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Slumping on the CPI, Spain proposes law to deter graft

Transparency International (TI) published its 2013 Corruption Perceptions Index last week. Spain dropped 10 notches in its ranking on the Index, and the reason is clear. The royal family and some national elected officials have been embroiled in scandal. What’s a country to do? Proposing a law to control more tightly the financial activities of political parties to avoid further corruption scandals is a good start.

The bill will ban legal and corporate entities from donating to political parties. It also prohibits banks from canceling the debts of political parties and individuals or negotiating interest rates below market levels on their behalf. Any illegal donations would have to be paid back if the law passes. The donation limit of 100,000 Euros a year would stay intact.

The proposed law comes on the heels of graft cases involving both the People’s Party (PP) and the Socialist party.

The former treasurer to the PP, Luis Barcenas, told a judge that he had funneled illegal donations by construction magnates to party leaders in return for juicy contracts. Barcenas had 48 million Euros hidden in Swiss bank accounts, and he told the judge that he handed envelopes of cash to Rajoy and other party leaders in 2008, 2009 and 2010.

Rajoy has so far avoided being charged by authorities for any crime, and he denies all allegations of wrongdoing. He is supportive of the new law banning corporate donations to parties and first announced it 10 months ago.

In addition to banning legal and corporate donations, the new law established tighter control of senior officials in the state administration by requiring them to file a declaration listing their assets and personal wealth. The proposed law must go to parliament for passage and it could see amendments attached to it.

The objective of TI’s Corruption Perceptions Index is to underscore how governments and public officials are perceived in terms of of their ability to govern free of the scourge of corruption, and the level of trust in such administrations. Spain dropped by 10 places to a rank of 40 on the global index this year, prompting elected officials to tackle political corruption with this new bill. 


Julie DiMauro is the executive editor of FCPA Blog and can be reached here.

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