Court hears of lucrative contracts at Spanish princess’ fraud trial

In this Monday, Jan. 11, 2016, file photo, Spain’s Princess Cristina arrives at a makeshift courtroom for a corruption trial, in Palma de Mallorca, Spain. A court official says Spain’s Princess Cristina has lost her bid to avoid being tried for tax fraud in a corruption trial that also ensnared her husband and 16 others. The official says a panel of judges rejected Cristina’s argument that she should not be tried because a prosecutor recommended she face at most administrative fines. AP File Photo

PALMA, Spain—The first defendant to take the stand in Spain’s landmark corruption trial involving Princess Cristina spoke Tuesday of lucrative no-bid contracts allegedly negotiated after playing sports at a royal palace.

Cristina, King Felipe VI’s sister, is charged with two counts of tax fraud in the graft scandal centred on the business dealings of her husband, former Olympic handball medallist Inaki Urdangarin.

READ: Spain: Historic fraud trial starts for Princess Cristina

The couple are among 17 suspects who went on trial last month at a makeshift courtroom in Palma on the island of Majorca as part of the case which involves the activities of the Noos Institute, a charitable organisation Urdangarin founded and chaired from 2004 to 2006.

The 48-year-old and his former business partner Diego Torres are suspected of embezzling around six million euros ($6.7 million) in public funds paid by the regional governments of Valencia and the Balearic Islands to the organisation to stage sporting and other events.

Urdangarin is accused of using his royal connections to secure inflated contracts without competing bids and siphoning off some of the money into Aizoon, a firm he jointly ran with Cristina, to fund a lavish lifestyle.

Cristina and her husband are suspected of using Aizoon for personal expenses including work on their mansion in Barcelona, dance lessons and even Harry Potter books, which reduced the firm’s taxable profits, according to court filings.

READ: Spain’s Princess Cristina goes on trial for tax fraud

If convicted, Cristina—who has denied knowledge of her husband’s activities—faces a jail term of up to eight years. Urdangarin faces more than 19 years in prison.

The first defendant to take the stand, Jose Luis Ballester, a former Olympic sailing gold medallist and friend of Urdangarin, said the head of the government of the Balearic Islands at the time, Jaume Matas, awarded contracts without competing bids to the Noos Institute.

Ballester, who was head of sports with the Balearic Islands government at the time, recalled negotiating deals with Urdangarin and Matas at the royal family’s seaside holiday home, the Marivent palace in Palma, after playing a tennis-like game called padel that is popular in Spain.

He told the court he agreed to cooperate with prosecutors in exchange for a lighter sentence because he wanted the world to “know his truth” while “others continue with their lies.”

Matas, a former cabinet minister with former prime minister Jose Maria Aznar of Spain’s ruling conservative Popular Party, is one of the 17 accused in the case.

‘Fictitious budget’

Among the deals awarded to the Noos Institute was a contract worth 1.2 million euros to stage a two-day tourism and sports congress.

“A completely disproportionate price” which was based on a “fictitious budget,” according to public prosecutors.

Prosecutors argue that a large part of the funds obtained by the Noos Institute from such contracts were then transferred to firms belonging to Urdangarin and Torres.

The defendants are scheduled to finish testifying on February 26.

Cristina, a mother-of-four with a masters degree from New York University, will be the last to testify but it is not yet known on which day.

She is the first Spanish royal to face criminal charges since the monarchy was reinstated following the 1975 death of dictator General Francisco Franco.

The case has sullied the monarchy’s reputation and is seen as one of the reasons for the abdication in 2014 of King Juan Carlos in favour of his son, Felipe.

The new king has taken steps to modernise the monarchy and restore its popularity.

He swiftly ordered palace accounts to be subject to an external audit and last year he stripped Cristina and her husband of their titles of Duchess and Duke of Palma.

The trial began on January 11 but was suspended for several weeks while the three-judge panel ruled on several legal questions, including a petition that the case against Cristina be dropped.

It is set to wrap up at the end of June.