Spanish PM Mariano Rajoy allegedly received €25,000 in kickbacks per year for more than a decade and so did many others: can the Partido Popular be held partly responsible for the Real Estate bubble in Spain?

The Partido Popular, the conservative party of Spain, has become under heavy fire due to recent accusations of corruption and bribery. While the attention focused initially on other members of the PP, since 31 January the spotlight is firmly aimed at Prime Minister Mariano Rajoy himself. He is accused of receiving more than €25,000 in kickbacks per year for the full period between 1997 and 2008.

The generous donors have supposedly been large building companies, who made their fortune during the emerging of the Spanish real estate bubble. The involvement of Rajoy in this year-long corruption case has been discovered by the Spanish newspaper El País. However, for purposes of convenience I start with some quotes from the Financial Times:

Rajoy drawn into corruption scandal

Spain’s prime minister has become embroiled in a growing scandal over secret cash payments to ruling party politicians after a newspaper published what it claimed to be accounts showing payments reaching as high as Mariano Rajoy himself.

The Popular party on Thursday again firmly denied that its leaders, including Mr Rajoy, received improper cash payments funded from donations from construction companies, as flames from the corruption allegations licked at the feet of some of its most senior figures.

The PP insisted that no party leader received payments outside their regular salaries after El País, Spain’s biggest selling daily, claimed that the prime minister had received €25,200 each year since 1997 in payments made every three or six months, reproducing on its front page what it claimed to be pictures of the former PP treasurer’s accounting book.

Maria Dolores de Cospedal, the PP’s general secretary, said that the accounts published in photograph form were fake. She denied any member had been paid outside their normal salaries, and insisted no form of secret accounting had taken place.

After Pío García Escudero, the PP president of Spain’s Senate, confirmed that a loan referencing his name in the alleged accounts was genuine, Ms Cospedal said this did not in any way confirm the veracity of the other entries in the accounts, which showed herself receiving several payments in 2008.

While the Financial Times only states that payments have been made by Spanish construction companies, El País supplies some more details on this shocking corruption case. 

The snips mentioned here have been translated from Spanish by me:

The secret accounts of Luis Bárcenas

The accounts held by Luis Bárcenas had nothing to do with official state subsidies for the Partido Popular, as part of the public financing for Spanish political parties. To the contrary, all payments have been recognized as private donations from well-known companies and entrepreneurs, especially from the construction industry.

From  those payments, according to these accounts, €120,000 have been donated in 2004 by Luis de Rivero, who was at the time vice-president of Sacyr Vallehermoso. In 2006, he donated another €240,000 when he was already president of this construction company. 

Other payments have allegedly been made by Juan Miguel Villar Mir, president of OHL: respectively €100,000, €180,000 and €200,000 in 2004, 2006 and 2008. 

José Mayor Oreja, president of FCC Construction and brother of the former Minister of Domestic affairs, has made two payments of €90.000 and €75.000 in 2008. A person or company, nicknamed “Mercadona” (i.e. ‘market’) donated €90,000 and €150,000 in 2004 and 2008. All persons mentioned here, however, denied directly or through their spokesmen to have donated these amounts.

The article in El País is a must-read for people who are interested in this matter and master Spanish. The amounts that have been paid might not seem too spectacular, but according to another article in El País, the total amount of briberies over the years has been €40 million: a very substantial amount, especially for a political party.

Besides that, we should look at those payments in the light of A. the fact that the Partido Popular has claimed that the Spaniards have been “living beyond their means” and B. the desperate economic situation in Spain.

According to Lex Rietman, the Dutch correspondent for BNR business radio (www.bnr.nl) in Spain, the claim that the Spaniards have been living beyond their means is ridiculous: the average Spaniard doesn’t earn more than €1000 per month.

And concerning the economic situation of Spain: the country, ‘prominent’ member of the PIIGS countries, has currently more than 26% of unemployed workers and more than 55% (!) of unemployed youngsters, according to the latest unemployment data by Eurostat. The economic situation in the country is yet somewhere between ‘hopeless’ and ‘extremely difficult’. 

The country is still in the middle of a very difficult transition from an agricultural and tourism-oriented country towards a modern services and industry-oriented country and this process would take at least another 20 years in prosperous economic times. In these desperate times, next to Seat and Zara, the only viable export product from Spain seem to be the Spaniards themselves. These are leaving Spain in large numbers to find jobs elsewhere in Europe.

On top of that, since more than a decade the country has suffered from a real estate bubble of epic proportions, that brought the Spanish economy and the banking industry almost to its knees. It seems that the Partido Popular has received briberies from the construction industry, exactly during the period in which this real estate bubble has emerged. These events make this party at least partially responsible for the Spanish real estate bubble.

Like other liberal-conservative parties all over Europe, the Partido Popular has little compassion with the unemployed and other people in need of welfare in Spain. Parties like these often use big words for these ‘spongers on society’.  In general, these parties think that the unemployed people would earlier find a job, when the unemployment benefits and welfare amounts would be diminished to the bare minimum.

However, when parties like Partido Popular (and prominent members of the VVD in The Netherlands) have been involved in widespread corruption, they should meet as little compassion as they show to people-in-need themselves. Receiving briberies for a large number of years is already a disgrace, but lying about it and washing your hands of innocence is even worse.

If the facts in El País and other newspapers can be proved beyond reasonable doubt and I have not much doubt that they can, than Mariano Rajoy has one way to go: to the exit! In this case, the Partido Popular and its donors should go through an extensive cleansing process, in which all perpetrators of this bribery affair should be fired and prosecuted.

It seems that the Spanish opposition and the many protestors in the streets of Madrid came to the same conclusion!