Corruption Scandal New Worry For Hard-hit Spain

By ALAN CLENDENNING

MADRID (AP) ⿿ It's not as though Spain doesn't have enough to worry about⿿ two years of recession, harsh austerity programs, sky-high unemployment and an unstable footing on the world's markets. Now comes a corruption scandal that has shaken the top levels of government.

Prime Minister Mariano Rajoy has steered Spain through the economic turmoil, but some are asking whether he will survive the storm over allegations that he and others benefited from years of slush fund handouts. Here's a look at how the scandal has developed:

THE ALLEGATIONS:

Spain's leading El Pais newspaper published a bombshell report on Jan. 31, laying out ledgers it said were from former Popular Party Treasurer Luis Barcenas, outlining nearly 20 years of alleged secret accounting showing cash payments to leading party members ⿿ including Rajoy before he became prime minister.

The money allegedly came from private companies, mostly construction firms doing big business during Spain's property boom stretching from the 1990s until the 2008 financial crisis. According to the documents published by El Pais, Rajoy received ⿬322,231 ($436,494) from 1997 to 2008.

Rajoy and the other party members allegedly involved have denied receiving payments, and the Popular Party said the documents are false ⿿ though it has acknowledged that some notations reflect legitimate party payments and notifications to Spain's taxation authority.

THE FALLOUT:

Spaniards struggling under spending cuts and tax hikes are outraged. In the country's bars, the talk about the controversy is more heated than the usual arguments over the Real Madrid and Barcelona football (soccer) teams. Angry protests have been held outside the Popular Party's Madrid headquarters.

The scandal has hit the markets: stocks fell and interest rates on Spanish bonds rose in the days after Rajoy denied the allegations, as investors grew concerned about the stability of the government and its economy.

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