Sun, sea, sand and sleaze: Marbella tries to clean up its act

It was supposed to epitomise luxury, prosperity and power. Instead, it became a symbol of the heady mix of excess and corruption which for too long was synonymous with Marbella, Spain's glittering city of fun.

The Rolls-Royce Shining Spur was the pride and joy of the self-proclaimed "God of the Costa del Sol", the late playboy and Marbella mayor Jesús Gil y Gil.

Gil thought nothing of demanding that his taxpayers fork out for the £170,000 car which transported him to every civic function, "like a Pharaoh" as locals put it. But now, three years after his death, his Rolls has – like his corrupt reign – lost its allure. The car will be put up for auction later this year in an effort to draw a line under a long and seedy chapter in the city's history.

Gil was the overweight, foul-mouthed supporter of the former dictator General Franco who ruled Marbella for seven years until he was finally ousted for corruption. He had diverted £20m of public funds to finance the football team he owned, Atletico Madrid. He died in 2004.

The new mayor, Angeles Muñoz, hopes that auctioning Gil's Rolls will usher in a new era in this playground for the rich, the famous – and the notorious. She has ordered the rusting car to be sold off to the highest bidder, with an asking price expected to be no more than £30,000.

Gil's Rolls-Royce will go under the hammer along with the BMW which carried another disgraced Marbella mayor, Marisol Yague. She was arrested last year with more than 100 former councillors, including another former mayor, property developers, lawyers and even a fading pop star, Isabel Pantoja. They are all accused of playing a role in a multi-million-euro civic scam.

Marbella's public servants allegedly took ¿22m (£15m) in backhanders in return for granting illegal contracts to builders fighting for some of Spain's most lucrative real estate. The scandal, which led to the dissolution of the city council by the national government, was the final straw for a country embarrassed by the apparent lawlessness which had gripped Marbella.

British, Russian and Italian criminals appeared to be tolerated or even bankrolling the city authorities and the police seemed powerless to act. Many pointed the finger at Gil, who was blamed for starting the rot. Among other things, the construction magnate was notorious for having built a restaurant that collapsed and killed 58 people, doing time in jail, and then receiving a personal pardon from Franco. He later showed his gratitude by putting up a statue of Franco in the foyer of Marbella's town hall.

When serving as mayor, Gil also used the city's mounted police to head the victory celebrations for Atletico Madrid. He was also not averse to indulging in fistfights with rival football chairmen and hurling racist abuse at his own players. His bon mots included: "For the delinquents, the stick; for prostitutes, the door."

He also made no secret of his contempt for politicians. "Politics is a shelter for incompetents. I wouldn't have them as bellboys in my company."

Gil made his money from construction and served as Marbella's mayor until 2002 when he was jailed for six months and banned from holding public office for 28 years for diverting public funds to Atletico Madrid and using the players' shirts to promote his own party, Grupo Independiente Liberal (GIL).

Despite his right-wing views and apparent tolerance of organised criminals, Gil was credited with cracking down on street crime and high-class prostitution.

But even with Gil behind bars, the cancer of corruption continued in Marbella via his own hand-picked coterie of dubious followers. These were rounded up last year when police moved to end the latest bribery scam which capitalised on Spain's booming construction industry. Builders looking for favours, which often meant being handed licences that broke Spanish law, could allegedly pay between ¿500,000 and ¿2m to the councillors and the man behind the swindle, the head of urban planning, Juan Antonio Roca.

Roca pocketed half the money, according to court papers, and spent it on his lavish – and lurid – hacienda. The property boasted a collection of stuffed lions, giraffes and other hunting trophies, a stable full of starving thoroughbreds and a Joan Miro painting which he kept in his lavatory – ever the true art lover.

Though Marbella is more than accustomed to tasteless flaunting of wealth, even seasoned observers were taken aback by Roca's garish display of the spoils of crime. Judge Miguel Angel Torres, who is investigating the case, said: "The display of wealth has been open and shameless."

There was allegedly a pecking order of corruption. The mayor, Yagüe, allegedly received ¿84,000 per building licence, while the votes of less important councillors cost ¿6,000. The web of corruption extended to the head of the local police, tax inspectors and at least one judge. At least 13 building companies paid bribes to the town hall.

Marbella has long been a favourite spot for Britons to settle and enjoy their twilight years slowly roasting in the Mediterranean sun. It has been unkindly called "the Spanish Bourne-mouth". So it was first feared the latest scandal would mean some 5,000 homes in Marbella, many owned by Britons, would be bulldozed as they were built with illegal licences or none at all.

But the new city council and many of the developers and building companies implicated in the web of corruption struck a deal, which has granted a reprieve to thousands of worried property owners. Now under the new administration, a development plan is to grant a reprieve to the owners of all but 752 homes.

Under the scheme, property developers can give the authorities compensation in the form of surrendering other land which will be used for "social" benefits like building schools or parks.

In return, 18,000 apartments will be allowed to remain standing and will be saved from the bulldozers. But some, like the Banana Beach complex on the seafront, look likely to be demolished. The complex was built next to the beach near to land reserved for a train station.

For British pensioners such as Yvonne and Jack Burditt, it could mean the end of their dream of passing their last years gazing at the sun go down over the Mediterranean. The couple, both in their eighties, face the unwelcome but very real threat that their three-bedroom apartment, like 300 others, will be knocked down.

Mrs Burditt, from Devon, said: "We originally heard on the radio that our home could be demolished. We bought the place in good faith for over ¿200,000 (£135,000). At our age, we want to go into sheltered housing, but we can't do that unless we can sell or rent this place. Otherwise it is impossible."

Meanwhile, for most in Marbella, life will go on much as before. On the average, steamy summer night, the bars in the city's glitziest quarter, Puerto Banus, are packed with Gucci-clad wannabes, the occasional soap star or perhaps a Premier League footballer.

In one of the most popular, Sinatra's Bar, the air stewardesses are praying they will be chatted up by a Bentley-driving Arab prince or invited to join the champagne set on the yachts in the bay. The tills in the D&G and Jimmy Choo shops will continue to ring as ever more partying Britons step from the designer shops straight into the bars next door.

Or, if they can afford it, perhaps they will indulge the latest fashion – ¿100 for a night on the de rigueur white leather beachside sofas to sip champagne.

Others, of course, will gaze at the yachts, wishing they could join the lucky few, whose boats are usually registered in a tax haven such as the Caymans. One local businessman, who did not want his name to be used, said: "Marbella is divided between those who look at the yachts and those who are looked at."

After exiting last year's football World Cup in shame, some members of England's squad headed for Marbella to quaff champagne on a yacht while surprised onlookers watched their heroes celebrating.

Back on land, Bentleys are the fashion in this show-off city, replacing an earlier fad for Lamborghinis. Those who cannot afford one pose in front of the gleaming cars while their girlfriends take photographs.

Another fad is a little less costly, but says much about the body-worship in this playground for the rich and famous. Plastic surgery is all the rage, with many tourists coming to this corner of southern Spain for discreet – and less discreet – nips and tucks. One local put it bluntly: "It's boob-job-a-go-go here."

Away from the crowds of wannabes and show-off rich kids, Marbella has become home to a set of British celebrities such as Freddie Starr, Bruce Forsyth, Bobby Davro, Kenny Lynch and the late Mike Reid. Recently, Madonna was said to be looking for a home, which would bring a touch of A-class celebrity to an area which might otherwise be in danger of slipping into the obscurity whence it came.

Until the 1940s, Marbella was just an obscure fishing village. Then it was discovered by an eccentric German prince, Prince Alfonso de Hohenlohe-Langenburg, in search of a way to make a fortune.

In 1947, the young aristocrat was driving to Andalucia, in his charcoal-burning Rolls-Royce Phantom, when he stopped for a picnic by the sea in Marbella. Charmed by its beauty, he determined to buy a vineyard ruined by phylloxera for 150,000 pesetas, or about £600, a bargain price. He used the land to build the 16-bedroom hotel.

The Marbella Club Hotel soon became home to the jet-set, from Hollywood royalty such as Grace Kelly, Tony Curtis and Sean Connery to real-life royalty such as the Duke of Windsor. Its appeal lay in its relaxed, clubby atmosphere and in giving the famous a respite from the lenses of the paparazzi.

In turn, the Marbella Club transformed the village into one of the priciest pieces of real estate in Spain. Sadly, the hotel's heyday has long passed. Today's los famosos prefer to languish in their own private villas.

Some feel that the very popularity of Marbella has attracted a different, less desirable set. But the city retains at least some of its A-list allure. Kate Moss and her partying set were the latest in a long line of celebrities to alight in town this summer. The question for residents is whether their city can keep the bling while shaking off the legacy of Gil.