of the Cuban regime, instead of reaching the employees providing the service in full.
PALCO is subordinated to the Council of Ministers of Cuba and has been linked to the business network of GAESA, the conglomerate controlled by the Revolutionary Armed Forces (FAR) that encompasses significant sectors of the island's economy.
The President of the United States, Donald Trump, sanctioned GAESA on May 1, 2026 through an executive order in which he described the conglomerate as "the heart of the Cuban kleptocratic communist system."
The business connection of PALCO with this framework adds a controversial element to the contracts, as it involves Spanish public funds allocated to an entity of the Cuban state economic apparatus.
The government denies that PALCO workers decide on nationalities
In response to the doubts raised about the involvement of workers hired through PALCO in the processing of files, the Spanish executive assured that these employees carry out only administrative, technical, and auxiliary tasks under the supervision of Spanish officials.
"In no case does it perform functions reserved for Spanish public officials nor does it participate in the adoption of decisions regarding civil registry files, passports, or visas," stated the Government in its response to Congress.
The executive insisted that all decisions related to the exercise of public powers remain reserved for the competent Spanish civil service personnel.
He also affirmed that workers' access to documents and computer systems is limited to the needs of the service and is subject to authorization, supervision, and traceability mechanisms, as well as obligations of confidentiality and data protection.
However, these explanations have not alleviated the criticism regarding the involvement of a Cuban state-owned company in the operations of Spanish diplomatic offices.
The Law of Grandchildren, amidst a political controversy in Spain
The contracts with PALCO are part of a broader controversy regarding the application of the Democratic Memory Law and its potential electoral consequences.
The Popular Party and Vox have questioned the procedure for incorporating new Spanish citizens into the overseas census and accused Sánchez's government of using the Grandchildren's Law to expand its electoral base.
Opposition sectors have estimated that the new registrations could have implications for up to 20 seats, although this is a political projection and not a verified electoral outcome.
The Supreme Court temporarily suspended on September 8 the electoral effects of certain registrations linked to the law, in the context of the general elections scheduled for November 29.
On October 12, the Supreme Court of Spain rejected the appeal from the State Attorney's Office and upheld the provisional suspension of voting for certain individuals who obtained nationality through the Grandchildren's Law in the upcoming general elections in November. The decision could impact 163,020 voters, although it does not involve the loss of Spanish nationality nor does it clarify how many of those affected are Cuban.
The controversy is compounded by concerns regarding the verification of documents issued in Cuba, a country that is not part of the Hague Convention on Apostille.
By July, the Spanish Ministry of Foreign Affairs had processed nearly 1.3 million nationality applications and granted citizenship to more than 357,000 people through this process.
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