Spain ruling party number two testifies in fraud case

The number two official in Spain's ruling party, Maria Dolores de Cospedal, gave testimony Wednesday in a slush fund scandal that has reached as far as the prime minister.

Cospedal, the secretary general of the Popular Party, is the highest ranking party official to testify so far at Madrid's National Court, which is investigating allegations of party financing irregularities over a period of some 20 years.

She is appearing before the judge as a witness, not as a suspect, and the hearing is not held in public.

The ruling party is accused of making undeclared payments to top officials from a slush fund financed by private firms including construction and property companies that benefited from public contracts.

The scandal has outraged Spaniards suffering high unemployment, austerity measures and a recession.

As Cospedal arrived at the court, dozens of protesters rallied in the street outside, chanting: "Rajoy and Cospedal to Soto del Real", the name of a neighbouring prison.

Cospedal's name has appeared along with that of Prime Minister Mariano Rajoy as a recipient of payments in a ledger compiled by disgraced former treasurer Luis Barcenas.

Cospedal and Rajoy have denied receiving any illegal payments.

Barcenas, who was the party's financial manager and then treasurer from 1990-2009, has been in the Soto de Real jail since June 27 pending investigations into a separate corruption case involving tens of millions of euros (dollars) stashed in foreign bank accounts.

Last month, Barcenas told a court presided by Judge Pablo Ruz that he had given 25,000 euros ($33,000) in 500-euro notes to Cospedal. A legal source at the hearing said he also admitted keeping double accounts.

According to conservative daily El Mundo, Cospedal and the prime minister are each alleged to have received payments amounting to 45,000 euros in 2009 and 2010.

But the court is reportedly most interested in the payment in 2007 of a 200,000-euro commission to the Popular Party of the region of Castile-la Mancha, of which Cospedal is president.

The payment allegedly came from a private company in exchange for a public contract in the regional capital of Toledo.

Spain's premier appeared before parliament on August 1 to defend himself against the accusations.

Rajoy scorned opposition calls for him to step down and denied any wrongdoing but admitted making a mistake in trusting Barcenas.

"I am not going to declare myself guilty because I am not," he told parliament.