Bloomberg News

Rajoy Says Politicians Err as Party Graft Charges Roil Spaniards

January 19, 2013

Spanish Prime Minister Mariano Rajoy said politicians make mistakes and he won’t be intimidated by reports an official from his ruling party amassed 22 million euros ($29 million) in a Swiss bank account while channeling bribes to colleagues.

“Mistakes may have been made, because there’s no one who never errs,” Rajoy told party activists at a rally today in Almeria, southern Spain. “If at any point I know of irregularities, my hand will not tremble.”

Deputy Prime Minister Soraya Saenz de Santamaria, who faced an hour-long grilling on the topic at her weekly press conference, declined to comment on whetherRajoy knew former People’s Party treasurer Luis Barcenas was making cash payments to senior officials as reported by El Mundo newspaper.

Rajoy’s party has been rocked by a series of reports in the past week that risk undermining the government’s credibility as it enacts the harshest austerity program in history. The hashtag #CorruPPlandia -- a term combining Corruptland and the ruling PP -- was trending on Twitter this week as posters organized a demonstration outside the PP headquarters for last night.

‘Rajoy Vulnerable’

“This was the week when people’s attitudes to corruption in PP started to shift,” Ignacio Sanchez Cuenca, a sociology professor at Madrid’s Complutense University, said in a telephone interview yesterday. “You need a critical mass of cases before people start to act and the PP is crossing that threshold. Rajoy is vulnerable.”

Police locked down the streets around the PP headquarters in central Madrid with 28 riot vans preventing protesters approaching the building because the demonstration wasn’t authorized. Citizens argued with officers about their constitutional rights. About 1,000 people attended the demonstration, the Spanish state broadcaster reported.

A Jan. 13 El Pais survey showed 96 percent of Spaniards consider politicians to be corrupt, with little difference between the views of PP voters and supporters of the opposition Socialist Party. Support for Rajoy’s PP dropped to 30 percent from 46 percent a year earlier.

Metroscopia polled 1,000 people Jan. 9-10 and the margin of error was 3.2 percentage points.

Officials Jeered

Saenz and Economy Minister Luis de Guindos were jeered by journalists on Jan. 17 when they turned up an hour late for a presentation on a housing program for families that have been evicted from their homes.

“This could happen to anyone,” Saenz said, her voice trembling. “Not to you,” shouted back one reporter to laughter from the gallery.

The allegations against Barcenas surfaced the same week that former Madrid regional health minister, Juan Jose Guemes, resigned from the board of a Unilabs SA unit over an alleged conflict of interest, and the region’s president Ignacio Gonzalez said he’d paid 770,000 euros to acquire a beachside penthouse that was the focus of a police investigation.

Rajoy ordered Barcenas to stop monthly cash payments of up to 15,000 euros using illegal contributions from construction firms in 2009, El Mundo newspaper reported yesterday. Rajoy never received illegal payments, it said, citing five people from successive leadership teams without naming them.

Tax Amnesty

Budget Minister Cristobal Montoro was dragged into the row after Europa Press reported Barcenas took advantage of the government’s tax amnesty to repatriate 10 million euros last year. The Budget Ministry published two statements last week rejecting the claim.

Barcenas’s lawyer, Alfonso Trallero, said in a television interview earlier this week the money was transferred through a company so the ministry may not have known who the ultimate beneficiary was. Trallero said his client accrued his fortune through investments in Latin America.

“This hasn’t been gained through work related to the PP -- it’s from Mr. Barcenas’s legitimate, legal, completely normal business interests in South America with his partners,” Trallero said. His assistant said he won’t be making additional comments, when contacted by Bloomberg.

Saenz, who worked at the party’s Madrid headquarters while Barcenas was running its finances, said yesterday she neither saw nor heard about any suspicious cash payments and would have spoken up if she had.

‘Spurious Interests’

Madrid President Gonzalez said he agreed to the purchase of a 5,000 square-foot duplex penthouse in Marbella on the south coast after his rental agreement with a Delaware-based company was probed by police.

Guemes resigned from the board of Geneva-based Unilabs’s Spanish arm after it acquired a majority stake in the company that runs laboratory tests for a group of Madrid hospitals. Guemes privatized that service when he ran health care for the region in 2008, the company said in a statement on its website.

“I value much more my freedom to defend ideas without anyone being able to accuse me of defending spurious interests,” Guemes said at a televised new conference Jan. 16. “I worked not only respecting strictly the relevant laws, but also ethically and, as some put it, aesthetically.”

Unilabs is owned by investors including Apax Partners LLP and Nordic Capital Svenska AB.

To contact the reporters on this story: Ben Sills in Madrid at bsills@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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