Rajoy scandal threatens political rupture

Rajoy scandal threatens political rupture - FT.com
By David Gardner

Finance allegations have several precedents

The avalanche of slush fund allegations threatening to engulf the ruling Popular party of Mariano Rajoy is only the latest in a long line of illegal party financing cases in Spain, after the restoration of democracy in 1977 brought with it the expensive inconvenience of regular elections.

In the mid-1990s, there was the Filesa scam whereby the then-ruling Socialists collected large corporate donations for fictitious consultancy work not carried out by dummy firms. The scandal helped bring down the government of Felipe González, which had already been weakened by revelations of its involvement in death squads sent against Basque separatists, and the attrition of four terms in office.


The current, so-called Bárcenas case, which centres on the purported secret accounts kept by former PP treasurer Luis Bárcenas that detail covert donations and cash payments allegedly made to senior party figures including Mr Rajoy, is in the same league.

The Bárcenas documents, published last week by El País, date back to 1990 when the PP had just been taken over by José María Aznar, the former prime minister. The party was busy dodging another case involving a treasurer charged with receiving illegal donations from a construction company. That case was eventually dismissed by the Supreme Court on a technicality.

But another slush fund scandal now grinding through Spain’s labyrinthine courts, the co-called Gürtel case that has ensnared PP regional barons as well as Mr Bárcenas, may corroborate some of the new allegations.

Documents in the Gürtel investigation, for example, exactly replicate one of the payments in the Bárcenas ledger. Several PP officials have confirmed payments to them in the Bárcenas dossier did take place.

The increasingly baroque Gürtel tale also revealed that the former party treasurer, appointed by Mr Rajoy, had €22m in an undeclared Swiss bank account


Mr Rajoy has stoutly denied receiving or handing out “black money”. Reluctant to answer questions before Spain’s parliament or press, he muddied the waters at a press conference in Berlin on Monday alongside Angela Merkel, Germany’s chancellor, describing claims made in the Bárcenas papers as “false, except for the odd case”.

The prime minister’s main line of defence – that he and his colleagues will now publish their tax returns – does not really address the substance of the allegations. If any of them were receiving covert funds, why would they advertise this in their annual income declarations?

There are similarities between today’s scandals and the Filesa affair two decades ago – not least that Filesa netted the Socialists nearly €15m in today’s money. But the differences are more important – and more dangerous.

In the mid-’90s, a new generation of the centre-right PP was ready to take over from the tired and tarnished Socialists. Now, a PP back in power for barely a year risks implosion, but the Socialists, demoralised and divided regionally as well as ideologically, are in retreat.

If elections were to take place now, Spain could face Greek-style political fragmentation, with the two main parties reduced to something like the diminished size of Greece’s conservative New Democracy and former prime minister George Papandreou’s Pasok (which, like the PP, also had a recently won absolute majority).

Two decades ago Spaniards were enamoured of Europe. Now, amid the compound devastation wrought by the fiscal, banking and euro crises, the EU is “like a wicked stepmother”, one Spanish analyst says.

Relentless austerity makes recent revelations, battering institutions from the monarchy to the judiciary, particularly odious to many Spaniards.

The monarchy’s ability to unite the country is diminished. King Juan Carlos turned out to be on safari in Africa as the crisis started to bite, and an embezzlement scandal has enveloped his son-in-law, Iñaki Urdangarin, due in court on Wednesday to post €8m in bail.

The highly politicised judiciary has been tarnished after its former head, Carlos Dívar, was forced out last year when a colleague denounced anomalies in his expenses. Factionalism among the judges was also behind the suspension last year of Baltasar Garzón, Spain’s most celebrated crusading magistrate, who had been investigating the Gürtel scandal.

Still, it is worth recalling it took six years for the courts to pronounce on Filesa. By then, voters had already given their verdict, ejecting the Socialists at the ballot box