Luis Barcenas, former treasurer of Rajoy's People's Party (PP), spoke a day after being released on bail in a separate corruption probe, throwing the spotlight back on an affair that has embarrassed the government.
Barcenas told judges in 2013 that he ran a slush fund to make undeclared payments to members of the party, with the knowledge of its leader Rajoy. Barcenas repeated the allegation , reigniting the scandal at the start of an election year, with regional polls due in May and a general election in November.
"Mariano Rajoy knew of the existence of the hidden accounts of the PP from the start," Barcenas told reporters. He said the slush fund had been put in place by another former party treasurer, Rosendo Naseiro, who took the post in 1987.
The party's spokesman Carlos Floriano later responded that "the PP never has and never will have secret accounts".
Before being bailed , Barcenas spent 19 months in custody as one of the highest profile suspects in a vast corruption investigation targeting senior members of the party. He is one of 43 suspects facing trial in the principal case. He is charged with money-laundering, tax fraud and embezzlement between 1999 and 2005. Judges have been investigating the affair for nearly seven years and the trial is not expected to start before the general election.
Rajoy denied the slush-fund claims back in 2013, braving furious street protests in recession-hit Spain and resisting calls to resign. After several years of economic crisis, opinion polls show corruption is one of Spaniards' top concerns.