Spanish PM denies party ran slush fund

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Associated Press

Posted on August 1, 2013 at 10:33 AM

Updated Thursday, Aug 1 at 11:05 AM

MADRID (AP) — Spanish Prime Minister Mariano Rajoy told Parliament on Thursday that he was wrong to trust his former party financial chief for so many years, and repeated his vigorous denials of the ex-treasurer's allegations the party ran a slush fund.

Rajoy surprised many in a special appearance before lawmakers by saying he "was wrong to maintain confidence in someone we now know did not deserve it."

"I was wrong, and I'm sorry about it, but it happened," Rajoy said of his decision to stand by Luis Barcenas, his long-standing political colleague. He admitted that the scandal had damaged the country's image.

The party financing scandal has dogged Rajoy since early this year, when allegations of irregularities emerged. The allegations, which have featured prominently in the media in recent months, have angered many Spaniards reeling from a 26.3 percent unemployment rate and debt-cutting austerity measures devised to heal the country's public finances.

Barcenas was allegedly the architect of the off-the-books payment scheme. He was the Popular Party's top financial official for nearly two decades until he resigned in 2009 after being named as a suspect in a related police investigation.

Barcenas was jailed in June after the National Court found he had held the 47 million euros ($62 million) in secret Swiss bank accounts. He faces possible trial on tax fraud and money-laundering charges

He told the judge investigating the slush fund allegations that he gave tens of thousands of euros in secret cash payments to Rajoy and party secretary general Maria Delores de Cospedal between 2008 and 2010 while they were opposition leaders. Other leading party members also allegedly received payments.

The Popular Party has in recent months turned against Barcenas. On Thursday Rajoy again denied the allegations and called his long-time friend "a delinquent." He claimed Barcenas's "best form of defense was to attack the party."

"You can ask me whether Barcenas's allegations are correct. I can tell you they are not," Rajoy said in a speech which earned a standing ovation from his party's lawmakers.

Opposition leader Alfredo Perez Rubalcaba and other opposition party leaders repeated calls for Rajoy to resign, saying the prime minister had lost his credibility.

"What authority do you have to tell Spaniards they must not evade taxes when you're party was doing just that?" Rubalcaba said.

Rajoy appeared before Parliament after opposition parties threatened to call a motion of no confidence in Rajoy.

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