Spain’s government. Another blow. The ruling conservative party is shaken by a damaging corruption scandal [The Economist. Feb 9th 2013 | MADRID ]

Spain’s government Another Blow

The ruling conservative party is shaken by a damaging corruption scandal

Feb 9th 2013 | MADRID |From the print edition 

 

A CHORIZO is a spicy Spanish sausage, best accompanied by a glass of Rioja, though often sliced and served in a doughy bocadillo, or sandwich. Chorizo is also slang for a swindler or cheat. At protests against Mariano Rajoy’s government demonstrators have taken to waving loaves aloft and shouting: “There isn’t enough bread for so many chorizos!”

Now the allegations have touched Mr Rajoy directly. “Never, ever have I received or handed out black money,” he insisted on January 21st. But revelations from Spain’s two main newspapers, El País and El Mundo, claim otherwise. They allege that slush money flowed liberally through the headquarters of Mr Rajoy’s Popular Party (PP) for at least two decades. Some of it supposedly went straight into the pockets of the party’s leaders. “Envelopes with cash were handed out as salary top-ups to certain top party officials,” said Jorge Trías Sagnier, a former PP deputy and the only whistleblower so far to go on the record.

The allegations, although denied by almost everyone who has been implicated, have turned into a full-blown scandal. The most serious evidence, contained in secret ledgers purportedly kept by the party’s chief accountant, show Mr Rajoy receiving €25,000 ($34,000) a year for a decade. On February 3rd, standing by Angela Merkel, Germany’s chancellor, at a press conference in Berlin, a nervous Mr Rajoy protested that “except for a few bits” the ledger entries were false.

The pivotal character in the scandal is Luis Bárcenas, a party administrator for two decades, whom the party made a senator in 2004 and Mr Rajoy himself promoted to treasurer in 2008. Courts began investigating Mr Bárcenas four years ago amid allegations that he was among the beneficiaries of a backhander scheme run by local party members in Madrid and Valencia. Mr Rajoy stood by his man and the PP paid for his defence. But Mr Bárcenas eventually stood down, as both treasurer and senator. Rumours spread that he had taken away incriminating documents.

The bombshell came last month when court investigators discovered that Mr Bárcenas had a €22m Swiss bank account. He also admitted to using a tax amnesty last year to declare €10m of hidden money.

The 14-page ledger, published by El País, is said by some handwriting experts to be in Mr Bárcenas’s hand. It appears to show that much of the PP’s secret fund came from construction magnates who received public contracts and helped inflate Spain’s disastrous real-estate bubble. Regular cash-in-hand payments to the PP’s leaders supposedly carried on even while they held public office, continuing until 2009, five years after Mr Rajoy became leader.

Some recipients of loans and other payments acknowledged having received money, but said that they were entirely legal. They include Pío García-Escudero, the senate president. Press reports are agreed that the slush fund was shut down several years ago. For the rest, the evidence is either confusing, of unknown provenance or both. Certainly, Mr Rajoy and the rest of his party deny it all. The prime minister’s denial of self-enrichment deserves credence, as this is the first suggestion that he is anything less than squeaky clean.

On the other hand, El Mundo has quoted five unnamed sources who spoke of regular cash-in-hand payments to party leaders. And voters are beginning to latch on to the idea that Mr Rajoy ran a party which hid, distributed and lied about dirty money. Four out of five Spaniards believe the PP’s leadership should resign en bloc. Just over half want a snap general election.

Will the scandal bring down Mr Rajoy’s government? It has a comfortable parliamentary majority and three years until a general election. Spain’s courts proceed slowly. They have only just started hearing the trial related to a ring of world-ranking cyclists and other athletes who allegedly doped themselves at the Madrid clinic of a doctor first arrested in 2006.

Yet the damage to Spain cannot be measured by the fate of a single party at the next general election. Spaniards have lost respect for their politicians. Other parties, especially the Convergence and Union coalition, which runs Catalonia, are knee-deep in allegations of corruption. The opposition Socialists have cases rumbling, too, especially in places where mayors and real-estate developers seemingly fell into a toxic embrace. Polls show that 96% of Spaniards believe many politicians are on the take. Support for the main parties has tumbled over the past year, as a double-dip recession deepened and unemployment climbed to 26%. The king’s son-in-law, Iñaki Urdangarin, and his business partner were recently told to post a €8.1m bail after being investigated for corruption charges that also involve regional PP governments.

A recent poll gave the two big parties, which have run Spain for the past three decades, only 46% of the vote. The political settlement Spaniards agreed on as they emerged from dictatorship in the 1970s gave huge power to the parties to solidify democracy. This may have backfired. “Having created the monster, we are being devoured by it,” says Antonio Argandoña at IESE, a business school.

In 2011 the country’s legion of indignados took over city squares, shouting: “They don’t represent us”. They have even more reason to be indignant now.

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