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Spain’s ruling party apologises over ‘illegal financing’

Spain's ruling party apologised to its voters on Thursday after a former official claimed in court that it received "dirty money" for election campaigns in the eastern region of Valencia.

Published: 25 January 2018 16:42 CET
Spain's ruling party apologises over 'illegal financing'
Corruption scandals have tainted the conservative party of Prime Minister Mariano Rajoy. Photo: AFP

“I'm ashamed and I apologise for the bad conduct of some people, to those Spaniards who in good faith voted for the Popular Party (PP),” Rafael Hernando, the party's parliamentary spokesman, told Spanish television in comments posted on his Twitter account.

Hernando is not implicated in the trial currently taking place, which centres around allegations that the PP in Valencia received illegal financing for three election campaigns in 2007 and 2008.

The case has further tainted the conservative party of Prime Minister Mariano Rajoy, which has been hit by several corruption scandals.   

On Wednesday at trial, Ricardo Costa, former head of the PP in Valencia, claimed in court that allegations of illegal financing were true.    

“It's true that the PP financed itself with dirty money in election campaign acts in 2007,” he said, laying the blame on former Valencia president Francisco Camps.

PP officials in the region are suspected of getting business people to pay a company to help organise their campaigns, in order to circumvent a mandatory cap on electoral spending.

Businessmen who have taken the stand in the trial in Spain's National Court, which deals with major criminal cases, have admitted to paying the money.

But they have not said what — if anything — they got in exchange for allegedly doing the PP this favour.

The trial is the latest in a series of scandals to hit the PP, contributing to the party losing its absolute majority in 2015.   

READ MORE: Ten Spanish corruption scandals that will take your breath away

Rajoy acknowledged that graft issues “hurt us more than the decisions taken in the realm of economic policy” — a reference to a raft of unpopular austerity measures taken during the economic crisis.

But Hernando said that the PP-led government had attempted to address the issue of corruption with a number of measures.   

The government pushed a bill through parliament in 2015 aimed at tightening party accounting rules and stiffening penalties for public workers found guilty of fraud or influence peddling.

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POLITICS

The plan for Catalonia to handle its own finances separately from Spain

Catalan separatists are pushing for 'financiación singular' to gain greater fiscal autonomy from the Spanish state, but the proposals are tied up with politics at the national level.

Published: 24 June 2024 14:06 CEST
The plan for Catalonia to handle its own finances separately from Spain

The recent regional elections in Catalonia in May were hailed by political pundits as the end of the procés and turning the page on the Catalan question. The evidence for this was that separatist parties lost their majority in the regional legislature for the first time in over a decade and that the Socialists (PSOE) won the most votes overall.

However, since then things have been far from simple. The PSOE candidate, Salvador Illa, is yet to secure an investiture vote and the political horse trading is ongoing with ramifications for Prime Minister Pedro Sánchez’s fragile majority at the national level.

The controversial amnesty law pushed by Sánchez’s government then got clogged up in the courts, despite being approved in the Congress, and Catalan separatist parties managed to cling onto the role of speaker in the regional parliament. Catalan lawmakers elected Josep Rull, a member of the hardline separatist Junts per Catalunya, which is led by exiled former Catalan President Carles Puigdemont.

READ ALSO: Separatists retain speaker in new Catalan parliament

The important context to understand here is that the Sánchez government is dependent on separatist parties, including Junts and the more moderate Esquerra Republicana de Catalunya (ERC). After inconclusive general election results last summer, Sánchez essentially made a deal with the Catalans in exchange for their votes to maintain his position in La Moncloa.

Catalan finances and national politics

Now separatist parties, particularly ERC, are leveraging this support in order to gain concessions from the national government. The main way they’re doing this is through a demand for financiación singular — ‘singular financing’. That is to say, how Catalonia raises and uses taxes, and whether or not it should be allowed greater fiscal autonomy closer to something like the Basque model.

ERC secretary general Marta Rovira has said in the Spanish press that greater fiscal autonomy “is the minimum that can be demanded,” and alluded to the conditionality of their support for Sánchez: “The Socialists must know that if Pedro Sánchez is not able to move on the singular financing… it will be very difficult for ERC to support him. Salvador Illa must bear this in mind.”

la financiación ‘singular’

But what is singular financing? Former president of the Generalitat, Pere Aragonès, described the plan as “full fiscal sovereignty” in the election campaign, and essentially what the ERC is proposing is a bespoke fiscal arrangement for Catalonia that allows the Generalitat to collect (and keep) more of its taxes.

This would be a step, albeit financial rather than constitutional, towards greater regional autonomy for Catalonia and likely viewed as a political victory for separatists.

For critics of Sánchez, it would be more evidence of his capitulation to Catalans.

Singular finance is an idea inspired by the so-called “Basque quota”. This is basically a fiscal arrangement that allows the Basque government control of most of its taxes but means it must also contribute a set ‘quota’ to the Spanish government.

READ ALSO: Spain’s contested Catalan amnesty bill comes into force

In Catalonia, the long-term aim would be something similar: for the Generalitat to collect all (or more than it currently does, at least) of the taxes paid in Catalonia and then transfer to the Spanish state an agreed portion of that.

In terms of cash, this would mean that the Generalitat would collect billions more in tax (some estimates put it as high as €52 billion overall) and more than double the €25.6 billion it received in 2021 under the current model.

Proponents of the singular finance model also suggest that giving the Generalitat greater fiscal autonomy would do something to redress the so-called ‘Catalan deficit’, the difference between what the Catalan economy contributes to the Spanish state coffers and what it receives in return investment. Generalitat estimates for 2021 put this figure at over €20 billion in 2021.

Therefore, the demand is not only political but economic. The ERC claims that changing the fiscal model would do something to resolve what it calls the “chronic underfunding” of the region.

Negotiations for a singular financing model, which will be tied up in the investiture negotiations for Illa, which are themselves tied up in the fragile arrangement at the national level, will likely continue for many weeks.

If no candidate has won an investiture vote in the regional parliament by August 25th, further elections will be called.

READ ALSO: Which Catalans want independence from Spain?

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