Imagine your prime minister and several of his top lieutenants got hefty payments from a secret slush fund run by their party, according to allegations made by a top newspaper. This cash, the paper says, was funnelled from construction companies and other businesses that get government contracts. Imagine these leaders also got totally legal payments from their party that dramatically boosted their government salaries. Now imagine all this happened as these leaders slashed government services, laid off tens of thousands of workers, raised your taxes and basically ran the economy into the ground.
For Spanish citizens this is no thought experiment, it's been playing out on the front pages of their newspapers every day. And after five years of crushing austerity, soaring unemployment and widespread evictions with no end in sight, they're pretty pissed about it.
The newspaper El Pais set the crisis in motion by publishing entries from what it claims is a handwritten ledger of a secret slush fund run by a former treasurer of Spain's ruling Popular party. The ledger shows that prime minister Mariano Rajoy was given €25,200 annually for 11 years, as recently as 2008. Other top party officials also allegedly received large payments from the fund, paid by a number of well-known business people, including some linked to a kickbacks-for-contracts scandal over which several officials have already resigned.
Part of the secret account ledger allegedly kept by former Popular party treasurer Luis Barcenas. (El Pais)
Rajoy and other Popular party officials have staunchly denied the allegations, promising to sue news outlets that ran the story. Luis Barcenas, the former party treasurer who allegedly administered the slush fund, likewise denied any involvement. But at least two handwriting experts consulted by Spanish media outlets believe the ledger is in Barcenas' hand, and a former senate president has confirmed he received a large payment listed in the ledger, which he says he later paid back. Jorge Trias Sagnier, a former Popular party lawmaker, has also confirmed that the ledger published by El Pais is the same one Barcenas had shown him previously.
To make matters worse, these allegations are just the latest in an astounding string of corruption scandals: Barcenas is already facing charges of tax fraud and receiving illegal payments in another case; other senior Popular party leaders are accused of taking bribes; there's the sprawling Marbella cash-for-votes trial, as well as King Juan Carlos' son-in-law's tax fraud trial. It's no wonder that Spaniards are furious: according to recent polling, 96% believe corruption is widespread and not usually punished.
Austerity for thee, but not for me
What's equally alarming is that the payments Rajoy and company are alleged to have accepted from their party would be legal, as long as they were reported to tax authorities as income. The finances of political parties in Spain are virtually unregulated and hidden from public view, and many Spanish elected leaders continue to accept money from their parties in addition to their official salaries.
For instance, Rajoy's recently released tax returns show that, as he was insisting on ever more painful cuts across the country, he himself was doing quite nicely, thank you – with the Popular party regularly boosting his salary as party leader, even after he was elected prime minister. The party has also thrived as its leaders have demanded deep sacrifices from the public.
Avaaz campaigners with a puppet head of Mariano Rajoy, calling for a law to curtail evictions. At least nine people facing foreclosure on their homes have committed suicide in Spain – four in the past week. (Avaaz)
What happens now?
Might this latest scandal topple Rajoy's government? Amazingly, it seems not. Unless deeper investigations uncover even more heinous allegations, the ruling party will probably fire a couple of ministers, shuffle the cabinet and make a few concessions to public sentiment, such as its abrupt decision to reverse its previous opposition to a bill that would curb evictions.
But, understandably, there's a mounting chorus calling for more transparency and better regulation of party finances. The public – which supplies most of the money for Spain's political parties – needs a bigger say in how that cash is spent. And the politicians who are getting fat while insisting everyone else tighten their belts need a dose of reality. It's past time to steer the country away from its disastrous austerity-at-all-costs mania – and towards policies to grow the economy and put Spaniards back to work.
Read more: Bloomberg's Megan Greene says there are signs the political crisis in Spain could undermine the country's precarious economic situation.
Sources: World, El Pais, Global Post, Guardian, Transparency International, RT, Bloomberg