Do political parties pay in cash, other than the PSOE?

BarcelonaCash payments are a major headache for the PSOE (Spanish Socialist Workers' Party). The courts do not consider them sufficiently justified and have evidence suggesting they have prompted an investigation into alleged illegal commissions within the framework of the Koldo-Ábalos-Cerdán case, as well as the party's finances. The opening last Wednesday of a new sealed investigation by National Court Judge Ismael Moreno to examine the socialists' financial records was just one more step. The PSOE's explanations have not yet convinced the courts, which will examine all the party's documentation regarding cash payments to officials, members, and supporters between 2017 and 2024. But the PSOE maintains that there is no wrongdoing. Spanish Prime Minister Pedro Sánchez even acknowledged having received some cash payments.

"It wasn't typical of me, but I'm sure I've had these kinds of expense settlements before," Sánchez said in an interview on SER radio, adding that "all expenses are accounted for, documented, and audited by the Court of Auditors and an external auditor." In any case, this method resulted in the PSOE withdrawing €940,000 in cash to settle payments during the years under investigation. 100,000 euros were allegedly paid by former minister José Luis Ábalos Ábalos through his former advisor Koldo García, according to the Central Operational Unit (UCO) of the Civil Guard. This practice, which other parties have tended to abandon, has raised the suspicions of investigators. But is it legal to pay settlements in cash? What should the courts look for?

The key points of the case

The general secretary of the tax inspectors' union Gestha, José María Mollinedo, explained in a conversation with ARA that, in the case of companies, employee expenses are not usually paid in cash. And although he doesn't venture to say whether it's more common in political parties – the tax authorities don't audit them – he makes it clear that this practice, nowadays, is more "old-fashioned" than suspicious. Mollinedo emphasizes that it's "always legal" for political parties to pay employees or leaders in cash for accommodation, meals, or transportation expenses. The reason, he explains, is that "they are not business entities" and, therefore, are not subject to the €1,000 limit on cash payments imposed by the anti-fraud law. In fact, political parties could even pay salaries in cash, a practice supported by the Workers' Statute. But are there any limits? On the one hand, all payments must be justified with invoices, receipts, and proof of payment. These documents should be attached to the accounting records audited by the Court of Auditors. On the other hand, according to Mollinedo, a political party cannot pay more than one thousand euros in cash to suppliers, as this would involve a company participating in the transaction. The Secretary General of Gestha cites as examples payments for carrying out renovations at party headquarters, organizing campaign events, or printing campaign materials. Mollinedo emphasizes, however, that what most interests the judge in the PSOE's payments case is the source of the money; that is, whether the party's coffers were filled legally or through alleged illicit activities. In this regard, he reminds us that the money in any party's coffers can only come from its own funds, derived from members' dues, contributions from public officials on account of their salaries, extraordinary contributions from members—duly justified—or from the sale of merchandise. He emphasizes that the coffers can never be negative: "If there are negative balances, it would mean that you have paid expenses with money thatthey do not exist"That's why the judge wants to see everything that comes in and everything that goes out."

The matches

Cash payments have long been the norm, and certain ingrained habits persisted until recently. In fact, it was only as a result of the investigation within the PSOE that an institution controlled by the PP, such as the Senate The Catalan Socialist Party (PSC) has eliminated cash payments for members' expenses, including allowances and travel. According to sources within the various parties, Junts, ERC, PP, Vox, Comuns, and the CUP never use cash for expense reimbursements, opting instead for bank transfers and supporting documentation. The PSC only uses cash on specific occasions. "Everything is done with an expense report form that must be filled out with the expenses and justified with a description and images of the receipts. It's sent by mail and paid by bank transfer," sources from Comuns maintain. Junts echoes this assertion, stating they have "never" opted for cash payments, similar to the statements made by the CUP and the PP. "We started eliminating it a while ago, and it's not used in the party," sources from ERC point out. Vox also says it has "never" paid anything in cash and that everything is done by bank transfer "after the expense reports with receipts and signed by a superior."

Sources within the PSC explain that the trend is to minimize cash payments for party expenses and that very few are made now. Expenses are usually paid either by bank transfer after receipts are submitted, or with prepaid cards given to employees or collaborators that are periodically recharged. And everything is properly documented, they emphasize. The same sources, however, attribute the cash payments to one modus operandi from the past.

Other sources familiar with party finances comment that although cash payments are "legal," they are "not a common method." But the problem is the "origin," according to another authoritative voice. However, this source adds that it is difficult to evade the current controls of the Court of Auditors. Both sources are unclear as to why the PSOE has used cash, although one of them maintains that "it could be a red flag for the police," since its origin is more difficult to determine.