Inaki Urdangarin Corruption Case: Will the Borbons survive?

General Details about the corruption scandal

As the Duke of Palma de Mallorca took part in the National Day on 12 October 2011, dashing and charming as always, few could have guessed that was his very last appearance in an official capacity as a member of the Spanish Royal Family, and that soon Inaki’s name will be on everyone’s lips for all the wrong reasons.

Less than a month later, on 7 November 2011, the Anti-Corruption Prosecutor recorded Noos headquarters in Barcelona in connection with the ongoing “Palma Arena” corruption case. Specifically, they were looking into the dealings of The Noos Institute for the period of 2004-2006 – the time Urdangarin was its Executive President.

Inaki Urdangarin arriving for a court hearing

Inaki Urdangarin arriving for a court hearing

The news shocked Spain, especially as the true extent of the embezzlement and Inaki’s involvement were gradually made known; Spain was experiencing one of the worst financial crises in history and the revelation the King’s son-in-law has effectively stolen millions of public money enraged the public. At the early stages of the investigation, the Duke denied any wrongdoing and loudly maintained his innocence and resolution to defend his “honour”. Soon, however, new details emerged that forced even his most ardent supporters to doubt his word.

Newspapers released several suspicious budget documents for the period the Noos Institute was managed by Urdangarin. They appeared to show that Urdangarin convinced Spanish public administrations to sign agreements with the company (which was supposed to be a non-profit organisation anyway) for works that were never done. Works that were done were dramatically over-budgeted. Among other, the Noos Institute was given an enormous €2.3 million by the Balearic Islands’ regional government to organise two conferences on tourism and.  Once the contracts were obtained, Noos subcontracted the work to companies owned by Urdangarin and Torres.

Urdangarin was apparently not shy of using royal connections either; at times, he even used royal residence to get contracts. Moreover, several witnesses have testified that they felt more or less compelled to sign contracts with Urdangarin because, well, he was the King’s son-in-law.

The former president of the Valencia CF told the police that he “felt obligated” to give money to Noos “because it was Inaki Urdangarin who asked for it.” Valencia paid €30,000 for several projects that never materialised, despite the fact that the club was losing money. The testimony of the president of Villareal CF was along the same lines. He said he hired the Noos Institute to do a study on selling the naming rights of the club’s stadium. Urdangarin set the price of the service at €696,000. What they got in return was a 13-page-report – and that included a page for a cover, one for the index, another for the introduction and finally one more for a three-paragraph conclusion.

Protesters gather outside the Court before Don Inaki's testimony

Protesters gather outside the Court before Don Inaki’s testimony

Perhaps more shockingly, Urdangarin and Torres used a foundation to help disabled children to evade tax. The anti-corruption prosecutor bluntly accused the Duke of Palma of evading taxes and transferring vast amounts of money to tax havens in Belize and the United Kingdom. Inaki appears to have conned members of his own family; Infanta Pilar was asked to raise funds, which she did in good faith the money will be used for charity. Instead, it ended in Don Inaki’s pockets.

Inaki Urdangarin hasn’t been charged with a crime but is a suspect in the case. According to Spanish newspaper El Pais, the Duke of Palma is set to face four separate charges over the case: defrauding the exchequer, falsifying documents, misappropriation of public funds and prevarication. He has already been questioned by the court and will make another appearance on February 23, 2013.  On the same day, Carlos Garcia Revenga – the personal secretary of Infantas Elena and Cristina – will testify as a defendant in the case as well. His testimony is awaited perhaps even more eagerly than that of Inaki because it can potentially incriminate Infanta Cristina and reveal hitherto unknown details.

The response of the Royal Household to these allegations was quite slow. At first, they merely announced the Duke of Palma will not take part in any official event on behalf of the Royal House in the “foreseeable future”. However, on 26 January 2013 – nearly a year and a half after the scandal first broke – the Royal Household removed the section dedicated to Inaki Urdangarin from its official website.

To be honest, I am not at all sorry  for Inaki Urdangarin and, for that matter, Infanta Cristina so forgive me if this article is less than sympathetic. I am, however, really sorry for their four children who are caught up in this mess. Their boys are old enough to understand what is going on and unfortunately, that’s bound to affect them in some way.

The House bought by Inaki and Cristina

In 2004, it emerged the Dukes of Palma de Mallorca have bought a 1063 square metre house in one of the most exclusive areas of Barcelona for €6 million. At the time, many questioned how they could afford the huge house complete with a swimming pool and a private gym area.

Inaki and Cristina's expensive house in Barcelona

Inaki and Cristina’s expensive house in Barcelona

In 2012, leaked documents from the court investigation revealed that the Caixa savings bank gave Inaki the mortgage in 2004 to buy the house. Incredibly, the huge mortgage was given for 0.5% interest on a declared monthly salary of €3,000 and savings of €77.000. The Dukes have so far repaid only €1.5 million.

In December of 2012 Inaki was forced to put his Barcelona house on the market for €7 million to cover the requested €8 million demanded by the judge to cover possible legal liabilities.

Infanta Cristina’s role

The extent of the Duchess of Palma de Mallorca’s involvement or knowledge of the case is not known but the fact she hasn’t been questioned or summoned before the court to give evidence, is puzzling at best. There is little doubt the King protects his daughter but how long can he continue to do so?

Infanta Cristina and Inaki Urdangarin on their wedding day

Infanta Cristina and Inaki Urdangarin on their wedding day

Cristina was a board member of Noos and part-owner of Aizoon both of which are involved in the corruption case. Carlos Garcia Revenga  – the private secretary and confidant of the Infantas Elena and Cristina – was the treasurer of the Noos and had no know something was amiss. Moreover, the Infanta is not by any means a stupid or naive woman; surely, even if Cristina didn’t directly partake in anything illegal, she should have wondered where the money supported their generous lifestyle was coming from?

Nevertheless, the judge in the case has ruled that from the testimony of the other accused (including Inaki) as well as the documents seized, there is no indication the Infanta participated in the illegal activities or was aware of them.

The situation changed in March of 2013, when Diego Torres released series of mails that strongly suggested Cristina was aware of what was going on at the Noos Institute. On 3 April 2013,  the Infanta was formally named a suspect in the case.

What the Royal Family did or didn’t know

Since no member of the Spanish Royal Family has made an official comment on the situation (apart from Infanta Pilar who famously told the journalists to “shut up”), it’s difficult to speculate just how much was known to the family.

King Juan Carlos must have had enough suspicions something was wrong to effectively order his son-in-low to quit his job at The Noos Institute in 2006. He also encouraged the family to move away from the public eyes to the United States. To make that possible, the King (allegedly) used his influence to get Inaki a plush job as a consultant for the Spanish telecommunication giant Telefonica. A minor scandal erupted when Inaki’s arrangements with Telefonica were revealed: not only does he earn approximately €1.2-1.4 million €per year, but Telefonica also paid for housing of the Urdangarin family in Washington, college for his children and private trips to Spain. In 2011, Inaki’s contract with Telefonica was renewed and extended until 2016; if it is terminated, he is set to receive compensation of €4.5 million.

Spanish Royal Family: from left to right - Infanta Elena, Princess Letizia, Prince Felipe, Queen Sofia, King Juan Carlos, Infanta Cristina and Don Inaki

Spanish Royal Family: from left to right – Infanta Elena, Princess Letizia, Prince Felipe, Queen Sofia, King Juan Carlos, Infanta Cristina and Don Inaki

How much other members of the Royal Family knew is subject to a debate. Queen Sofia has always acted as a very protective mother, going as far as agreeing to pose smiling with the Urdangarin at the height of the corruption scandal; whatever she knew, the Queen appears to have put her rule as a mother and grandmother above that of a Queen.

The Princes of Asturias are the only ones who have, so far, remained completely free of any association with the case. Over the years, it has been noted that the once very warm relationship between Prince Felipe and Infanta Cristina has turned somewhat sour. It was usually blamed on Princess Letizia and her not-too-close relationships with the Infantas. However, now many speculate that the Princes of Asturias were aware there was something suspicious in Inaki’s dealings and tried to distance themselves (and the Monarchy) from the Dukes of Palma de Mallorca. The timing the strains first appeared supports that theory.

What this all means for the Monarchy?

While denying any misconduct, the Duke has said he regrets the “damage” caused. I wonder whether he really understands the extent of the damage though. For many years, the Spanish Royal Family has enjoyed the sort of protection and reverence their European counterparts could only dream of. Not protection from some shady figures in grey but from the media. Very, very few scandals or wrongdoings were reported, while the King has always been portrayed as a faultless saviour of democracy. The game has changed now.

Inaki’s case was followed by a series of unfortunate events that probably would have never been reported in previous years: the King’s expensive hunting trip at the time of economic hardships (which really only came to light because of His Majesty’s injury) and his extra-marital indiscretions (he was accompanied by a long-time “friend” Corinna zu Sayn Wittgenstein during the trip) found themselves on the front pages of Spanish newspapers. For the first time, the King’s person and behaviour were scrutinised with no regard to his past feats; suddenly, King Juan Carlos realised he was no longer immune.

King Juan Carlos I

King Juan Carlos I

That spells trouble not just for the King but for the entire Spanish Royal Family. The problem is, the Spanish Monarchy is not by any means secure and most of the country’s monarchists are supporters of the King personally and not the institution in general. King Juan Carlos will have a hard time regaining the kind of esteem he enjoyed just a couple of years ago.]

Some call for his abdication but would it not be counter-effective right now? The Prince of Asturias is well-liked but he doesn’t command nearly the same respect as his formidable father. Besides, if the King abdicated at these difficult times, it would be akin to a Captain abandoning his sinking ship. Among other things, it will show better than anything else that the metaphorical ship is in fact sinking. Juan Carlos doesn’t have much choice; he has to stay and weather the storm. If he succeeds, Felipe may become King one day: Spanish royals just have to understand they no longer have immunity and remember they can’t afford another Inaki or another safari.

As for Inaki, even if he is acquitted in the eyes of law, he has already been found guilty by the public. Now, I am a firm believer of presumption of innocence: innocent until proven guilty. However, the weight of evidence in Duke of Palma’s case is simply undeniable. If he isn’t charged and/or convicted, it will be because he has really good lawyers, a legal loophole or a deal with the prosecutors. I would like to think it won’t be because he is the King’s son-in-law.

Timeline

  • 2004 – Inaki and Cristina buy an expensive house in Barcelona; at the time, the source of funding for the house is unkown and subject to much speculation.
  • 2006 – King Juan Carlos tells Inaki to cut ties with the Noos Institute and move to the United States.
  • October 12, 2011 – The last occasion Inaki Urdangarin is seen in an official capacity as member of the Spanish Royal Family. He took part in the celebration of the National Day.
  • November 7, 2011 – The Anti-Corruption Prosecutor records Noos headquarters in Barcelona in connection with the ongoing “Palma Arena” corruption case.
  • November 2011 – First accusations against Inaki are made: he is accused of diverting public funds for his own profit through the Noos.
  • December 2011 – The Duke is also accused of tax evasion when it emerges huge sums of public money were transferred to tax havens.
  • December 2011 – The Spanish Royal Household announces the Duke of Palma de Mallorca will not participate in any official Royal Family activity for the foreseeable future, a direct result of the Noos scandal.
  • December 24, 2011 – In the King’s Christmas speech on 24 December 2011, King Juan Carlos states that “La justicia es igual para todos” (“Justice is the same for everyone”), which many take as a reference to the Urdangarin case.
  • December 29, 2011 – Inaki is summoned to appear before a judge over allegations of corruption on 6 February.
  • February 6, 2012 – Inaki Urdangarin appears before a judge over the allegations of corruption.
  • February 25, 2012 – Inaki is again summoned to the court to answer further questions.
  • Early-May 2012 – News surface Urdangarin is close to accepting plea of guilty and return approximately €4 million to avoid jail time. Supposedly, the deal stipulates that the accused (Inaki) admits his criminal responsibility for crimes of embezzlement, fraud management, forgery and tax evasion, and returns to the Treasury return approximately €4 million. In return, the prosecution agrees to a sentence under two years: since the Duke has no prior criminal record, even if he is convicted, he will not spend any actual time in jail.
  • Mid- May 2012 – Inaki’s lawyers deny any guilty plea is considered and maintain their client is innocent.
  • December 2012 – Inaki puts his Barcelona house on the market for €7 million to cover possible legal liabilities.
  • January 26, 2013 – Given this wealth of incriminating evidence, the Spanish Royal Household removed the section dedicated to Inaki Urdangarin from its official website.
  • January 30 2013 – The judge presiding over the Noos case sets the bail at €8.2 million for Inaki and his former partner, Jose Castro, before their trial in a corruption case cover possible legal liabilities. The Duke can have properties embargoed if he fails to provide the bail but won’t go to prison. Urdangarin and Castro are free to agree between themselves on how to divide the bail amount.
  • January 2013 –  There are calls for King Juan Carlos to forbid his son-in-law to use the title Duke of Palma de Mallorca (a title that isn’t actually his but his wife’s). Several officials claim he dishonours the town’s name. There is also a motion to change rename the “Dukes of Palma Avenue” to just “Avenue”.
  • February 23, 2013 – Urdangarin appears in front of a court in Palma to be questioned over the corruption allegations.
  • February 23, 2013 – Carlos Garcia Revenga, the private secretary of Infantas Elena and Cristina, testifies as a defendant in the Noos case.
  • March 27, 2013 – Diego Torres, Inaki’s former partner and co-defendant in the corruption case, releases a series of mails which strongly suggest Infanta Cristina was aware of at least some of the illegal activities.
  • April 2, 2013 – Judge Jose Castro declines the petition of Don Inaki’s legal team to dismiss the mails submitted by Diego Torres on March 27.
  • April 3, 2013Infanta Cristina is formally named a suspect in the corruption case.
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2 Comments

  1. Inaki Urdangarin Scandal: Infanta Cristina may have possibly known of illegal activities | Artemisia's Royal Den
  2. Inaki Urdangarin Scandal: Infanta Cristina officially named a suspect | Artemisia's Royal Den

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