Spain's Mariano Rajoy Denies Corruption Charges

Mariano Rajoy, Prime Minister of Spain.
Radolpho Saenz | AFP | Getty Images
Mariano Rajoy, Prime Minister of Spain.

Spanish Prime Minister Mariano Rajoy denied allegations of tax evasion and fraud after documents published in El Pais newspaper detailing a secret web of unofficial payments involving top party officers, including Rajoy, unleashed a political storm in the recession stricken-country. The Spanish PM reportedly received regular cash payments of €25,000 hidden from tax authorities since 1997 according to El Pais.

"I have never received or distributed 'black money', it's false," Rajoy said in a press conference on Saturday. "I didn't come into politics to make money."

(Read More: Spain's Leader Faces Political Storm Over Corruption)

Spanish conservatives deny allegations of tax evasion and threatened to sue the newspaper claiming it manipulated the information. But the scandal over the "secret accounts" has prompted a wave of criticism and saw protests outside the party's headquarters in Madrid over the weekend. Rajoy's popularity has plummeted 20 percent since he took office in December 2011.

"We won't sit back with our arms crossed against these attacks that aim to create a situation of unrest and instability at a difficult time," Rajoy said. The Spanish PM has called for a new audit into his party's finances and vowed to "get Spain out of this crisis" despite growing public uproar over widespread corruption.

The money reportedly came from party donations and construction companies such as Sacyr Vallehermoso and FCC Construcciones as well as Valencia-based supermarket chain Mercadona. They all denied making payments to party officials.

(Read More: Spain's Ruling Party Hit by Major Corruption Scandal)

Angry spaniards took it to twitter with Rajoy, El Pais and former party treasurer Luis Barcenas trending both in Spain and worldwide on Thursday.

But the country's domestic troubles could threaten its delicate position among international investors despite recent market optimism, which has Spanish 10-year benchmark bond yield fall below 5 percent. The scandal over tax evasion is the latest blow for Rajoy's administrations as the country battles mass unemployment a deepening recession. The Spanish economy contracted 1.8 percent in the fourth quarter.

El Pais newspaper said the documents were penned by former treasurer and party secretary Barcenas, who kept track of illicit payments in a hand-written accounting book. He also faces allegations of money laundering through a Latin America-based company used to transfer undeclared funds out of Europe and Spain. Barcenas admitted to have laundered 11 million euros taking advantage of Rajoy's tax amnesty in 2012.

Details on the scandal have emerged only months after his administration pledged to crack down fraud and toughen tax inspections.

(Read More: Investors Throw Spain a Lifeline as Economy Shrinks)

UPDATED: This story has been updated to correctly reflect the amount of money the Spanish PM reportedly received since 1997 according to El Pais.