Spanish prime minister rejects calls to step down over scandal

Spanish prime minister Mariano Rajoy rejected calls today for his resignation over a ruling party financing scandal and said he would not allow the matter to deter his reform plans.

The pressure mounted on Mr Rajoy as the former treasurer of his People’s Party gave new testimony before a judge looking into the affair, saying he handed envelopes of cash to Mr Rajoy and other party leaders in 2008, 2009 and 2010.

Mr Rajoy has so far limited the impact of the scandal, which involves alleged illegal donations by construction magnates that were supposedly distributed as cash payments to party leaders in return for juicy contracts.

Speaking at a news conference today, he said: “I will defend political stability and I will fulfill the mandate given to me by Spanish voters.”

He said the scandal would not derail his political reform programme, aimed at combating a deep recession and a huge hole in the budget.

But the opposition demanded he quit, and some members of his own party also said it was time for him to go.

“The PP may have an absolute majority but it has lost moral authority,” said the opposition Socialists’ Deputy Secretary General, Elena Valenciano. “We are going to work with all the parties to make the prime minister step down.”

At the heart of the scandal is former party treasurer Luis Barcenas (55) who was jailed in June and charged with bribery, money laundering, tax fraud and other crimes.

A High Court judge questioned Mr Barcenas behind closed doors for more than three hours yesterday after he was transported from jail in a white and black van.

A lawyer involved with the case told Reuters that Mr Barcenas, a once-trusted aide, turned over documents showing how he ran a secret slush fund at the party for many years, and provided details of years of cash payouts to party leaders.

Over his more than 20 years handling PP finances, Mr Barcenas accumulated as much as €48 million in Swiss bank accounts that prosecutors say he has failed to adequately explain.

Mr Rajoy is not charged with any crime and has repeatedly denied that he or other party leaders received illegal payments.

However, text messages between Mr Rajoy and Mr Barcenas published in El Mundo newspaper over the weekend showed the two were personally in touch as recently as March and that the prime minister tried to limit potential damage from the former party official, who he made treasurer in 2008.

Mr Rajoy today acknowledged the text messages were genuine and said they showed that he had not caved to blackmail from Mr Barcenas.

Inside the PP, politicians are increasingly convinced that Mr Rajoy is losing the credibility he needs with voters tired of high unemployment. Support for the party has dropped to 25 per cent from 44 per cent in the 2011 general election, according to a poll by Metroscopia.

Reuters