Last updated: February 2, 2013 3:38 pm

Spain’s Rajoy denies payment allegations

Spain’s prime minster Mariano Rajoy has staunchly denied allegations that he took cash payments from a secret slush fund paid for by construction companies as his ruling Popular Party attempts to contain the largest scandal in its history.

“This is all faIse - am not in politics for money… I have never received undeclared money,” Mr Rajoy said following an emergency meeting of the Popular Party’s executive committee on Saturday as several hundred protestors gathered outside its Madrid headquarters, barricaded by police.

Mr Rajoy announced he would publish all of his declarations to Spain’s tax authorities and proceed with a full investigation into allegations of a system of cash payments to party leaders run by its former treasurer.

Last week the daily newspaper El País published what it claimed to be an accounting book drawn up by Luis Bárcenas, the PP’s former treasurer, showing entries recording payments made to Mr Rajoy and other party leaders.

Mr Bárcenas, who had stepped down from his role as a result of a corruption investigation, had been revealed to hold €22m in a Swiss bank account after the Swiss authorities passed information to their Spanish counterparts. Mr Bárcenas has denied that the accounts published by El País were drawn up by him.

The former PP treasurer was subsequently revealed to have taken advantage of a fiscal amnesty passed by the Rajoy government which allowed money held outside Spain to be brought back into the country if tax was paid on it at 10 per cent tax – less than half the country’s income tax rate.

The allegations, published by the left-leaning El País and the right-leaning El Mundo newspapers, have shaken Spain’s political establishment at a time when Mr Rajoy’s government is pursuing a programme of sharp public spending cuts, and one in four of the country’s labour force is declared as out of work.

The allegations have thrown into focus Spain’s laws on party financing, which many observers have argued have facilitated political corruption and must be reformed.

Between 1987 and 2007, Spanish law prohibited donations over €60,000 per year, and banned companies competing for public contracts from giving money. In 2007, Spain’s then socialist government passed a law banning all anonymous political donations.

As Mr Rajoy spoke on Saturday morning, hundreds of protestors gathered around police barricades positioned outside the Popular Party’s central Madrid headquarters and called for the prime minister to resign. The protests followed similar gatherings on Thursday and Friday nights after the story was first published.

An online petition calling for Mr Rajoy’s resignation had gathered almost 650,000 signatures by Saturday morning, with leading members of the PP scrambling to contain the political fallout from the accusations in a country showing mounting anger at a string of corruption cases that have engulfed politicians and other public dignitaries from all sides.

Soraya Sáenz de Santamaría, deputy prime minister, was moved to deny on Friday that the allegations were damaging confidence in the Rajoy government.

The so-called Bárcenas scandal comes as Iñaki Urdangarin, son-in-law of King Juan Carlos, faces charges of embezzling millions of euros from charitable organisations, and a leading judge was last year forced to resign for using public funds to pay for private trips.

Maria Dolores de Cospedal, the PP’s general secretary, earlier this week accused unnamed plotters of using what she said were fake accounts in an attempt to destabilise the party.

Spain’s attorney-general, Eduardo Torres-Dulce, said on Thursday that the new allegations were sufficient to justify an investigation, and that Mr Rajoy could be questioned.

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