MADRID (Reuters) - Spain’s ruling People’s Party (PP) funded a 2007 regional election campaign with kickbacks from businessmen in exchange for work contracts, a former senior party official told a court on Wednesday as part of a corruption trial.

FILE PHOTO: Spain's Prime Minister Mariano Rajoy drinks water during a meeting at People's Party (PP) headquarters in Madrid, January 15, 2018. REUTERS/Juan Medina

The PP has denied any wrongdoing and said it had not received any illegal payment.

The trial at the Spanish High Court follows several long-running graft investigations into allegations that the conservative People’s Party (PP) used a slush fund to illegally finance campaigns, which the party denies.

The case has tainted the 6-year-long administration of Prime Minister Mariano Rajoy, the PP’s leader since 2004, restricting his minority government’s ability to negotiate legislation with other parties and fuelling calls for him to resign.

Rajoy became the first sitting Spanish prime minister to give evidence in a trial when he appeared as a witness last July. He denied ever taking illicit payments and said the allegations were “absolutely false”.

Ricardo Costa, the deputy PP head for the Valencia region from 2007 to 2009, said he was aware the party’s regional leadership accepted payments from local businessmen, who would deposit cash in accounts at different Valencian bank branches.

The payment amounts were below 3,000 euros ($3,700) to skirt the threshold imposed by the law that governed party financing. Several of these businessmen testified last week that they had financed Valencian election campaigns in 2007 and 2008.

“Yes, it’s true that the PP financed itself with dirty money in the 2007 election campaign events,” Costa said during a televised court appearance. The PP won that year’s regional election.

Costa, who prosecutors have asked the court to jail for 7 years and 9 months, said he did not do anything when he found out about the practice and “of course assumed the responsibility that that entails”.

On Wednesday, Rajoy denied the PP’s Valencian wing received illegal payments.

“I didn’t know anything about that ... I will wait and see what the courts say,” he told Onda Cero radio.

The case originally centered on illegal dealings between small city councils and a network of businesses. But it expanded to snare several former high-ranking PP members such as ex-party treasurer, Luis Barcenas, who is among the 37 people on trial on charges of organized crime, falsifying accounts, influence-peddling and tax crimes.