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More pain for 'brand Spain' as leader faces fresh allegations

A newspaper has published what it says are documents showing Prime Minister Mariano Rajoy received illegal payments.

rajoy 07 10 2013Enlarge
Prime Minister Mariano Rajoy has denied the latest allegations in the usually sympathetic El Mundo newspaper. (Pierre-Philippe Marcou/AFP/Getty Images)

BRUSSELS, Belgium — Spain's Prime Minister Mariano Rajoy is facing fresh newspaper allegations that he and other senior members of his conservative party received illicit payments, raising the prospect of more political uncertainty in another crisis-hit euro zone country.

The El Mundo newspaper on Tuesday published what it said were shadow accounts held by the former treasurer of the governing Popular Party, Luis Barcenas, suggesting that he ran a slush fund for payments from businessmen that were distributed to senior party officials.

Similar allegations have appeared in Spanish papers in recent months, but the latest ran in a publication that’s usually supportive of the PP, and are the closest so far to suggesting Rajoy himself was a beneficiary during his time as a minister in a previous government.

Senior party officials have denied the claims. In his first comments on the allegations, Rajoy sought to play them down during a visit to an auto plant Wednesday.

"In Spain, there are some very important international issues, what happens is sometimes we have a certain tendency to talks about minor issues," Spanish media reported him as saying.

The growing scandal over the alleged payments puts more pressure on a government struggling to deal with record banking debts, a deep recession and Europe's highest unemployment rates.

The risk of a political crisis is also adding to uncertainty facing the euro zone's southern members following last week's near-collapse of the Portuguese government and a last-minute deal to save Greece from a summer bankruptcy.

Spain's Foreign Minister Manuel Garcia-Margallo acknowledged that the scandal was a blow for "brand Spain" as it seeks to attract investors to help pull it out of recession.

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Once a major political figure in Spain, Barcenas is in jail facing corruption and tax fraud charges that he denies. El Mundo says the ledgers allegedly kept by Barcenas suggest Rajoy received payments of around $15,000 in 1998.

The opposition Socialist Party has called on the prime minister to resign.

http://www.globalpost.com/dispatch/news/regions/europe/spain/130710/spanish-leader-rajoy-new-allegations