Spanish PM fights to keep scandal at bay

MADRID - Spain's Prime Minister, Felipe Gonzalez, yesterday was fighting to pull his Socialist Party (PSOE) clear of a growing corruption scandal that threatens to wreck its chances of re-election later this year.

One senior party official has already offered to resign, and Mr Gonzalez himself has threatened to quit over the scandal, which involves the illegal financing of the ruling party by 15 large Spanish companies at the end of the 1980s.

'What the PSOE are playing with is not just their image and credibility ahead of the forthcoming elections but also probably their very existence,' the daily El Pais said in an editorial.

A top-level party meeting scheduled for yesterday to discuss the corruption scandal has been postponed until Saturday to give Mr Gonzalez more time to sort the mess out. 'The party leadership has to analyse the whole issue seriously,' Mr Gonzalez said in an interview over the weekend. 'The party must be accountable to the people.'

The party was thrown into turmoil last month by a judicial report on the 'Filesa case', named after a Barcelona-based group of consultancy firms that allegedly channelled illegal funds totalling 1bn pesetas ( pounds 6m) to the Socialists. The report accused two senior Socialists of controlling the money, which the Filesa group received from various banks and companies in return for bogus consultancy reports.

Opposition parties say Filesa is just part of a huge corruption scandal of almost Italian proportions, which includes bribes paid to the Socialists for public-works contracts.

Filesa was controlled by Carlos Navarro, former party treasurer and a Socialist congressman, and Senator Jose Maria Sala, administrative secretary of the Catalan Socialist Party. The PSOE has said it will not invoke parliamentary immunity to block the trial of these two politicians, and newspaper reports say neither man is expected to be a candidate at the next general elections, which have to be held by December.

But speculation is growing that other heads will have to roll to appease a disillusioned public. The party's number three, Txiki Benegas, offered to resign over the affair, while press reports suggest the number two, Alfonso Guerra, might also quit.

Mr Guerra and the more radical left wing of the party have always rejected suggestions that the PSOE was involved in the scandal and are said to be at odds with Mr Gonzalez over his handling of the case. Mr Gonzalez has threatened to go if senior party involvement in the scandal is proved.