The government of Pedro Sánchez officially confirmed before the Congress of Deputies of Spain that it maintains contracts with Grupo PALCO, a Cuban state enterprise linked to the military conglomerate GAESA, to provide support personnel to the Spanish Consulate General in Havana.
The agreements awarded to the entity, related to the functioning of Spanish diplomatic representations during the influx of nationality applications under the Grandchildren's Law, amount to over 1.6 million euros, according to public contracting 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 hiring was conducted in accordance with Law 9/2017 on Contracts in the Public Sector.
The response was sent following a written question presented by members of the Partido Popular on July 10, after the Spanish press revealed the multimillion-dollar contracts awarded to the Cuban company and the economic conditions under which it provided workers to diplomatic representations.
The Sánchez government justified the operation by stating 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 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 staff by the Consulate General of Spain in Havana must be channeled through a state-owned company, in this case, PALCO. The Government specified that this mechanism has been in use since 2017 and that there is no other hiring method 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 with a total amount exceeding 1.6 million euros.
The main contract, identified with the record 2024SWs00114, was awarded by the Undersecretariat of Foreign Affairs on March 5, 2025, for 1,131,295.68 euros, for the provision of office and domestic staff to the Consulate General of Spain in Havana.
In the process, there was only one bidder, the state-owned Cuban company itself, and the contract is valid until December 2028.
This agreement is accompanied by two others: one for 242,743 euros for supplying personnel to the Spanish Embassy and another for 228,000 euros for renting a property intended for the staff.
The hiring allowed for the incorporation of about 87 office assistants at the Spanish consulate to manage the high volume of citizenship applications generated by the Law of Democratic Memory, popularly known as the Grandchildren's Law.
As of July 2026, Cuba had recorded over 350,000 applications for Spanish nationality, a figure that made the consular office in Havana one of the main processing centers for this procedure.
Spain paid more for the workers than they received
One of the most controversial aspects of the contracts is the difference between the amounts paid by Spain to PALCO and the salaries that Cuban employees ultimately received.
The Spanish government was paying the state-owned company between 205 and 210 euros per month per worker, while employees received between 133 and 135 euros.
The difference, of approximately 70 to 77 euros per month per person, was in the hands of PALCO, which acted as a mandatory intermediary between the Spanish authorities and the Cuban workers.
This hiring mechanism allows the Cuban state to control access to employment in foreign diplomatic representations and to generate revenue through labor intermediation.
The official confirmation of the contracts with PALCO establishes a documented 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 compels it to contract with a state-owned company, the mechanism implies that part of the funds allocated by Spain to hire workers ends up in the hands of a regime entity, rather than reaching the employees providing the service in full.
PALCO is subordinate to the Council of Ministers of Cuba and has been linked to the business network of GAESA, the conglomerate controlled by the Cuban Armed Forces that encompasses important 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 an element of controversy 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 concerns raised about the involvement of workers hired through PALCO in the processing of files, the Spanish executive assured that these employees only carry out administrative, technical, and support duties 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," the Government stated 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 stated that employees' access to documents and IT systems is limited to service needs and subject to authorization, supervision, and traceability mechanisms, as well as obligations of confidentiality and data protection.
However, these explanations have not eliminated the criticism regarding the involvement of a Cuban state-owned company in the operations of the Spanish diplomatic offices.
The Grandchildren's Law, amid a political controversy in Spain
Contracts with PALCO are part of a broader controversy regarding the implementation of the Law of Democratic Memory and its potential electoral consequences.
The Popular Party and Vox have questioned the procedure for adding new Spanish citizens to the overseas census and have accused Sánchez's government of using the Grandchildren's Law to broaden its electoral base.
Opposition sectors have estimated that the new registrations could have repercussions for up to 20 seats, although this is a political projection rather than a verified electoral result.
The Supreme Court suspended on September 8 the electoral effects of certain registrations related to the law, in the context of the general elections scheduled for November 29, 2026.
On October 12, the Supreme Court of Spain rejected the appeal from the State Attorney's Office and upheld the precautionary suspension of voting for certain individuals naturalized under the Grandchildren's Law in the general elections on November 29. This decision could affect 163,020 voters, although it does not entail a loss of Spanish nationality nor does it allow for the determination of how many of those affected are Cuban.
The controversy is further compounded by concerns regarding the verification of documents issued in Cuba, a country that is not a party to the Hague Convention on Apostille.
As of July 2026, the Spanish Ministry of Foreign Affairs had processed nearly 1.3 million citizenship applications and granted citizenship to over 357,000 people through this procedure.
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