Y esto...duele!

Spanish Premier Vows 

Transparency 

on Finances

• ore

By CHRISTOPHER BJORK and RICHARD BOUDREAUX

Associated Press

Riot police detain a protester at an anticorruption rally in Madrid on Saturday.

MADRID—Prime Minister Mariano Rajoy moved to contain a scandal over alleged secret payments to him and other leaders of his party, promising to disclose his tax returns and financial assets this week.

But the move seemed unlikely to quell the mood of popular outrage over corruption across Spain's political spectrum.

Hundreds of people calling the Spanish leader a delinquent took to the streets in Madrid, Barcelona and other cities Saturday evening and Sunday after Mr. Rajoy's nationally televised pledge of "maximum transparency" to address allegations shaking his conservative Popular Party and the government.

By Sunday a petition demanding his resignation had collected 769,000 signatures on the activist website Change.org, one of several online campaigns calling for a cleanup of Spain's political institutions. The leader of the main opposition Socialist Party also urged Mr. Rajoy on Sunday to step down, saying his credibility had been damaged.

Mr. Rajoy has vigorously denied the allegations against him.

In a country mired in the second year of a deepening recession, with 26% of the workforce unemployed, Spaniards are especially sensitive to allegations of graft during the previous decade's economic boom. Those allegations are emerging in judicial investigations that since 2008 have targeted at least 300 politicians of various parties, the monarchy and the Supreme Court, whose chief justice resigned last year over questionable business-expense claims.

If unrest over the allegations persists, it could limit the government's ability to impose further austerity measures on the population and close a big budget deficit, political analysts said. And that could unnerve investors, undermining the Spanish government's effort to finance itself and avoid a politically costly international bailout.

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Reuters

Prime Minister Rajoy, right, vows increased transparency.

Finance Minister Luis de Guindos said last week that he didn't think the scandal was affecting international investor confidence in Spain.

But the issue is troubling Spain's financial elite. Francisco González, chairman of the country's second-biggest bank, BBVA SA,BBVA.MC -4.54% defended Mr. Rajoy at a news conference Friday, but added: "There are clearly many bad practices in many parts of our country and these practices need to be eradicated."

A survey published Sunday by El País, a leading Spanish newspaper, showed more than three-fourths of Spaniards believe that neither Mr. Rajoy's party nor the Socialist Party "responds effectively" against evidence of corrupt practices among their ranks. At least 90% believe that corruption demoralizes the Spanish people, hurts the country's credibility abroad, and poses the risk of scaring away foreign investment, the poll showed.

The latest scandal reached the prime minister's doorstep Thursday when El País published what it said were excerpts from Popular Party financial accounts showing two decades of undeclared payments to party leaders, including Mr. Rajoy, above their official salaries. The money, the newspaper said, was delivered in cash in envelopes and came from a hidden party account fed by donations from construction companies and other firms that had sought state contracts. Payments to Mr. Rajoy averaged €25,200 ($34,378) per year between 1997 and 2008, El País said. He led the party between 2004 and 2011.

Spain's attorney general, Eduardo Torres-Dulce, said the judiciary would consider investigating the newspaper's allegations as part of an existing probe into possible kickbacks to Popular Party members.

The prime minister defended himself and his party with unaccustomed rhetorical force. "Never, I repeat, never, have I received undeclared money," the usually retiring Mr. Rajoy told Saturday's emergency gathering of the party's executive committee, in a speech that was televised. Calling the documents published by El País "apocryphal," he added: "It is not true that we received cash that we hid from tax officials."

"We must not allow Spaniards, of whom we are demanding sacrifices, to think that we do not observe the strictest ethical rigor," he said.

All Popular Party officials will be required to publish their tax returns, a party statement said, and all those who have served on its executive committee since 1995 will be required to sign sworn statements that all their earnings have been declared to the tax authorities.

The party said its own preliminary review had turned up nothing illegal in its accounts but said it would submit them for an audit by an independent firm.

Despite an erosion of his popularity, Mr. Rajoy appears to face no immediate threat of losing his job. Any judicial investigation of the alleged payments could drag on for years. Meanwhile, his party has a solid majority in Parliament, national elections are three years away, and opposition parties are grappling with corruption investigations of their own politicians.

El País's survey, conducted by independent polling firm Metroscopia after the latest allegations, showed that the Popular Party would get 23.9% of the vote if an election were held now, down from the 44.6% it won in November 2011, when Mr. Rajoy was elected.

But the Socialist Party, which governed Spain for the previous eight years, would get an even lower vote, and its leader, Alfredo Pérez Rubalcaba, has a disapproval rating of 81%, compared with Mr. Rajoy's 77%. The polling firm surveyed 1,000 Spaniards nationwide and reported a margin of error of 3.2 percentage points.

Antonio Argandoña, a professor of economics and business ethics at the IESE Business School in Barcelona, said popular disgust with corruption could still have an effect if Mr. Rajoy and other leaders cooperate to change the way political parties are financed.

"The problem is that in Spain the political parties are structured in ways that favor neither transparency nor clear financing procedures," he said. "Dismantling these structures isn't easy, but that's what citizens are asking for."

Write to Christopher Bjork at christopher.bjork@dowjones.com and Richard Boudreaux at richard.boudreaux@wsj.com