MADRID Jan 31 (Reuters) - Prime Minister Mariano Rajoy and Spain's ruling People's Party denied on Thursday that the party made payments from business donors to the premier and other party leaders after a newspaper published what it said were secret party accounts.
El Pais published images of excerpts of almost two decades of handwritten accounts that it said were maintained by People's Party treasurers, showing donations from companies, mostly builders, and regular payments of thousands of euros to Rajoy and other party leaders.
"The People's Party has no knowledge of the handwritten notes that were published and of their content, and it cannot be recognised, in any case, as this political party's books," the PP said in a statement.
The statement said that the party's payments to leaders and staff were always legal and followed tax rules.
A spokeswoman from Rajoy's office told Reuters the prime minister stood by comments he has made recently that he has not engaged in improper conduct. Last week he said the party would ask for an external audit to look over accounts.
The widening corruption scandal over alleged secret cash payments to PP leaders has hit Rajoy's popularity as he struggles with a deep recession, a fiscal crisis that could push Spain into an international bailout, and the euro zone's highest unemployment rate.
El Pais said the donations and payments represented a secret accounting system by the conservative party, but the alleged slush fund may not necessarily be illegal.
Until recently, Spanish political parties were allowed to receive anonymous donations. And if the party leaders declared the income in tax statements, it may not be illegal.
However, the allegations raise serious ethical questions about party operations, especially because many of them occurred during Spain's building boom, in which politicians granted large numbers of development contracts.
The accounts published in El Pais were allegedly from two former PP treasurers. One of them is Luis Barcenas, who stepped down as party treasurer in 2009 when judges began to investigate his possible involvement in alleged illegal payments and kickbacks to party officials from builders and other businesses that won government contracts.
The ongoing judicial investigation of Barcenas has revealed recently that he had a Swiss bank account which at one point held as much as 22 million euros.
Press officials from Spain's High Court confirmed that Barcenas' lawyer has provided to the court a document showing that in 2012 his company applied for a tax amnesty on funds in the Swiss bank account.
Barcenas' lawyer was not immediately available for comment on Thursday. (Reporting by Fiona Ortiz; Editing by Tracy Rucinski and Giles Elgood)