Spain's €136 Million Railway Contracts Under EU Fraud Investigation After Deadly Train Crashes

European prosecutors have opened an investigation into possible fraud involving European Union funds allocated for upgrading Spain's Madrid–Seville high-speed railway line, where a train collision near Urda killed 69 people on October 28. The European Public Prosecutor's Office (EPPO) opened the investigation on November 6, examining the use of funds intended for improvements to railway safety, signalling and communications systems.

Investigators have sought documents relating to three infrastructure contracts worth a combined €136.4 million, with investigative measures conducted at the headquarters of Spain's railway infrastructure manager ADIF, the State Railway Safety Agency and the Court of Auditors.

The inquiry follows two fatal accidents on the same railway corridor in 2026, bringing renewed attention to the management of European funding and the implementation of railway safety upgrades. However, prosecutors have not established that financial wrongdoing contributed to either accident.

What Triggered The European Investigation?

The EPPO announced on November 6 that its Madrid office had opened an investigation into possible fraud affecting EU funds allocated to the renovation and upgrading of the Madrid–Seville high-speed railway line.

The investigation is being conducted with the support of Spain's Guardia Civil, particularly its Central Operational Unit (UCO). Investigators carried out measures at the headquarters of ADIF, the State Railway Safety Agency and Spain's Court of Auditors.

In its official statement, the EPPO said the investigation concerned funds allocated for the "renovation and upgrading of safety, signalling and communications systems" on the railway line. It confirmed that the inquiry had been opened on its own initiative but declined to disclose further details about the suspected wrongdoing.

Reuters reported that the investigation concerns possible fraud involving EU funding for the railway corridor. ADIF confirmed that investigators had visited its headquarters and that it had provided the requested information.

Three Contracts Worth €136.4 Million Under Examination

According to Spanish newspaper EL PAÍS, investigators have obtained documentation relating to three infrastructure contracts with a combined value of approximately €136.4 million. The projects received co-financing from European Union programmes, including NextGenerationEU and the European Regional Development Fund (ERDF).

The €136.4 million represents the combined value of the contracts, not the amount of EU funding suspected of being misused.

The largest contract, worth approximately €94 million, was awarded by ADIF to Thales España in September 2021. It covered the replacement of the existing LZB train protection system with the European Rail Traffic Management System (ERTMS), alongside improvements to signalling and fixed telecommunications infrastructure. The contract was transferred to Hitachi Rail in July 2024.

A second contract concerned the replacement of 63 of the 319 railway switches installed along the Madrid–Seville corridor. Its first phase, worth €21 million, was awarded to a consortium comprising Ferrovial Construcción, Grupo Azvi, Convensa and Agrupación Guinovart. The switches at Urda were among those covered by the project.

The third contract, worth €21.5 million, was awarded to Thales España for the renewal of track circuits on the Madrid–Seville line and the La Sagra–Toledo branch. Track circuits detect the presence of trains on particular sections of railway track and form part of the signalling infrastructure.

The investigation is examining the use of European funds connected to these projects.

The LZB System And The Urda Collision

The investigation has also brought attention to the delayed replacement of the LZB train protection system, which was still operating on the Madrid–Seville line when the Urda collision occurred.

LZB is an automatic train protection system that monitors train movements and helps prevent collisions by controlling train speeds and movements. Its planned replacement, ERTMS, is a newer European standard designed to modernise train control and signalling and improve interoperability between railway networks.

Although the physical installation of ERTMS on the Madrid–Seville line was completed in June 2026, the system was still undergoing testing and was expected to become operational in early 2027. The older LZB system therefore remained in use when the Urda collision occurred.

According to EL PAÍS, the LZB system experienced a failure at around 8:30 am on October 28, bringing trains travelling along an affected stretch of more than 63 kilometres to a halt. At around 8:36 am, the control centre authorised the Renfe train to resume its journey. The Iryo train's driver contacted the control centre at 8:41 am and again at 8:48 am to report that the train remained stationary. At 8:53 am, the Renfe train struck the stationary Iryo train.

The newspaper reported that then transport minister Óscar Puente said the system had experienced 170 interruptions during 2026. He added that between 150 and 200 such incidents were recorded annually, although he later clarified that only 64 of the 170 interruptions had affected train operations. Around 75 per cent were attributed to external factors, including cable theft, construction work and weather conditions.

Puente said the Renfe train should not have been allowed to resume its journey until the stationary Iryo train had started moving again. He also said that, under the applicable protocol, the train should have been restricted to a maximum speed of 40 kilometres per hour in such circumstances.

A Second Probe After The Adamuz Disaster

The Urda investigation is the second inquiry launched by the EPPO this year into possible fraud involving European funds allocated to the Madrid–Seville high-speed railway corridor.

On January 18, a train accident near Adamuz, in Córdoba province, killed 45 people. An Iryo train derailed and collided with a Renfe train travelling on an adjacent track. The accident prompted questions about railway infrastructure, maintenance and safety.

The EPPO opened a separate investigation in March 2026 into the use of EU funds earmarked for maintenance of the railway section near Adamuz. The November investigation concerns possible fraud involving funding for safety, signalling and communications upgrades along the Madrid–Seville corridor.

The two investigations concern the management and use of European funding, but they should not be confused with the Spanish judicial proceedings examining the technical causes of the accidents.

The EPPO's investigation will examine whether European funds allocated for railway improvements were properly managed and used, while separate Spanish proceedings will determine whether infrastructure, maintenance or operational failures contributed to the two collisions.

With 114 people killed in the two accidents, the investigations have brought renewed scrutiny to Spain's railway infrastructure spending. Whether any financial irregularities occurred, and whether they affected the condition of the railway line, remains to be established.