The Telegraph
Saturday , February 23 , 2013
Since 1st March, 1999
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Duke probe draws Spain royals into scandal

Madrid, Feb. 22: The website of the Spanish royal family features pictures of the king, Juan Carlos I, in a blue sash, his bejeweled wife, Queen Sofía, and the couple’s three glamorous children. But most of the photographs of the dashing Duke of Palma, the king’s son-in-law, were scrubbed from the site last month.

The duke’s official biography was also banished from the site. And for more than a year, the royal family has barred the duke, a former Olympic handball player named Iñaki Urdangarin, from attending official family functions.

With a multitude of graft cases undermining Spaniards’ faith in just about every institution of government, an intensifying investigation aimed at Urdangarin has placed the palace under siege as well, and left the nation’s ageing monarch and his aides struggling to quell the crisis.

Urdangarin, 45, who is married to the king’s youngest daughter, Cristina, 47, is scheduled to testify tomorrow before an investigating judge over allegations that he embezzled millions of euros after leveraging his blue-blood connections to gain inflated, no-bid contracts from regional politicians for his non-profit sports foundation, Instituto Nóos.

The royal family has tried mightily to distance itself from the investigation. Officially, the palace has insisted that the king knew nothing about the foundation activities of Urdangarin, who has pledged to prove his innocence. It publicly maintains that Juan Carlos ordered his son-in-law to abandon the troubled foundation in 2006, a year before dubious financial dealings surfaced.

But last weekend, the duke’s former business partner, Diego Torres, who is also under investigation, told a judge that the duke made no move without palace approval, and he turned over nearly 200 emails to support his claim.

Many of those emails have now surfaced in the Spanish news media. Others were provided to The New York Times by a person close to the legal process who did not want to be identified for fear of retribution.

The emails suggest that the palace was concerned about what was going on at the sports charity well before it has acknowledged, and began pressuring Urdangarin to leave it at a time when investigators now say he and his partner were involved in inflating contracts and moving money offshore.

Despite the palace’s insistence that the king had little to do with his son-in-law, the emails show that the king was monitoring his affairs. They include boasts by Urdangarin about the king’s backing of sponsorships for events he was organising.

The emails do not indicate any wrongdoing by the king. But they have brought the scandal to the palace doorstep, further tarnishing a monarchy that has come under scrutiny as Spaniards suffer through an economic downturn and as corruption cases — including envelopes of cash handed out to top politicians — stoke their resentment over the privileges and special connections that have insulated Spain’s elite from the same pain.

Meanwhile, the king and his courtiers have been working aggressively at damage control. Over the past 10 days, the king, his attendants and the Spanish intelligence service have been pressuring the suspected sources of leaks and approaching top newspaper executives to tone down coverage of the investigation, according to people with ties to the palace and some of Spain’s leading newspapers.

The emails obtained by The Times suggest that the worries over potential harm to the palace are not new. Some show the palace searching relentlessly for a way to steer Urdangarin away from the sports foundation, scouring for a new job for him through a blue-chip network of contacts in 2004, two years before it has publicly acknowledged.

As the hunt extended into 2005, the duke complained about mounting pressures to avoid conflicts of interest. “We have been suffering a permanent surge of press releases, not always precise concerning our professional and private lives,” he wrote in stilted English in an email to another aristocrat, Corinna Sayn-Wittgenstein.

Sayn-Wittgenstein, a German princess through a former marriage, has described her role as an unpaid adviser and friend of the king, dismissing reports in the Spanish news media that they had a romantic relationship.

The king gave Sayn-Wittgenstein the task of finding a new job for his son-in-law, preferably something in the sports field and with a multinational company or foundation, according to a person familiar with the recruitment search who spoke on the condition of anonymity for fear of reprisal. Emails show that the king kept close track of her efforts.