PSOE faces its partners' red line in Spain's Congress over slush fund

PSOE and the slush fund: the red line its partners can no longer cross

How much cash can circulate through a political party's headquarters before its parliamentary partners stop looking the other way? The question has hung over Spain's PSOE ever since the Civil Guard's Central Operative Unit (UCO) concluded, according to published reports, that the party's former number three, Santos Cerdán, was running a parallel accounting system at the party's Ferraz headquarters. According to those same reports, an employee at the Socialist headquarters implicated him in unofficial payments despite his court testimony. The debate material states that the Civil Guard detected "cash deliveries for the benefit of Ábalos that have not been documented by the party".

The matter has ceased to be an internal problem and has become an equation of variable geometry in Congress. Gabriel Rufián, spokesperson for ERC, summed it up in a sentence that became the axis of the debate: "Don't make us choose between cheap crooks and premium crooks, because in the end what we'll tell you is to let the people decide." The warning was no bluff. Underneath lies the question of whether the investiture partners are willing to keep the Government afloat while the case files keep piling up.

From 500-euro envelopes to the Ferraz slush fund

The figures handled in the case, according to the cited media, are no small change. Koldo García, former adviser to José Luis Ábalos, would have admitted, according to published reports, that the "chistorras" he referred to in his conversations were 500-euro notes and that he received them from the PSOE, contradicting the party's former secretary-general. His own partner was taken aback by one payment: "2,000 chistorras? That's a million," reads one of the published conversations. Koldo's brother admitted having gone to Ferraz to pick up envelopes of cash.

The cash payment scheme poses an additional problem for the party: the legal cap. Under anti-fraud rules, the cash limit was 2,500 euros, and it would have been exceeded three times, which constitutes an indication of money laundering. The Supreme Court judge sees signs of irregular financing in the PSOE's cash payments to Ábalos, and the National Court must investigate the expense settlements. Meanwhile, the slush fund's manager, Mariano Moreno, confirmed to the judge, according to published reports, that Sánchez and the PSOE leadership "were paid in cash".

The Supreme Court, Air Europa and the Plus Ultra bailout

The case is not limited to the envelopes. The courts upheld that Sánchez must be investigated over the Air Europa rescue while he was sponsoring Begoña Gómez. The Madrid High Court of Justice (TSJM) concluded that the Office of Conflict of Interest, under Óscar López's ministry, must reopen its inquiries into the multimillion-euro injection of public money into the airline. In parallel, Ábalos and Aldama fought back and cornered Zapatero over the controversial multimillion-euro Plus Ultra bailout: "He took care of all of it," according to the statements gathered.

The web of suspicion extended to the Venezuelan oil company PDVSA. Aldama testified that the Apamate company channelled 250 million dollars in oil to illegally finance the PSOE. Delcy Rodríguez would have admitted the veracity of the envelope regarding the illegal financing. These are accusations that, as of this debate, have not led to firm convictions and which the party denies.

The PNV doesn't give speeches, but it doesn't take steps either

In parliamentary terms, arithmetic rules. The PNV is less inclined to give Rufián-style speeches, but it will not take any step that jeopardises its position. The underlying reflection is that politically targeting their partners could cost them a small percentage of votes, and that percentage could be decisive. ERC, meanwhile, no longer hides it and defends the PSOE and Pedro Sánchez tooth and nail, according to published reports. The Republicans' strategy goes back a long way: accusing Junts of siding with the Spanish right. Junts' move sets ERC's nerves on edge, and Rufián comes to the PSOE's rescue.

In practice, the red line has kept shifting. First it was corruption; now, according to a comment circulating in the debate, the red line would be if the irregular financing exceeds one million euros. The irony belongs to the story itself: Yolanda Díaz had a slip of the tongue in the Senate when she said that "there's plenty of corrupt government left for a while".

PSOE hid 295 bank accounts in the year of its irregular financing

The party's official accounts also have holes. The PSOE hid 295 bank accounts, holding more than 300,000 euros, in its balance sheets during the year of its alleged illegal financing, according to the reports gathered. On top of this, the Socialist International, chaired by Pedro Sánchez, has not filed accounts since he was elected by acclamation in November 2022. The income from member parties' dues could exceed five million euros over these years, with no information or oversight on it.

The corruption narrative has a limited effect at the ballot box. As Tomás Gómez noted, "with Sánchez the PSOE risks disappearing." But Spanish politics has shown a remarkable capacity for absorption. The people decide, as Rufián warned. And while they decide, the envelopes keep turning up in the courts.