Spain ruling party faces inquiry over 'slush fund'

Protesters in Madrid called for Mr Rajoy's government to quit on Thursday evening after the story broke

Spain's public prosecutor says there are grounds to investigate alleged secret payments made to leaders of the ruling Popular Party (PP), including Prime Minister Mariano Rajoy.

Prosecutor Eduardo Torres-Dulce said he may question Mr Rajoy and other PP officials about the alleged slush fund.

The conservative PP has denied the allegations and says Mr Rajoy will make a statement about them on Saturday.

The daily El Pais published photos said to be of suspect party ledgers.

The ledgers were allegedly kept by two former party treasurers and cover nearly 20 years.

"The prime minister will make his position known tomorrow," Deputy Prime Minister Soraya Saenz de Santamaria told a news conference.

She stressed that in the 12 years she had worked with Mr Rajoy he had always manifested "exemplary conduct".

The PP will hold an extraordinary meeting to discuss the funding affair on Saturday.

Mr Rajoy and his party were elected by a landslide in November 2011 on a promise to reduce the high public deficit.

El Pais, a centre-left daily, said Mr Rajoy had collected 25,200 euros (£22,000; $34,000) a year between 1997 and 2008.

Money was allegedly paid by outside firms via two former treasurers including Luis Barcenas, who stepped down in 2009 and is currently under investigation for money-laundering.