In Spain, new trial puts spotlight on Popular Party’s illegal funding scandal

The trial over the “Bárcenas papers,” which were first published by EL PAÍS in January 2013, began on Monday in Spain’s High Court, the Audiencia Nacional, after a six-year investigation.

Although there are only five people on the dock and the penalties sought by prosecutors are far lower than those seen at other high-profile corruption trials, Spain’s political parties are keenly aware of the significance of these legal proceedings, which are taking place with an election campaign underway in the northeastern region of Catalonia.

The main defendant, former Popular Party (PP) treasurer Luis Bárcenas, sent a letter to prosecutors a few days ago promising to cooperate with new revelations about the workings of an alleged illegal funding operation that went on for years. His lawyer insisted on Monday that senior party officials were fully aware of this parallel bookkeeping, which became known as the Bárcenas papers, including former Prime Minister Mariano Rajoy, who will be called as a witness at the trial. But the attorney representing the PP, which is itself being held accountable for subsidiary civil liability, says that the party’s honor is being violated with a deliberate “media circus.”

The current president of the conservative party, Pablo Casado, on Monday said he would not hesitate to take action if the court finds any current party member responsible in any way for the events on trial. “We want the whole truth to come out now. If Bárcenas has any proof, let him lay it out on the table,” he said in an interview on the radio station Onda Cero, adding that the ex-treasurer has caused the PP “tremendous damage.” Casado said that Bárcenas has “no credibility” and that “he has been lying for 10 years.”

The leftist party Unidas Podemos, which is the junior partner in Spain’s governing coalition led by the Socialist Party (PSOE), said that “there are no more excuses” against investigating former Prime Minister Rajoy over the PP’s alleged illegal funding.

Which activities are on trial?

Investigating Judge José De la Mata has prepared a list of irregularities for the High Court to examine, chiefly the existence of secret parallel accounts allegedly kept by the PP and used for a variety of purposes. The issue already came up during the main trial of the Gürtel case, a sweeping kickbacks-for-contracts scheme affecting scores of local and regional PP officials who awarded no-bid contracts to a business network led by a well-connected entrepreneur named Francisco Correa. In October 2020, the Supreme Court confirmed 29 convictions handed down in 2018 against leading members of Gürtel.

In their 2018 ruling, judges also said that there was sufficient evidence to indicate that the PP kept off-book accounts, but the matter has just now reached the trial stage. According to the investigation, the conservatives had “a financing system outside the legal economic circuit” between 1990 and 2008. But former party treasurer Luis Bárcenas – who was convicted to a long prison term at the Gürtel trial and is now back on the stand again – recently said that the side accounts began as early as 1982, according to a letter sent in late January to the prosecutor’s office in charge of corruption cases.

The investigation indicates that this hard-to-track funding came from donations – including from donors with ties to large companies that received important government contracts, according to Bárcenas. The funds were later used for a variety of purposes, such as paying cash bonuses to senior party officials. The ex-treasurer has mentioned former PP prime minister Mariano Rajoy as one of the beneficiaries.

Part of the money allegedly went to help out party members who had been targeted by the now-defunct Basque terrorist organization ETA. And funds were also used to pay for extensive renovation work at the PP’s main headquarters on Madrid’s Génova street. Finally, De la Mata’s investigation suggests that Bárcenas and his predecessor Álvaro Lapuerta (who died in 2018), pocketed some of the money for themselves. Ahead of the Gürtel trial, Bárcenas was found to have a fortune hidden away in foreign bank accounts.

Another key issue that attorneys will address at the trial is whether the PP is guilty of tax evasion in connection with the years of undeclared donations that show up in the handwritten ledgers kept by Lapuerta and Bárcenas.

This trial will not deal with the possible bribery of public officials in connection with donations in exchange for public works contracts. This issue is part of a separate investigation that is looking into €600 million worth of contracts awarded under former Prime Minister José María Aznar and other contracts awarded by the regional government of Madrid.

The accused

Only five people are accused of crimes. The best-known defendant is Bárcenas, who served as PP treasurer from 1990 to 2009 and who is already serving a 29-year sentence in connection with the main Gürtel trial. But there is also Cristóbal Páez, who was once the deputy national manager of the party and who allegedly accepted €12,000 in €500 bills as an undeclared salary bonus. The other three are architects Gonzalo Urquijo and Belén García, who were in charge of the company that did the renovation work at PP headquarters, and Laura Montero, project director for the company, named Unifica.

The charges include criminal association, false accounting, document forgery, influence peddling, money laundering and tax crimes, among others. Prosecutors are seeking prison terms ranging from 18 months to five years. The parties conducting the private prosecution want up to 35 years for Bárcenas and Páez.

The judges

A panel of three judges will oversee the case: Fernando Andreu, José Antonio Moral Alarcón and María Fernanda García.

The hearings

There are 46 planned hearings, the first of which took place on Monday with a discussion of preliminary points. The defendants will take the stand next, followed by dozens of witnesses, including former prime ministers José María Aznar and Mariano Rajoy, as well as other senior party officials who served as ministers and deputy prime ministers, such as Javier Arenas, Francisco Álvarez Cascos, Ángel Acebes, María Dolores de Cospedal, Rodrigo Rato, Federico Trillo and others. Several of them are suspected of taking cash bonuses. Several business leaders from the construction industry have also been called in to testify, including Luis del Rivero, former chairman of Sacyr Vallehermoso, José María Villar Mir, ex-chairman of OHL, and Alfonso García Pozuelo, owner of Constructora Hispánica, who was himself sentenced to two years in the main Gürtel trial.

English version by Susana Urra.