Gonzalez's party faces 'Spanish Inquisition': Allegations of corruption and mismanagement have put Socialists under pressure from opposition parties and the public

'WE DIDN'T expect the Spanish Inquisition.' To some Spanish Socialists, it represents the end of a 'catastrophic year'. For others, it is a new 'Spanish Inquisition', politically motivated by the conservative opposition. So far this week, one Socialist MP and a Socialist senator have been grilled by a Supreme Court judge, who has also given banks five days to provide details of the ruling party's bank accounts.

The heart of the matter is how Felipe Gonzalez's heavily indebted ruling Socialist Party, the PSOE, financed its successes of recent years, from its persuasive about-turn campaign on Nato membership to its hi-tech election campaign in 1989. The party is believed to be upwards of 6bn pesetas (pounds 33.6m) in the red.

The answer is relatively simple. The money came from 'benefactors', mostly big businesses and banks. It is other questions that are causing more concern. Were such contributions legal? On the face of it, they would not be, if made directly. But the millions of pounds' worth of payments at issue were allegedly paid through 'front' companies using phony invoices for phantom services provided.

Were the payments entirely voluntary? In some cases, it is alleged, 'benefactors' were sought out by the ruling party with a less than softly-softly approach. In others, companies were only too glad to help. According to the man who broke the biggest corruption case here, a Chilean accountant called Carlos van Schouwen, alleged contributions to the PSOE by the German-owned Siemens electronics company might not have been unconnected with the company's commercial interests in Spain's controversial High-Speed Train. Siemens denies wrongdoing.

The conservative opposition makes much of a Socialist 'mafia' over the party's financing. In fact, the allegations being investigated by a Supreme Court judge suggest a 'family' affair that, at least at the start, appeared far from sinister. According to documents before the Supreme Court Judge, Marino Barbero, a cleaner at the PSOE's Madrid headquarters managed to get her daughter a job as a secretary. When the daughter, Aida, showed greater talents, she became a 'financial co-ordinator' and ended up with control over party bank accounts, the depositions allege. As contacts with big business became increasingly sensitive, Aida, now 34, was given the codename Opera. She has since been removed from her post, keeps what can only be described as a low profile and is now billed in the press here as the Socialist Party's 'Black Lady'.

A Socialist Senator, Josep Maria Sala, voluntarily appeared on Wednesday before Judge Barbero, who is investigating the 'front' companies that allegedly filtered money to the PSOE. Mr Sala admitted buying a company called Time-Export in Barcelona in 1987 for what he called 'a symbolic fee' - 200 pesetas, or just over pounds 1. He said he knew nothing of the company's activities and sold it later for a similar sum without making a profit. According to the allegations being investigated by Judge Barbero, the company was one of several used solely to filter money from contributors to the ruling party.

Under heavy media pressure, a Socialist MP, Carlos Navarro, also waived his immunity this week to appear before Judge Barbero. He, too, admitted owning part of Time-Export in the Eighties but said a 1988 trip to Switzerland, revealed in the press, was 'for family reasons'. Allegations before Judge Barbero say his 'family' concerns had more to do with an alleged dollars 30m (pounds 19m) payment from Siemens, in connection with the High-Speed Train project, that had to be filtered through Swiss bank accounts. 'This is more like the (Spanish) Inquisition,' Mr Navarro's lawyer, Horacio Oliva, said yesterday, saying his client and Senator Sala were grilled and treated with disrespect during their voluntary appearances before Judge Barbero.

The Supreme Court has the right to initiate proceedings on the basis of serious allegations, appointing one of its number to investigate. Some Socialists accuse Judge Barbero, a career judge, of a political vendetta against the PSOE. He created a furore last month when he ordered a search of the party's Madrid headquarters for financial documents.