In Spain, corruption and austerity don't mix

Protesters hold placards reading 'Rajoy thief, resign' during a demonstration againt corruption organized by members of Spain's 'indignant' movement in front of the headquarters of the Partido Popular party in Madrid on January 18, 2013

Spain is being rocked by a bribery scandal involving the country's prime minister, Mariano Rajoy. Spain's largest daily newspaper
alleges that senior politicians in the conservative People's Party accepted illegal payments from construction companies.

"Most explosively, it's claimed that the current prime minister, Rajoy, himself, received $34,000 a year for more than a decade -- a total of about a third of a million dollars in illicit payments," explains Marketplace's Stephen Beard. "It's alleged these payments were made to politicians during Spain's building boom in return for construction contracts."

Rajoy's People's Party denies the allegations, but the news is apparently not sitting well with Spanish citizens at a time of deep budget cuts and high unemployment.

"These circumstances, of course, it is especially upsetting to hear that there may be illicit payments made to politicians and to members of the government," says Alfredo Pastor, professor of economics at the IESE Business School in Madrid.

Analysts say the scandal could trigger a general election in Spain, raising doubts about the country's ability to weather the debt crisis.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.

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