Corruption Claims Roil Spain Election as Barcenas Promises Proof

  • Opposition chief says Rajoy not fit to lead in debate Monday
  • Former aide can prove premier knew of slush fund, lawyer says

The corruption allegations that resurfaced this week to spice up Spain’s election campaign could yet derail Prime Minister Mariano Rajoy’s bid for a second term.

In a prime-time television debate Monday, opposition leader Pedro Sanchez told Rajoy he isn’t fit to lead the country as he attacked the prime minister again and again over links to his former party treasurer, Luis Barcenas, who is the focus of a graft investigation.

Mariano Rajoy speaks to the media during a pre election event in Barcelona.

Photographer: Pau Barrena/Bloomberg

Barcenas’s lawyer said in an interview the same day that his client plans to submit evidence showing the prime minister received cash payments from -- and had full knowledge of -- a secret party slush fund used to receive political contributions. Rajoy denied any wrongdoing in testimony to parliament after the connection first surfaced in 2013, without addressing the specifics of the allegations.

“This was a mechanism used to finance the party for a long period of time,” Barcenas’ lawyer Francisco Maroto said at his offices in Madrid. “The party leadership was aware of what was happening.”

Rajoy’s press officer on Wednesday declined to comment when contacted by Bloomberg.

For investors trying to project the outcome of Spain’s most uncertain election for a generation, the discontent over the prime minister’s links to Barcenas raises the chances of an impasse after Sunday’s vote because Rajoy may struggle to muster enough support to stay in power, even though polls show he’s set to win the most seats.

“The corruption of course plays a big role,” said Lluis Orriols, a political scientist at Madrid’s Carlos III University. “It’s the major obstacle to him finding support.”

Tectonic Shift

Sanchez, seeking to overturn his seven-point deficit in the polls, used the allegations to go on the attack in Monday night’s debate. He told Rajoy he should have resigned two years ago and that by clinging on as prime minister he was damaging Spanish democracy.

“I am a clean, decent politician,” Rajoy replied. “Your rhetoric is mean, deceitful and pathetic.”

The tectonic plates of Spanish politics have shifted since Rajoy’s People’s Party won a record majority in 2011, with two new parties emerging from nowhere to challenge the traditional powers as voters were angered by waves of corruption scandals and a six-year economic slump. Graft is the second-biggest concern of voters after unemployment, according to the state polling company.

The last polls before the pre-election blackout projected Rajoy’s party will win about 28 percent of the vote compared with 45 percent last time. The Socialists, Ciudadanos and Podemos will get between 17 percent and 21 percent, leaving the prime minister needing support to govern.

No Partner

His bitter exchanges with the Socialist Sanchez this week, and the two parties’ historic battles, make it unlikely that support can come from that quarter. And it’s implausible to think anti-austerity Podemos would help Rajoy.

Pro-market Ciudadanos would be the natural partner were it not for the graft allegations hanging over the prime minister.

“We don’t believe that Mariano Rajoy can be the leader of a government of regeneration,” Juan Carlos Girauta, a European lawmaker for Ciudadanos and a candidate for the Spanish parliament, said in an interview. “In the countries we want to use as a benchmark, a prime minister in a comparable situation would have resigned already.”

An eight-year investigation into alleged corruption among officials and executives with links to the PP burst onto the front pages in 2013 when Spain’s leading newspapers, El Pais and El Mundo, reported details of the Barcenas funds. Barcenas is being investigated over charges of embezzlement and tax evasion and says that he is innocent, according to Maroto.

‘Be Strong’

Rajoy, who has been PP president since 2004, was drawn more tightly into the scandal when El Mundo, also in 2013, published text messages of support that he’d sent to Barcenas as the judicial probe closed in.

“Be strong, Luis,” read one of the messages.

Following up those reports, investigating magistrate Pablo Ruz said in a March ruling that evidence suggests the party was running under-the-table accounts from at least 1990 through 2008. The party may have committed tax fraud, Ruz said. A spokeswoman for the PP didn’t respond to a request for comment.

Spain’s National Court is due to set a trial date in the early part of next year, according to Maroto. When the cases eventually do come to court, Barcenas plans to submit reams of so far unseen documents and audio recordings to show the party hierarchy, including Rajoy, was complicit in the operation of the fund, Maroto said.

Regardless of whether Barcenas’s evidence proves as strong as Maroto claims, the scandal is hurting Rajoy, according to Pablo Simon, a political science professor at Carlos III University. About two thirds of Ciudadanos’s voters would want the party to demand his ouster as condition for supporting any PP-led government, according to a Sigma Dos poll this week.

“For Ciudadanos it’s very difficult to back Rajoy because it will upset its own voters,” Simon said in a telephone interview. “The chances of Rajoy staying in office are pretty low.”

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