MADRID – Fourteen months after his appointment, Ángel Escribano stepped down on Wednesday as chair of defence and technology giant Indra following weeks of mounting friction with the Spanish government.

“The events of recent weeks have created a situation that, in addition to taking a personal toll, threatens to undermine the goals that have driven me from day one and that I consider essential for the future of Indra and the industry,” Escribano said in a letter to Indra’s board.

“I cannot allow my continued presence to jeopardize the company’s stability,” he added.

At the centre of the dispute is a stalled merger between Indra and smaller defence firm Escribano Mechanical & Engineering (EM&E), presented by both companies as key to consolidating Spain’s growing defence sector, but which raised serious conflict-of-interest concerns.

Indra’s chair, Escribano, is also the founder and co-owner of EM&E, alongside his brother Javier. EM&E is Indra’s largest private shareholder, with a 14,3% stake, giving the brothers significant influence over the proposed merger.

After local media reported earlier on Wednesday that Escribano would resign, Indra’ shares on Spain’s Ibex index dropped by around 6%.

Escribano was appointed by the government of Pedro Sánchez in January 2025 to lead the defence firm, which specialises in radar and drone technology. From the outset, he signalled plans to merge with his artillery-focused company EM&E, raising concerns that he was effectively facilitating the acquisition of his own firm.

Spain’s Socialist-led government initially backed the deal through its stake in Indra via the state-owned SEPI fund, but has since withdrawn its support.

In mid-March, SEPI, which holds a 28% stake in Indra, publicly raised concerns about a conflict of interest.

SEPI President Belén Gualdá González urged then in a statement that the conflict be “resolved” so that the merger can proceed, hinting that Escribano may need to step aside to avoid potential legal liability.

According to several local reports, the U-turn could reflect the government’s search for a more politically loyal candidate to lead the company.

Less than a day after Gualdá’s comments, EM&E pulled out of merger negotiations during a special board meeting, saying current circumstances did not allow it, putting an end to a closely watched operation by Spain’s national defence and political landscape.

Indra has been a major beneficiary of the Spanish government’s defence push to increase its military spending above 2%, with many tenders worth billions of euros allocated to joint ventures with EM&E.

(aw)