Spain's Rajoy Under Pressure After Ex-Party Treasurer Convicted

(Bloomberg) -- Prime Minister Mariano Rajoy faced threats of a confidence vote in parliament after a judge ruled that his People’s Party benefited from a illegal financing scheme and jailed its former treasurer for more than 33 years.

The National Court in Madrid ruled that the PP financed some of its electoral activities with proceeds from the scheme, according to a ruling sent by email Thursday. Anti-system party Podemos and at least one regional chapter of the Socialist Party, the largest opposition group in the Spanish parliament, demanded that Rajoy should face a no-confidence motion.

The Gurtel case -- as the investigation into the corruption ring is known -- is the most high profile of at least two dozen investigations into former and current officials at Rajoy’s PP. The ruling released Thursday refers to crimes that took place between 1999 and 2005, including tax fraud and embezzlement committed by a group of businessmen and party officials. The ruling can be appealed. Rajoy has been party leader since 2004.

“In principle it’s very difficult to see the opposition parties agreeing on a no-confidence vote against Rajoy, because they disagree about what to do next,” said Antonio Barroso, a London-based analyst at Teneo Intelligence, which advises investors on political risk. “Still the Socialists will be under significant pressure to put forward a no-confidence motion.”

Votes of no-confidence in Spain’s parliament require opposition parties to install a new prime minister after successfully ejecting the existing premier.

“We have to expel them,” said Podemos leader Pablo Iglesias on his twitter account. “Corruption is the biggest threat hanging over Spanish democracy.”

The former PP Treasurer Luis Barcenas was ordered to pay fines of more than 44 million euros ($51.6 million) as well as his jail term of 33 years and four months. The PP was ordered to repay more than 245,000 euros, the amount of the funding it got from the scheme.

“PP faces a civil responsibility not a criminal one,” PP Co-ordinator Fernando Martinez-Maillo told reporters after the ruling. “We should make this clear.”

To contact the reporter on this story: Esteban Duarte in Madrid at eduarterubia@bloomberg.net

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net, Charles Penty, Ben Sills

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