Spanish Prime Minister Ousted in Corruption Scandal

Ousting corrupt heads of government has slowly become more common across the world. In 2016, major corruption scandals and nation-wide political protests led to the impeachment of the Presidents of Brazil and South Korea. In 2017, the release of the Panama Papers led to the resignation of the Prime Minister of Iceland and the dismissal of the President of Pakistan. Now, a corruption case almost a decade in the making has unseated the Prime Minister of Spain.

On June 1, Spanish Prime Minister Mariano Rajoy was ousted after a vote of no confidence and Pedro Sanchez, the leader of the Spanish Socialist Worker’s Party (PSOE), became the new Prime Minister. The formation of the new Sanchez administration is the latest development of a corruption case that began over nine years ago and has completely disrupted the Spanish political landscape.

Investigations into the Popular Party (PP), Mariano Rajoy’s political party, started in 2009 when businessman Francisco Correa Sánchez was arrested on a number of charges, including bribery, money laundering, and tax fraud. In this case, called the Gürtel case, Correa was identified as the ringleader of a major kickbacks-for-contract scheme with the Popular Party. A series of investigations and court cases involving members of the Popular Party and associated businesspeople uncovered the extent of the kickbacks-for-contract scheme, which had run parallel to the party’s financial structure since the party’s creation in 1989.

Last May, 29 members and associates of the party were convicted on a number of charges involving tax evasion and money laundering, including Luis Bárcenas, who as the party’s treasurer was found to have hidden millions of Euros in secret Swiss bank accounts. Bárcenas was sentenced to 33 years in prison, and Correa was sentenced to 51 years. Prime Minister Mariano Rajoy was made to testify in these cases, and although he was never accused of any wrongdoing, the courts disputed his testimony and questioned his credibility.

After the convictions were issued, members of the opposition parties in Parliament, led by PSOE leader Pedro Sanchez, called for a vote of no confidence against Prime Minister Rajoy. On June 1, the vote was successful, passing with 180 out of 350 votes. This was the fourth vote of no confidence submitted since Spain transitioned into a democracy, and the first one to be successful.

Prime Minister Pedro Sanchez, although successful in his bid to unseat the previous prime minister, faces an uphill battle in implementing new policy. His political party is nowhere near large enough to command a majority in Parliament, and thus requires cooperation from many other parties, possibly including the beleaguered Popular Party, which still holds the most seats in Spanish Parliament. However, Sanchez appears to currently hold popular support among the people of Spain. It remains to be seen how the vote of no confidence and transfer of controlling parties will turn out in the next General Elections in 2020.

We at Smith Brandon International will be keeping a close eye on developments in Spain so we can provide clients with accurate and informative political risk assessments and other information they may need to make plans for the future of their business.

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