Massive Fraud in Spain Threatens Entire Government of Prime Minister Mariano Rajoy; Protestors in Madrid Shout "Resignation"

I am piecing together a story of fraud and corruption involving the highest levels of Spanish government. My unnamed sources think it could bring down Prime Minister Mariano Rajoy.

However, the news articles I have (primarily in Spanish) are particularly choppy.

The brief background story is "black money" (under the table fraud or bribes) was paid monthly to top Partido Popular (PP) party leaders.

PP is the party of prime minister Rajoy. Amounts ranged from 5,000 to 15,000 euros per month, between executive secretaries, public officials and other members of the PP. Top party officials were aware of, approved, or were part of the scheme.

Ex-Treasurer Hides €22 million in Swiss Account

Starting with an article in English, the Irish Times reports Ex-treasurer of Spain's PP had €22m in Swiss bank

The beleaguered government of Mariano Rajoy has been embarrassed by revelations that its party’s former treasurer had a bank account in Switzerland containing up to €22 million.

Luis Bárcenas held the treasury post in the conservative Partido Popular (PP) from 2008 until 2009, when he resigned because of an investigation into his part in a massive fraud network. He stepped down from the party in 2010. The inquiry into that case continues and information a Spanish judge has requested from Swiss authorities shows details of an account held under the politician’s name which coincides with the time he was managing the PP’s finances.

The PP’s deputy leader, María Dolores de Cospedal, hinted yesterday at the concern within the party’s leadership. “Of course this will cause outrage, how can it not? I’m outraged by it,” she said. However, she sought to distant the government from Mr Bárcenas by highlighting that he was no longer in the PP.

Tax evasion

In a further revelation about Mr Bárcenas’s finances, his lawyer, Alfonso Trallero, yesterday said he had declared €10 million last year as part of a controversial tax amnesty introduced by the Rajoy government. The amnesty meant tax evaders could declare hidden assets and pay only a 10 per cent fine. PP spokesman Carlos Floriano said more details need to emerge to ensure justice is done.

Tip of the Iceberg

That story is just the tip of the iceberg

El Economista reports "Black money bonuses paid to the dome of the PP during the last twenty years". I presume "dome" means top.

Luis Barcenas [former treasurer] would have paid bonuses to black money from the dome of the Partido Popular (PP) for years, as published by the daily El Mundo quoted "five reliable sources" of successive addresses match. The extesorero, that information is distributed on every month with amounts ranging from 5,000 to 15,000 euros between executive secretaries, public officials and other members of the PP unit.

The newspaper [El Mundo] cited information notes that Rajoy took the supplements and never from 2009 Cospedal told I should put an end to a practice that had been common for 20 years. Would mean that the highest levels of PP and all officials who have passed through the address in the last two déccadas were aware of what was happening. therefore the action of the president of Castilla-La Mancha have been a turning point in the case of double pay within party.

Protestors in Madrid Shout "Resignation"

El Pais reports A thousand people are concentrated along the PP headquarters in Madrid

About 1,000 people, divided into two groups, are concentrated from seven in the evening in the vicinity of the PP headquarters in Madrid Genoa Street, protesting political corruption, with a heavy police presence.

The congregation can not approach the PP headquarters as police installed a double security fence two hundred yards, at the confluence of Genoa Street Alonso Martinez Square and the Plaza de Colón.

From there, protesters shout slogans as "Resignation, resignation", "There's the cave of Ali Baba" or "In the envelopes you pay extra"

The concentration has been summoned through social networks emerged yesterday and motivated by news accounts in Switzerland the PP extesorero, Luis Barcenas. "Where is the money, ask the treasurer" and "Where are the sausages PP" are some of the slogans the protesters throwing both the group gathers in the Plaza de Alonso Martinez, as it is formed in the Plaza de Colón. There have been no incidents.

The demonstrators were watched by large numbers of riot police have been deployed in the area at least 35 police vans. The concentration has not been officially communicated to the Government Delegation in Madrid, which considers "illegal" the call and has stated that participants can be identified and punished.

Among the protesters were people of disparate ages for almost three hours in protest showed his anger with shouts like "Government resign" and "shame." Three high school teachers, who wore badges with the slogan 'in defense of public education', say Friday at this time go to the movies but when he learned of the announcement by Facebook, decided to change the plan. "We can not more. Require sacrificing basic rights while spread corruption money in envelopes. It's the last straw, "said one of them irritated.

Powder-Keg Potential

As protests go, 1,000 is not much of a protest. However, one never knows when the tipping point is reached.

Arguably, the most likely outcome is this will all be swept under the rug with everyone turning their heads the other way, perhaps with prosecution of a few token officials.

Then again, perhaps this turns into something far more significant. It should.

Regardless, if not now, it's bound to happen. Spanish unemployment is 26.6%. Youth unemployment in Spain is an amazing 56.6%

It will not take much of a spark to set things off.

There is also a powder-keg and constitutional crisis in Spain's Catalonia region to consider (see Catalonia Drafts Declaration of Sovereignty, Announces Vote of Independence, Seeks Self-Determination in 2014)

Eventually the lid off the pressure cooker in Spain is going to blow sky-high. Whether or not this story is the spark remains to be seen.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com