Bookkeeper at Center of Spanish Graft Inquiry

While Spaniards suffer with the sacrifices of government-imposed austerity, Spain’s top politicians, including Prime Minister Mariano Rajoy, have been accused in a widening scandal of pocketing envelopes of cash sometimes amounting to nearly $35,000 a year for nearly two decades. Mr. Bárcenas is suspected of distributing the illicit payments in an elaborate scheme to finance the party and enrich its leadership.

Having started as a low-level case, the scandal has now reached the very top of the political pyramid, with fresh disclosures emerging almost daily, directly threatening Mr. Rajoy’s government and rattling financial markets. It has fueled public anger among Spaniards — like their southern European counterparts in Greece and Italy — who have seen traditions of institutionalized graft exposed by the downturn in Europe’s economy.

The scandal has also shined an uncomfortable light on how the political parties operate and their clubby relations with a corporate elite in an alliance that stifles competition throughout the economy — to the detriment of the middle and lower classes.

“In Spain, there is a perverse system in the way that political parties are financed,” said Jorge Trías Sagnier, a former conservative lawmaker. “It was public knowledge that there were ‘envelope salaries’ for the parties.”

In an effort to quell the clamor, Mr. Rajoy publicly recently released his tax returns — a first for a prime minister here — and called for a vigorous internal investigation of the party’s finances. But critics charge that Mr. Rajoy showed no interest four years ago in pursuing accusations that party members had amassed wealth beyond official salaries, benefiting from a decade-long property boom and the largess of construction companies that provided cash, luxury Patek Philippe watches, Caribbean vacations and birthday parties in return for no-bid contracts and development rights.

According to a person familiar with the Swiss banks who asked not to be named, the investigation quietly lapsed after the Spanish authorities failed to clarify a request made to their Swiss counterparts to comb bank accounts in search of money held by Mr. Bárcenas.

The request was reactivated only in 2011 by Pablo Ruz, a judge from Spain’s national court, finally revealing last month that Mr. Bárcenas, the former treasurer, had stashed away $29 million in Swiss bank accounts in the name of shell companies.

Mr. Bárcenas resigned as party treasurer four years ago, when he was tied to what appeared to be a mundane graft case in which mayors and other regional politicians from Mr. Rajoy’s party were accused of taking bribes from a conglomerate led by a communications entrepreneur and developer, Francisco Correa, in exchange for no-bid contracts. The current scandal grew out of that, one shocking disclosure after another.

They have included the publication by Spain’s leading newspaper, El País, of handwritten ledgers that the paper said showed secret payments to Mr. Rajoy and other party members dating from 1990 to 2008, when Spain’s construction boom ended.

Mr. Bárcenas has denied that the secret ledgers are his, but handwriting experts for Spanish newspapers have confirmed his script. At the time of his resignation, he is believed to have walked out of his party headquarters with nine boxes of documents. Though he remains loyal to his party, the trove has become a source of endless speculation, centered on the looming threat that if Mr. Bárcenas is made to take the fall in any partywide scandal, others may fall with him.

He “was the guy in charge of the money and most probably has an awful lot of secrets in his closet,” said Kenneth A. Dubin, professor of political science at the Carlos III University in Madrid.

Article source: http://www.nytimes.com/2013/02/16/world/europe/bookkeeper-at-center-of-spanish-graft-inquiry.html?partner=rss&emc=rss