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Coffee House

Cheat sheet: the new Spanish corruption scandal

1 February 2013

5:25 PM

1 February 2013

5:25 PM

An unemployment rate of 26 per cent (and 56 per cent for young people); an economy that contracted by 0.7 per cent last quarter; tumbling approval ratings. Spanish Prime Minister Mariano Rajoy had enough problems, even before claims that he received about €280,000 (£240,000) in payments from ‘secret’ accounts managed by the treasurers of his People’s Party (the PP). Protestors took to the streets of Madrid last night calling for his resignation.

El País (Spain’s biggest newspaper) published hand-written accounts that it claims were kept by PP treasurers Luis Bárcenas and Álvaro Lapuerta between 1990 and 2009. They show donations to the party from businesses (mostly in the construction sector) and regular payments to various party leaders, on top of their normal salaries. According to the paper, Rajoy received €25,200 (£22,000) a year for 11 years from 1997 to 2008. Other alleged beneficiaries include Rodrigo Rato, who served as Spain’s finance minister from 1996 to 2004 and Managing Director of the IMF from 2004 to 2007; and María Dolores Cospedal, current Secretary General of the PP.

This is the latest chapter in an ongoing corruption scandal surrounding the PP’s accounting. Bárcenas resigned as party treasurer in 2009 after he became the focus of allegations, and a fortnight ago Swiss authorities told the Spanish investigators that he had deposited €22 million (£19 million) in Swiss bank accounts.

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Both Bárcenas and the PP have denied all the allegations against them. The party put out a statement saying that it ‘has no knowledge of the handwritten notes that were published and of their content, and it cannot be recognised, in any case, as this political party’s books.’ Cospedol told a press conference: ‘The People’s Party only has one set of accounts and it is clean, transparent and submitted to the official accounting authority. We have absolutely nothing to hide.’

Still, the country’s public prosecutor Eduardo Torres-Dulce has suggested he might haul the politicians concerned in for questioning. He told a Spanish TV station last night that a decision on any investigation into the claims would be made in the next few days. Rajoy has announced that he will speak about the allegations against him tomorrow.

What long-term effect — if any — this will have on Rajoy and his government isn’t clear yet. As Reuters points out, ‘The alleged payments may not necessarily be illegal if the party leaders declared the income in tax statements. Until recently, Spanish political parties were allowed to receive anonymous donations. However, it would have been illegal not to book those donations in the party’s official, regulated accounts, a People’s Party source told Reuters.’

But the source did say that ‘It looks like bribes’ and so could be very damaging to the party’s standing. And such accusations carry an extra sting when levelled against a government that is cutting public services and raising taxes. On the other hand, the New York Times has reported that ‘About 300 Spanish politicians from across the party spectrum have been indicted or charged in corruption investigations since the start of the financial crisis.’ So this may not have the impact it would if it were an isolated incident.

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