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Spain ruling party denies PM received slush funds

July 9, 2013

MADRID (AP) — Spain’s ruling Popular Party on Tuesday denied a news report that Prime Minister Mariano Rajoy received slush fund payments while serving in a previous government.

The party said financial documents published in El Mundo did not come from the party’s books and that no party member received money under the table.

El Mundo said the documents — hand-written ledger entries — belonged to Luis Barcenas, who served in the Popular Party’s treasury for 20 years. He resigned in 2009 after he was named in a probe into illegal financing of the party.

Despite the governing party’s strong denial, the scandal over alleged secret payments has shaken Rajoy’s party and dented its popularity ratings. The reports have come as Spaniards are made to suffer harsh austerity measures and stiff economic reforms as part of the government’s desperate bid to bring the country’s debt down to a more manageable level. These cuts have proved a massive drag on Spain’s economy — the country is stuck in recession and has an unemployment rate of 27.2 percent.

El Mundo said the financial documents show Rajoy received 42,000 euros ($54,000) in payments while serving as a minister between 1997-99.

Barcenas, who was jailed last month while awaiting possible trial on tax fraud and money-laundering charges, told El Mundo in an interview published last weekend that the party has long been illegally financed. The interview was carried out June 10, before Barcenas was jailed.

Other party members and figures such as former deputy prime minister and ex-IMF chief Rodrigo Rato are also named in the entries.

El Mundo said that it had handed the documents over to the National Court, which is handling the probes involving Barcenas.

Rajoy and his party vigorously denied similar allegations in another Spanish daily, El Pais, earlier this year. Rajoy also denies the allegations are having any damaging effect on his government.

The government claims Spain is on the mend and will emerge from recession later this year. But the International Monetary Fund threw cold water on that prediction Tuesday, saying Spain would not begin growing again on an annual basis until 2015, a year later than the government predicts.

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