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Spain’s Princess Cristina Testifies as Suspect in Graft Case

Princess Cristina, King Juan Carlos’s younger daughter, testified as a suspect in a corruption probe of her husband’s business activities and told the court she had no knowledge of his financial affairs.

Cristina said she signed “whatever her husband put in front of her,” Virginia Lopez, a lawyer at the closed-door hearing told reporters after the princess left the Palma de Mallorca court house smiling. She was “evasive,” spoke of her “trust in her husband” and didn’t know the answer to most of the questions, according to Manuel Delgado, another lawyer who briefed reporters on the six-hour hearing.

Cristina, a 48-year-old mother of four with a master’s degree from New York University, is the first royal to face criminal allegations in court since the monarchy was reinstated almost 40 years ago. Support for the monarchy has declined during the investigation amid a broader institutional crisis in the country, while the King’s deteriorating health fuels calls for his abdication.

Demonstrators gathered near the court house with banners opposing the royal family and supporting Judge Jose Castro, the magistrate in charge of the case who has expressed frustration at the difficulty of bringing in the princess for questioning. Cristina is “absolutely convinced of her innocence,” her lawyer, Miquel Roca, told reporters last month.

‘Martyrdom’

Castro should complete the three-year investigation into the activities of Cristina’s husband Inaki Urdangarin as soon as possible, according to Rafael Spottorno, head of the royal household, who has described it as a “martyrdom” for the royal family. Support for the monarchy as a system of government fell to 49.9 percent in December from 53.8 percent a year ago, according to a Sigma Dos poll published Jan. 5 in El Mundo newspaper.

Urdangarin, a former Olympic handball player and then an executive at Telefonica SA (TEF), is a suspect of fraud, embezzlement and money laundering. The probe focuses on the non-profit Noos Institute he headed, which received public funds, and Aizoon SL, a shell company he owned equally with his wife that received money from Noos, according to court documents.

The allegations against Cristina hinge on her involvement and knowledge of her husband’s activities. Cristina is suspected of using Aizoon for “strictly personal” spending, which amounted to receiving untaxed dividends from the company while reducing the firm’s taxable profits, according to court filings.

Kruger, Olympics

Spending included trips to South Africa’s Kruger National Park, tickets to Rome’s Olympic Stadium and restaurant bills including children’s menus, according to the document signed by the judge. Home refurbishments and a 1,742-euro crockery set were also charged to the company.

Cristina was named as an official suspect on Jan. 7 for suspected tax evasion and money laundering. In the 200-page court filing -- such documents are usually a few pages long -- the judge highlighted the difficulty of bringing her to court, saying “it was necessary to write nothing short of a treatise of procedural law.”

Prime Minister Mariano Rajoy said on Jan. 20 he was convinced the princess was innocent and that she should resist calls to give up her royal privileges. In the same television interview, Rajoy, whose party’s finances are being investigated in a separate probe, said that everyone should be “equal before the law.”

Corruption Cases

The case has escalated an institutional crisis in Spain as faith in politicians and public bodies slumps amid a series of corruption investigations involving executives, politicians and unions. In April last year, 1,661 corruption and financial crimes cases were being pursued, and political corruption cases continue to increase, according to a report by the European Commission released this week.

Sixty-three percent of Spaniards said they were personally affected by corruption in their daily lives, according to the report, the highest rate in the European Union, where the average is 26 percent.

To contact the reporters on this story: Ben Sills in Madrid at bsills@bloomberg.net; Emma Ross-Thomas in Madrid at erossthomas@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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