The president of Spain's electrical utilities trade association said today that his organization never had signed a contract with the Washington public relations firm Gray and Co., and had not paid it a "single peseta."

Pedro Rivero, president of the Madrid-based utility association Unidad Electrica S.A. (UNESA), said in an interview he could not understand reports out of Washington indicating UNESA allegedly had paid $500,000 to Gray and Co., half of which reportedly was meant for a Spanish legislator.

Rivero said he had held a series of exploratory conversations with Gray and Co. executives, including the company's then vice chairman Alejandro Orfila, aimed at attracting potential U.S. investors for the Spanish utilities.

Sources close to Gray and Co. have said the company reached a severance agreement with Orfila because it suspected that money was being transferred from a client to a legislator in Spain for the purpose of influencing legislation.

Orfila is a former Argentine ambassador to Washington and secretary general of the Organization of American States. He was censured by the OAS for accepting salaries from both Gray and Co. and the international organization after he took the public relations position early last year.

"Quite simply, there was no deal," Rivero said today for UNESA, which is an association of 18 private utility companies.

In Washington, members of Gray and Co. met with the criminal division of the Justice Department on Monday, and the Securities and Exchange Commission Tuesday to discuss the case.

Gray and Co., which earlier had said the client in question was an association of Spanish utility companies that had paid $250,000 as the first part of its account, said Tuesday that it stands by the accuracy of earlier reports.

Asked to respond specifically to UNESA's denial that it was the client, a spokesman for Gray and Co. said that, on the advice of counsel, he had no comment.

However, Carter Clews, who headed Gray and Co.'s Madrid office, has said UNESA was the only account on which he worked between April and December of last year.

Sources close to Gray and Co. said earlier that $100,000 of the $250,000 was returned to the utility association when the agreement was canceled. Asked whether the check paying back the association had been cashed, Gray and Co.'s counsel refused to comment.

In earlier reports, the alleged utility association money was linked to a Spanish legislator, Jose Ramon Lasuen, a member of the opposition Popular Alliance party. Lasuen allegedly was expected to use his influence in parliament to avert a cutback by Spain's Socialist government in the use of nuclear power.

Rivero said today the utilities had "no possible use" for such potential lobbying activities because a consensus agreement already had been reached with the government on a national energy plan.

"If I had wanted to lobby, it would have been with the governing party and with the industry minister. What use could an opposition member of parliament, like Lasuen, be to the utilities?" asked Rivero.

Lasuen held a press conference last night with a fellow Popular Alliance legislator, Miguel Herrero de Minon, who is his partner in a Madrid consulting company called Adicsa that had a business arrangement last year with Gray and Co.

Both Lasuen and Herrero de Minon denied any impropriety in their association with Gray and Co.

Herrero de Minon, who is the party's chief spokesman in parliament, was due to address the National Press Club in Washington today, but he returned to Madrid to answer allegations linking him and Adicsa to payments by Gray and Co.

He said he and Lasuen had decided to break their contract with Gray and Co. after the Washington company opened a subsidiary in Madrid last year.