12.09.11

Iñaki Urdangarin, Spain’s Royal Son-in-Law, Suspected of Fraud

Iñaki Urdangarin, a handsome former Olympic athlete and King Juan Carlos’s son-in-law, has been implicated in schemes that misappropriated millions in public funds.

The incorporation of Iñaki Urdangarin into the Spanish royal family 14 years ago seemed perfect on paper: the tall, handsome Olympic athlete marrying avid sportswoman Princess Cristina de Borbón, daughter of King Juan Carlos I, would soon provide the tabloids with countless photographs of the attractive pair and their four adorable children. In 2009, the family moved to Washington, D.C., when Urdangarin, who will turn 44 next month, was named chairman of telecom giant Telefónica’s public-affairs commission to the United States and Latin America.

The fairy tale ended last month, however, when investigators in Spain’s anti-corruption, tax, and financial crimes units pegged Urdangarin as one of the ringleaders of a scheme that diverted more than €6 million ($8 million) from public coffers into private accounts.

New and damaging information is being divulged almost daily, but it is expected that the anti-corruption courts will indict Urdangarin in January when prosecutors finish their investigation. When and if that happens, the Duke of Palma, as he is also known, will join four others currently under indictment for false documentation, fraud, and the mismanagement of public money: Diego Torres, his wife, and her two brothers.

All five suspects were high-ranking members of the nonprofit Nóos Institute that Urdangarin headed between 2004 and 2006. Investigators allege that the five, in collaboration with local politicians, overcharged the regional governments in Valencia and the Balearic Islands, as well as the Valencia city hall, to hold several conferences and then pocketed the overhead by diverting money from the nonprofit to several for-profit companies under their control. They charged “prices completely disproportionate for the services they provided,” according to one court document.

The Spanish tax authorities said that Nóos brought in €16 million ($21 million) between 2003 and 2007, and the anti-corruption investigators, after sifting through paperwork and interviewing around 30 people with knowledge of the contracts, estimate that the institute was making a 170 percent profit.

So far, the breakdown of alleged fraud involves contracts from the Balearic government worth €2.3 million ($3.07 million) to put on two tourism and sports conventions in 2005 and 2006 in Mallorca, and four contracts from Valencia worth €3.8 million ($5.1 million) to hold three annual conventions to promote Valencia as a place to hold sporting events. Two former general directors of Valencia’s Arts and Science Museum, which paid Nóos part of the latter sum, have also been indicted.

The Spanish press reported also that Nóos diverted funds to fiscal paradises in Belize to avoid detection, using fake receipts to cover their tracks. On Friday, the mayor of Valencia, Rita Bárbara, told the press that city hall’s dealings with Nóos were legal and properly documented.

Before the duke joined Nóos in 2003, the nonprofit had been inactive. Once Urdangarin arrived, however, local politicians began to send contracts and potential financiers to Nóos. Princess Cristina and her secretary appear as members of the institute’s board until 2006, but investigators have told the Spanish press that they had nothing to do with financial matters and will not be indicted. Nevertheless, the princess is co-owner of one of the companies Urdangarin supposedly diverted funds to.

The investigation into Nóos began in September 2010 as part of the suspected fraud surrounding the construction of the Palma Arena sports complex in Mallorca. The former regional premier of the Balearic Islands, Jaume Matas, has been indicted and is now free on a €3 million bond. During that investigation, Torres was called to testify and he presented documents that started the paper trail against him and his four alleged co-conspirators. When Torres was questioned by a judge in June, he defended the legality of the contracts.

Urdangarin commented on the case in November, when he sent a brief note to the EFE news agency, saying that he will defend his "honor and innocence in the matter with the conviction that my professional conduct has always been proper." On Saturday, he also read a statement to the same news agency over the phone from Washington: "Due to the accumulation of information and comments that have appeared in the news related to my personal actions, I want to state that I am profoundly sorry that [these actions] are seriously damaging the image of my family and of the family of his Majesty the King, who has nothing to do with my private activities." He has hired a lawyer to speak in his name from now on.

Spanish anti-corruption investigators have been watching politicians in the Balearics and Valencia for years, and there are several cases pending against elected officials.

Before the scandal broke last month, Spaniards in general liked Urdangarin and Cristina. Both were down to earth, athletic, and active in charities. Urdangarin played professional handball for FC Barcelona for 14 seasons and won two bronze medals for Spain in the 1996 and 2000 Olympics Games. The two met at the 1996 games in Atlanta.

Since the investigation went public, the royal family has tried to distance itself from Urdangarin, sparking anger from many Spaniards.

The Spanish queen visited the pair in Washington last week, but since the investigation went public, the royal family has tried to distance itself from Urdangarin, sparking anger from many Spaniards. In one open letter to the king published in a left-wing, online Canary Island newspaper on Wednesday, an Army colonel broke rank and lambasted the Spanish monarch—technically his commander in chief—for not addressing his son-in-law’s predicament. “Why are you shutting up?” the colonel asked, a nod to the king’s “Why don’t you shut up?” rebuke of Venezuelan President Hugo Chavez.

One person commented on the letter, saying, “Thank you for bravely saying what many citizens think.”