Spain PM says fraud probe into ex-minister damages his party

AP News
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Posted: Apr 18, 2015 3:40 PM
Spain PM says fraud probe into ex-minister damages his party

MADRID (AP) — An investigation into an ex-minister and former International Monetary Fund chief over alleged fraud and money laundering is damaging Spain's ruling Popular Party, which faces a general election late this year, the prime minister said Saturday.

Speaking at a hastily convened, unscheduled press conference in eastern Murcia, Mariano Rajoy acknowledged the probe into Rodrigo Rato "particularly affects the Popular Party" because the former minister "has been one of our most important assets."

Rato, who was detained briefly Thursday as police searched his home and offices, served as economy minister and deputy prime minister under conservative ex-Prime Minister Jose Maria Aznar between 1996 and 2004, and had been seen as a possible successor to Aznar.

Rato headed the IMF from 2004 to 2007 before returning to Spain where he was appointed chief executive of Spanish bank Bankia.

In May 2012, Bankia replaced Rato and acknowledged it would need 19 billion euros (then $23.8 billion) in state aid to shore itself up against its bad loans, an unexpectedly large bailout that rocked Rajoy's government as Spain hit the deepest point in its financial crisis.

The National Court is investigating Rato for suspected mismanagement at Bankia, including the alleged use of "opaque" credit cards for irregular and undeclared expenses.

Late Friday, as protesters gathered outside the PP's Madrid headquarters, Spain's prosecutor ordered Rato's private and business bank accounts blocked.

A series of scandals — including former party treasurers who are being investigated for allegedly being involved in illegal financing of the PP — have outraged Spaniards and battered Rajoy's party as it prepares for municipal and regional elections next month and general elections by the end of the year.

Rato has been suspended from the PP.

In Washington, Spanish Economy Minister Luis de Guindos said the case should not affect Spain's image abroad, saying it's a country "where institutions work and the law is applied."

At a press conference held during a meeting of the IMF and World Bank, de Guindos said the case has been difficult for him because he worked with Rato for eight years, but "the law has to be applied independently of any personal consideration."

He said Rato's case did not come up during his meetings with IMF Managing Director Christine Lagarde or other officials.

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Associated Press writer Luis Alonso Lugo contributed from Washington.