(Bloomberg) -- Pedro Sanchez is facing the biggest corruption scandal in his six years as Spanish prime minister, raising questions about how long he’ll be able to maintain his grip on power.
At the center of his problems is a report by Spain’s most important security force, the Civil Guard, that alleges a criminal network was operating inside the transportation ministry in 2020 and 2021, when it was run by one of Sanchez’s closest allies, Jose Luis Abalos. Abalos was a top party official and then transport minister under Sanchez, but he was kicked out of the party caucus earlier this year as a result of the probe.
The alleged racket funneled cash from public coffers into different businesses, according to an 87-page report by the Civil Guard, which was seen by Bloomberg News. The probe was first made public by newspaper El Mundo last week.
The Spanish press has also reported that public money was used to pay a stipend to a woman who had a relationship with Abalos — although he has said no money was involved in the relationship. Abalos himself has not been accused of any wrongdoing. He did not respond to text and voice messages seeking comment.
The graft allegations touching Sanchez’s inner circle have put the prime minister up against the ropes, with the opposition People’s Party, the largest group in parliament, filing a criminal complaint against his party on Monday.
Sanchez was already on the backfoot over his wife’s business dealings. Begona Gomez is being investigated for possible influence peddling over her relationship with two universities. Sanchez has said his wife has done nothing wrong and the probe is politically motivated.
In April, the pressure on his wife prompted Sanchez to step back from his duties for five days to consider his future before ultimately deciding to continue.
Corruption is a particularly sensitive issue for Sanchez because he came to power in 2018 by denouncing the graft in the PP government under his predecessor Mariano Rajoy.
The 52-year-old Socialist has survived in power since then at the head of a series of increasingly perilous coalitions and currently needs the backing of at least eight different parties to pass legislation.
Despite consistently polling behind the PP for the past two years, Sanchez has become a master of navigating the ideological divisions driven by Catalonia’s failed push for independence in 2017.
For example, the five lawmakers from the Basque Nationalist group PNV are sympathetic to the PP’s pro-business agenda and could topple Sanchez if they chose to align with the opposition. But any alternative majority would have to include the far-right group Vox and that would be extremely uncomfortable for the PNV because of Vox’s vehemently nationalist agenda.
What’s more, Sanchez’s Socialists have cut deals to help the PNV govern in the Basque region and several major cities, so pulling its support for Sanchez would put its own power base at risk. The Catalan separatists of Junts are also closer to the PP in terms of their economic philosophy, but would also struggle to line up alongside Vox.
Meanwhile, among the plethora of small left-wing groups that support Sanchez — which include the government’s junior coalition partner Sumar — concerns over the premier’s future are limited, according to two people familiar with the situation. At this stage, no charges have been filed and it seems limited to a specific ministry, said one person. Left-wing voters are far more focused on issues such as affordable housing and are paying little attention to corruption, said another.
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