Spain's government jumps to calm corruption scandal

Spain's government leapt to calm a scandal Friday over alleged corruption in the ruling party, announcing that Prime Minister Mariano Rajoy will speak out after being named in the affair himself.

It insisted the publication of ledgers purportedly showing party donations being secretly channelled to Rajoy and other Popular Party officials did not threaten its stability as it fights through a recession.

"The government is one thing and the parties are another," Deputy Prime Minister Soraya Saenz de Santamaria told a news conference.

"This government enjoys great stability," she said.

"The prime minister will make his position known tomorrow," Saturday, after an extraordinary meeting of the conservative party's national executive committee, added Saenz, the government's official spokeswoman.

The publication of the account ledgers by leading centre-left daily El Pais on Thursday gave a bitter twist to protests by Spaniards suffering in a recession that has thrown millions out of work.

Protestors say ordinary Spaniards are being made to pay for an economic crisis brought on by the collapse of a construction boom which many blame on corrupt politicians and unscrupulous banks.

Hundreds of demonstrators rallied outside the Popular Party's headquarters in Madrid on Thursday night, calling for Rajoy's resignation.

Scores of protestors returned there on Friday, waving empty envelopes in a reference to the envelopes of money allegedly handed out to party members.

"The country in general feels cheated by the whole political class, not just the Popular Party," said one demonstrator, Jorge Garcia, on Friday.

"We want to pull them out by the roots, but we don't know how."

El Pais cited ledgers kept by two former party treasurers, Alvaro Lapuerta and Luis Barcenas, apparently showing payments including 25,200 euros ($34,000) a year to Rajoy between 1997 and 2008.

The newspaper said the alleged fund was made up of donations, mostly from construction companies, adding that such payments would be legal as long as they were fully declared to the taxman.

Barcenas, the former party treasurer at the centre of the scandal, denied the allegations, as did most of the top officials named in the report including the party's current secretary general Maria Dolores de Cospedal.

Barcenas was already under investigation over reports that he had stashed millions of euros in Swiss bank accounts, which prompted Rajoy last month to order a review of the party's finances, subject to an external audit.

One photograph in El Pais showed a supposed 1999 entry in the ledgers marked: "M. Rajoy - second semester", with a sum of 2.1 million pesetas (12,600 euros) on the outgoing column of the party's funds.

Former IMF managing director and senior Popular Party official Rodrigo Rato was shown receiving 2.28 million pesetas for the same period. He, too, denied the allegation.

The deputy prime minister declined to comment on the alleged payments and their implications for the government on Friday, but defended Rajoy personally.

"I have been working with him for 12 years... and what I have seen in that time has always been exemplary conduct," she said. "I have never seen him break the rules."

An editorial in centre-right daily El Mundo said: "The affair is of extraordinary political gravity and leaves the Popular Party and the government on the ropes. They must not only collaborate with the justice department but also show absolute transparency."

The leader of the main opposition Socialist Party, Alfredo Perez Rubalcaba, demanded that Rajoy say publicly whether he received the money and, if so, whether it was properly declared.

"He has to answer these himself, the head of the government, because we have a very big crisis at this moment; a critical situation," Rubalcaba said.