Pedro Sanchez’s coalition government is on shaky ground ahead of a judgement on illegal party financing allegations.
It comes as the Spanish prime minister has refused to rule out the possibility of the PSOE being formally placed under investigation as a legal entity amid a widening judicial probe into its finances.
The prospect is politically explosive because illegal party financing has been identified as a red line by some of the allies whose votes keep Sanchez’s minority government in power.
Asked about the possibility during an interview with Spain’s public broadcaster TVE on Wednesday, Sanchez said: ‘I don’t know whether they will charge us or not, but there is no illegal financing.’
It is the second time since returning from the summer break that the PM has declined to categorically rule out such a development.
His comments have prompted PSOE’s leadership to prepare politically for the possibility while publicly insisting there is no evidence of illegal financing and attempting to project ‘calm’.
No such charge against PSOE is confirmed, and being formally investigated would not amount to a finding of guilt.
Nevertheless, it could have major political consequences.
Several parties that backed Sanchez’s investiture have maintained that illegal financing represents a red line for their continued support, although one reportedly questioned whether the judicial process would advance far enough for such a scenario to arise before the end of the legislature.
Part of the investigation at Spain’s National Court remains under secrecy restrictions following several extensions.
‘We’ve shown everything’
The latest controversy came as PSOE manager Ana Maria Fuentes appeared before National Court judge Santiago Pedraz on Wednesday as part of the so-called Leire case.
The investigation includes scrutiny of payments to lawyers allegedly connected to a plot to interfere with legal cases involving the party.
Fuentes attributed responsibility for commissioning and overseeing the relevant legal work to former PSOE organisation secretary Santos Cerdan.
According to the party’s account of her evidence, management’s role was to formalise and document work previously commissioned by the Organisation Secretariat and process payments according to its instructions.
PSOE sources said: ‘These are ordinary expenses which are not the responsibility of either the Federal Executive Committee or the General Secretariat.’
The party therefore maintains that neither Sanchez, as PSOE secretary-general, nor its federal executive was responsible for those payments.
The PSOE has repeatedly denied illegal financing and says it has provided investigators with the invoices and documentation requested.
‘As we have done from the beginning, PSOE maintains a position of absolute transparency and full cooperation with the justice system,’ the party said.
‘We have provided the information and documentation requested from us and will continue to do so whenever necessary.’
It added that after Cerdan’s departure, PSOE kept his documentation in its custody and even sealed it in anticipation that it could subsequently be requested by investigators.
Danger for Sanchez
The distinction between an investigation and proof of illegal financing will be crucial politically.
PSOE’s emerging defence is that even if the party itself were formally investigated, that would not mean allegations of illegal financing had been proven.
But whether Sanchez’s parliamentary partners would accept that distinction could become critical to the government’s survival.
The prime minister’s latest remarks come against the backdrop of an increasingly bitter confrontation between his government and parts of Spain’s judiciary.
Sanchez also used Wednesday’s interview to discuss what he described as ‘discrepancies’ with the Supreme Court over the interpretation of legislation passed by parliament.
Those tensions have stretched across several major political and judicial battles, including the amnesty law and previous disputes surrounding pardons granted to Catalan independence leaders.
