MADRID — As allegations of corruption against a former aide began to circle three weeks ago, Spanish Prime Minister Pedro Sánchez couldn’t bring himself to believe them, according to people close to him.

Santos Cerdán was a powerful figure in Sánchez’s Socialist Party. As organizational secretary, he was in charge of the day-to-day running of the party — a role he took on after his predecessor, José Luis Ábalos, another former Sánchez aide, was charged with organized crime, bribery and influence peddling last year.

When Cerdán was implicated in the same case in a police report released on June 12, Sánchez was in a state of shock, the people said, speaking on condition of anonymity to discuss internal party matters. On Monday, Cerdán was arrested.

The shock has reverberated throughout the Socialist Party and the fragile coalition government that Sánchez heads. Senior Socialist Party officials told Bloomberg News that there is a sense of betrayal and anger within the party’s ranks.

With Sánchez facing the biggest challenge to his position since becoming prime minister in 2018, the leadership needs to take decisive action to restore trust with members and the electorate, the officials said.

“We are disappointed, it’s a widespread feeling in the party,” Cristina Narbona, president of the Socialist Party and a former minister, told Bloomberg News. “Not only our secretary-general trusted them,” she said, referring to Sánchez. “We all did.”

Cerdán, who has resigned from his roles in the Socialist Party and in parliament, denied the charges in a statement, saying that he has “never committed any illegal act nor have I been an accomplice of any.”

Sánchez has denied any knowledge of the alleged crimes, and said that he acted swiftly to expel his senior advisers as soon as he was made aware of police reports. A spokesperson for the prime minister told Bloomberg News that Sánchez “found it hard to stop believing in Cerdan’s innocence. He believed him up until the last minute. He had to personally read the police report to realize the disappointment and terrible reality.”

The corruption investigation began in 2022 when the opposition People’s Party filed a series of reports with prosecutors over the issuance of public contracts during the Covid pandemic. Most were dismissed, but one, alleging that staff at the transport ministry had taken payments from private companies in exchange for public contracts for masks, caught the attention of the anti-corruption prosecutor’s office.

The investigation initially focused on a senior advisor at the department, Koldo Garcia, who was arrested in February 2024, but has since expanded. In November, the supreme court opened a case against Ábalos, who was transport minister from 2018 until 2021.

The allegations are particularly damaging for Sánchez, who came to power in 2018 on a platform of integrity in public life. He became prime minister after a no-confidence motion in parliament — sparked by another corruption case — ousted the conservative People’s Party leader Mariano Rajoy. It was Ábalos who proposed the no-confidence motion on behalf of the Socialist Party.

Alongside the police reports, audio recordings have circulated in the Spanish media that appear to show Garcia and Ábalos using sexist language and referring to sex workers as merchandise. Sánchez’s party calls itself feminist, and has been vocal about equal rights and pay, access to abortion, and the need to tackle violence against women.

The apparent hypocrisy has angered some in the Socialist Party. “There is a growing uncertainty among thousands and thousands of socialists who want to know where this will end up,” Emiliano Garcia Page, a Socialist Party politician, president of the region of Castile-La Mancha — and a regular critic of Sánchez, said. “The problem is what to stand for. We’ve defended all those we now call shameless.”

Opposition parties have demanded new elections, but they do not have enough votes for a motion of no-confidence.

The coalition government that Sánchez leads is fractious, and has struggled to pass any legislation. No budget has been approved since late 2022. The corruption allegations have increased tensions. “We’re angry,” Deputy Prime Minister Yolanda Diaz, from Sumar, a junior coalition member, said in a press conference on Tuesday.

“We’ve asked them to rise to the occasion but it doesn’t seem that the Socialist Party has become aware of the seriousness and urgency of the moment,” Culture Minister Ernest Urtasun, from Sumar, told reporters after meeting with Socialist cabinet members on Wednesday.

Rebecca Torró, a junior minister has been named as Cerdán’s replacement. Sánchez is due to address a meeting of the party’s federal committee, a key decision-making body, on Saturday, where he is expected to announce further changes to Socialist Party’s executive leadership, as well as new internal anti-corruption controls.

Sánchez has said he intends to lead the Socialist Party into general elections, due to be held in 2027. Despite the sense of crisis in the party, it is unlikely that there will be a meaningful challenge to the prime minister’s leadership, according to party figures, speaking on condition of anonymity to discuss internal party matters.

The reluctance is partly because bringing down the government would open the door to a government led by the People’s Party, in coalition with the far-right Vox.

Both Vox and the PP have promised to take a tougher stance on migration, to reform or repeal laws targeting violence against women, and to take a hard line on regional separatist movements, which have supported Sánchez. At the last election, the two parties combined came four short seats of a majority.

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