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Friday, February 01, 2013

Spain's slush fund scandal: This is not going away soon

New interesting details have emerged on the slush fund allegations involving Spanish Prime Minister Mariano Rajoy and his Partido Popular (PP). The party has said that it will take El País to court, because the 'secret' accounting books allegedly held by PP's former treasurer Luis Bárcenas are fake. However, the paper today reports that a couple of senior members of Rajoy's party have admitted that they did receive the payments registered in the books under their names.

A spokesperson for Pío García Escudero, the speaker of the Spanish Senate, said that Escudero actually asked the party for a 5 million pesetas (some €30,000) loan in 2000. He needed the money to repair his house in Madrid, which had been destroyed by an attack from Basque terrorist group ETA. Escudero says he paid the loan back in instalments of 1 million pesetas each, and stresses that he never dealt with Bárcenas personally.

Similarly, people close to Jaume Matas - a former Environment Minister and President of the Balearic Islands region - have confirmed that the party agreed to pay him some sort of 'transition allowance' between when he quit the cabinet and when he became PP's candidate for President of the Balearic Islands. Now, El País notes that Matas stepped down as Environment Minister in March 2003 and was elected as President of the Balearic Islands in May 2003. Perhaps just a coincidence, but the €8,400 payment to Matas is dated 2 April 2003 in the books.

Interestingly, during her press conference yesterday, the Secretary General of PP María Dolores de Cospedal (pictured) was asked about Escudero's admission. She said that specific payment "may be true", but this does not automatically validate the documents, because "some people ask for money in advance, this happens in all companies. It's no extra pay." Not an entirely convincing answer.

One last aspect is worth flagging up. El País stresses that, according to the Spanish law on the financing of political parties in force from 1987 to 2007, donations larger than 10 million pesetas (around €60,000) were forbidden. Therefore, 70% of the donations disclosed by the paper would have been illegal at the time when they were made - potentially quite a strong incentive to try and hide them in 'parallel' accounting books. 

Rajoy has convened a meeting of top members of his party, scheduled for tomorrow - but has yet to announce when (and if) he will speak to the press on this issue. Meanwhile, hundreds of Spaniards protested outside his party's headquarters in Madrid yesterday and called for him and his cabinet to resign immediately. This story is getting increasingly interesting, and is not going away anytime soon.  


jon livesey said...

I ran across an odd sidelight to this affair. Most of the illegal donations - donations over 10m Pesetas - seem to have come from property developers.

Given what we know about over-building in Spain, and land being re-zoned for development without the owners' permission, this is starting to form an interesting picture.

One other thing. Assuming that these ledgers do turn out to be genuine and not forgeries, the people recording the donations obviously knew that they were up to something illicit, because some donors are recorded only as first names or initials.

Jesper said...

A small observation:

The blogspot is labelled as being about the 'eurozone crisis'. Why?

Would corruption cases where the bribes were/are being paid in USD be seen as a dollarzonecrisis?

I'd say this particular story (and many others) are about corruption, cronyism and poor governance in general.

Maybe '(lack of) transparency crisis' would be more accurate?

Rollo said...

If you hold any Spanish bonds, sell them.


The more involved we become with these countries the more like them we become, including slush funds and politicians unable to distinguish between right and wrong.

As with Kohl who admitted to handling huge sums in suitcases, claimed it didn't matter because it was all in a good cause ie EU integration - and stayed on as MP!

Rik said...

It is about the EuroZone crisis more than anything else. These kind of scandals have been happening all over Souther Europe since Abraham. But now not only the locals are confronted with them like before but also the Northern Europeans.
Just ask yourself how keen would you be(as a Northern Euro-citizen) to use all the growth in your personal income (or may be worse face cuts in your entitlements) to pay in one way or another for bailing out countries which have:
-Greece. former PMs mother having almost 1 Bn in a Swiss bankaccount; former FM losing disks bit still able to get family of it.
-Spain. This, plus banking scandal, plus military that want to use force for a referendum on independence in a region.
-Italy. Berlusconi and the present banking scandal.

In Holland a cabinet member resigned because he gave the wrong adress from where he charged his travelexpenses (it was closer than the real one). And they would have to keep paying for countries that look to accept this kind of behaviour.

Same with all sort of dodgy EU accounting practices and 1000s of EU civil servants getting more paid than Merkel or the Dutch PM. In times like now you get a lot of pressure from the ultimate payers for all these sort of things.

Jesper said...

The difference between a 'eurozone crisis' and a 'corruption and poor governance crisis' is in how you deal with them.

A currency crisis is dealt with one way - some would say monetary tools by the central bank is the only way to deal with a currency crisis.

A corruption crisis on the other hand is dealt with by police, prosecutors and the courts.

Define the problem and you define the solution.

As long as the crisis is called a eurozone crisis there is a risk that the problem will be dealt with incorrectly.

Rollo said...

Lot of self righteous Brits: wrongly. Our politicians are liars, cheats, criminals. They are self centred egotistical thieves. Look at the expenses scandal. Look at the way Clegg took his MPs out of the commons because he was refused an in-out referendum. It is a pity though, that small matters, such as stealing or perverting the course of justice, are deemed more worthy of punishment than huge crimes, such as selling our nation down the river. What is a few expenses swindled compared to giving away our fisheries, for example?

jon livesey said...

There is nothing self-righteous about nailing corruption. In the UK the MPs caught up in the expenses scandal were forced to pay money back and in a couple of case even went to jail.

Meanwhile in Spain Rajoy says he will decide whether he will even talk to the Press about the scandal.

There is a bit of false logic that pops up constantly on the net that boils down to "Johnny does it too". Well, sorry, but just because Johnny got caught doesn't mean we can't criticise Pedro for the same or worse.

And no, stealing, corruption and perverting the course of justice are not "small" matters. Once the elites can get away with such offenses, they are answerable to no-one.