This article is more than 10 months old

This article is more than 10 months old

Two former socialist presidents of the southern Spanish region of Andalucía have been found guilty of misconduct and misuse of public funds over their roles in a decade-long, €680m (£582m) fraud that led to one of the country’s biggest corruption trials.

The verdicts will be acutely embarrassing for the Spanish Socialist Workers’ party (PSOE) as its leader, Pedro Sánchez, the acting prime minister, struggles to form a government after winning another inconclusive election nine days ago.

Sánchez’s awkward predicament is exacerbated by the fact that the PSOE came to power last year by seizing on a huge corruption case involving the conservative People’s party (PP), which was previously in government.

Twenty-one former PSOE officials stood trial in Seville over their involvement in the so-called ERE case, the Spanish acronym for a workforce dismissal plan.

Prosecutors argued that two successive PSOE administrations in Andalucía oversaw a corrupt scheme in which funds intended to help unemployed people and struggling companies were often diverted to individuals and businesses that were close to the PSOE.

Between 2001 and 2010, the fund received €855m from the Andalucían government. According to anti-corruption prosecutors, €680m was handed out fraudulently through a “totally opaque grants system” that operated free of “all the established control mechanisms”.

Manuel Chaves, who was president of the regional government between 1990 and 2009 and chair of the PSOE from 2000 to 2012, was found guilty of misconduct and barred from holding office for nine years.

His successor, José Antonio Griñán, who stepped down in 2013 as news of the scam emerged, was found guilty of misconduct and misuse of public funds, jailed for six years and banned from office for 15 years.

Seventeen of the other defendants were convicted of misconduct or misuse of public funds, or both, while two were acquitted.

In their sentencing remarks, the judges said: “The political need to provide a rapid response to the big socio-labour conflicts led those in charge of the Andalucían government to set up a flexible system – a system so flexible that it ended up doing away with the legally established control mechanisms.”

The sentencing will embarrass Sánchez, who said last year that the verdict in the Gürtel corruption case, which found that the PP benefited from an illegal kickbacks-for-contracts scheme, “seriously damaged the health of our democracy”.

Sánchez’s rivals were quick to accuse the acting prime minister of failing to tackle corruption within his own party, although the scandal predates Sánchez’s tenure as PSOE leader, which began in 2014.

“No regeneration, no progress, no dignity #YOUAREresponsibleSánchez,” the PP tweeted.

Albert Rivera, who stepped down as leader of the centre-right Citizens party after its disastrous performance in this month’s election, said the PSOE had “stolen millions and millions of euros from the Spanish people”. He added: “Are you going to resign, Mr Sánchez? Yes or no?”

Santiago Abascal, the leader of the far-right Vox party, described the PSOE as “the most corrupt party in Europe”.

Pablo Iglesias, whose anti-austerity Unidas Podemos alliance has signed a preliminary agreement to enter into a coalition government with the PSOE, said the old two-party system had brought “corruption and arrogance”. But he said Spain had changed and the opportunity had arisen to “defend social justice and guarantee the integrity of our institutions”.

Andalucía, traditionally a PSOE stronghold, is now ruled by the PP and Citizens after they sought Vox’s support in winning power after a regional election last December.

Speaking on Tuesday afternoon, the PSOE’s organisational secretary, José Luis Ábalos, said that the party had “absolute respect” for the court’s verdict and had never attempted to hide the wrongdoing in the region.

But Ábalos also pointed out that the corruption had taken place between 2000 and 2010, adding: “It does not affect the current government nor the current party leadership.”

He said the verdict would help the PSOE draw a line under events “that the PP has tried to exploit for years by attempting to portray us as being as bad as them when it comes to corruption plots.”