Rajoy's party treasurer questioned in graft probe

MADRID (Reuters) - Spanish prosecutors questioned the former treasurer of Prime Minister Mariano Rajoy's party on Wednesday in an inquiry launched following new allegations of corruption that have shaken the government.

Luis Barcenas, already charged in another major graft case, declined to speak to reporters before or after spending two hours at the anti-corruption prosecutor's office in Madrid.

He helped run finances for Rajoy's People's Party for many years until 2009. Barcenas has described as fakes handwritten ledgers published last week by El Pais newspaper, which accused the PP of channelling payments through secret accounts from managers of building companies to its leaders, including Rajoy.

The premier has denied all wrongdoing. Investors sold some Spanish state bonds in recent days on concerns the government's efforts to stave off insolvency could be thrown off track by any scandal. However, few analysts see the affair breaking Rajoy's control of parliament or forcing an early election.

The prosecutor questioning Barcenas could decide to pass his findings to the magistrate investigating what is known as the Gurtel case, in which Barcenas is charged with bribery, money laundering and tax evasion. The prosecutor could also recommend a separate formal investigation or simply end his inquiry.

In the Gurtel inquiry, now in its fourth year, prosecutors said last month that Barcenas had a Swiss bank account containing up to 22 million euros (19 million pounds). He has said the funds were legitimate business income. He is due to appear in court on February 25 for a hearing on another Swiss bank account.

Rajoy's approval rating even before the latest scandal broke last week had dropped to 19 percent. Small groups of protesters have taken to the streets to demand his resignation. But the opposition Socialists face similar questions over party funding, blunting their ability to benefit from the PP's troubles.

Chronic backlogs in the justice system may benefit Rajoy; it could take years before the courts decide whether there are criminal charges that could go to trial.

For all the denials from the party leadership, some PP members have given credence to the latest allegations. A former lawmaker who had told El Pais of payments to the party leaders was also questioned on Wednesday by the prosecutor in Madrid.

In another sign of tension within the party, the PP leader in the Madrid region, seen as a potential challenger to Rajoy, called on Wednesday for reforms to speed up the judicial process: "Slow justice is unfair justice," Esperanza Aguirre told party colleagues, saying the corrupt must be punished.

A poll published on Wednesday by the publicly funded CIS research organisation - conducted in the first two weeks of January - showed voting intentions of just 35 percent for the PP and 30 for the Socialists in a highly fragmented parliament.

(Writing by Fiona Ortiz; Editing by Alastair Macdonald)

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