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The corruption scandal that is shaking Spain

Following is a summary of some of the key questions of the corruption scandal that has hit Spain's ruling People's Party.

  • El Pais published images of excerpts of almost two decades of handwritten accounts

    El Pais published images of excerpts of almost two decades of handwritten accounts

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The ruling People's Party has been buffeted by media reports alleging that its former treasurers operated a slush fund with donations from construction industry executives that were then doled out to Rajoy and other party leaders.

The scandal broke when the National Court reported recently that Barcenas amassed an unexplained €22 million ($30 million) in a Swiss bank account several years ago.

Following is a summary of key question to look at.

What is the ruling PP party accused of?

Until recently, Spanish political parties were allowed to receive anonymous donations. And if the party leaders declared the income in tax statements, it may not be illegal. However, it would have been illegal not to book those donations in the book's official, regulated accounts.

The allegations raise serious ethical questions about party operations, especially because many of them occurred during Spain's building boom, in which politicians granted large numbers of development contracts. The Popular Party was in power and the construction industry made the country one of the most successful economies in the European Union.

Prime Minister Mariano Rajoy and Spain's ruling People's Party have denied that the party made unofficial payments from business donors to the premier and other party leaders.

What information is there in what El Pais newspaper calls the "secret papers" of former party Treasurer Luis Barcenas?

El Pais published images of excerpts of almost two decades of handwritten accounts that it said were maintained by People's Party treasurers, showing donations from companies, mostly builders, and regular payments of thousands of euros to Rajoy and other party leaders.

El Pais said the donations and payments represented a secret accounting system by the conservative party, but the alleged slush fund may not necessarily be illegal.

This is the first time a newspaper has published images of documents allegedly showing the names of party members and the payments they received as well as sheets showing company names and their donations.

Those named in the lists include former ministers Angel Acebes, Javier Arenas and Francisco Alvarez Cascos. The paper said the documents showed that as of 1997 Rajoy received some €25,000 each year.

Among the companies named in the El Pais story is builder and infrastructure and energy company FCC. FCC declined to comment. A source close to the company told Reuters that FCC would carry out an internal investigation regarding possible donations.

El Pais also said the president of another builder, OHL, Juan Miguel Villar Mir, was one of the donors. OHL declined to comment.

Who is Luis Barcenas?

The accounts published in El Pais were allegedly from two former PP treasurers. One of them is Luis Barcenas, who stepped down as party treasurer in 2009 when judges began to investigate his possible involvement in alleged illegal payments and kickbacks to party officials from builders and other businesses that won government contracts.

The ongoing judicial investigation of Barcenas has revealed recently that he had a Swiss bank account which at one point held as much as 22 million euros.

What is the role of Prime Minister Mariano Rajoy in this scandal?

Rajoy, who has seen austerity policies drive his approval rating down to just 19 percent after 13 months in office, gave an initial response to last week's media allegations by flatly denying any wrongdoing. He also welcomed an investigation of the finances of his conservative People's Party and promised to post his own tax returns on a government website.

Who does this scandal affect the rest of Europe?

The widening corruption scandal over alleged secret cash payments to PP leaders has hit Rajoy's popularity as he struggles with a deep recession, a fiscal crisis that could push

Spain into an international bailout, and the euro zone's highest unemployment rate.

Uproar in the media and some street protests have helped raise doubts among investors on the government's future, pushing its borrowing costs back up at a time when its priority has been to save money and pay off debts to stave off insolvency.

And what happens in parliament?

Although the Socialist opposition has called for Rajoy to step down, they have not gone so far as to call for an early election. A vote right now would be damaging for both main parties, with polls crediting neither with more than 25 percent.

The survey showed 23.9 percent of the public voting for the PP - the lowest level since the 2011 election and down from 29.8 percent in the same poll last month. Support for the PSOE was at 23.5 percent, little changed from the 23.3 percent last month.

On the other hand, PP is well protected with an absolute majority in the Spanish chamber.


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