NÓOS INVESTIGATION

How a rumor grew into a royal scandal

For seven years Urdangarin's business deals remained out of the limelight

But the Palma Arena case brought them to the fore, ensnaring his wife, Princess Cristina

Princess Cristina and Iñaki Urdangarin at the wedding of Sweden's Crown Princess Victoria and Daniel Westling in 2010. / AFP (ATTILA KISBENEDEK)

It is May 2010. There is no such thing as the Urdangarin case yet. The Duke of Palma is an executive for Telefónica who has been living in Washington for a year. His social life goes no further than a few official events, and he does not attend the funeral of longtime International Olympic Committee (IOC) president Juan Antonio Samaranch, even though his wife, Princess Cristina, does.

This reserved attitude triggers a few comments about an alleged marital crisis: "Even though the couple have never hesitated to show their love [...] rumors start rolling in Barcelona society," writes a gossip columnist.

Right around then, it emerges that on March 24 the former Balearic Islands premier Jaume Matas, investigated for corruption, has had to answer court questions regarding payments to the Nóos Institute, a non-profit foundation headed by Urdangarin and founded by his business partner Diego Torres. The latter, concerned about these media reports, goes to see the lawyer Manuel González Peeters. The Urdangarin case is just a rumor, but the rumors are seven years old by now.

Timeline of turning tide

  •  1999. The Nóos Institute is created. The not-for-profit is originally called Instituto de Investigación Aplicada and it belongs to Diego Torres. It has no business activity until 2003, when Urdangarin is appointed its administrator.
  •  2003. First deal between Jaume Matas and Urdangarin. The Balearics premier, of the ruling conservative Popular Party, signs a cooperation agreement with the king's son-in-law worth 1.1 million euros.
  •  2004-2006. 3.7 million euros. That is how much the Nóos Institute charges the Valencian government and the city of Valencia for organizing three editions of the Valencia Summit.
  •  2005. The king's emissary. The monarch tasks his legal advisor, the Count of Fontao, with investigating Urdangarin's business dealings.
  •  2008. 'Palma Arena' Judge Investigating judge José Castro probes the sports arena in Palma whose construction costs ballooned from 48 million to 110 million euros. This is the genesis for the Nóos case.
  •  2009. Outside Spain. The Dukes of Palma move to Washington where Urdangarin is working for Telefónica.
  •  2011. The judge targets Torres in the investigation. From the moment his wife Ana María Tejeiro faces preliminary charges as well, Torres becomes Urdangarin's worst enemy.
  •  December 2011. Preliminary charges filed against the royal son-in-law. La Zarzuela pulls him out of the royal agenda after learning of Judge Castro's decision. The gag order is lifted.
  •  2011 Christmas Eve speech. "Justice is the same for everyone," the king says in his televised Christmas address to the nation in clear reference to his son-in-law.
  •  25-26 February 2012. Urdangarin testifies for 22 hours before Judge Castro. He blames his former associate Torres for everything and exonerates his wife Cristina.
  •  20 January 2013. "Boundless for-profit intention" is how the judge describes the activities of Urdangarin and Torres, who are slapped with a civil liability bond of 8.1 million euros.
  •  23 January 2013. Urdangarin is summoned to testify in court over tax fraud.
  •  29 January 2013. The judge summons Carlos García Revenga , secretary to the princesses and former treasurer at Nóos, as a formal target of the investigation.
  •  15 February 2013. Meeting in Zarzuela? Torres told the judge that in 2004 he and Urdangarin negotiated with Valencian premier Francisco Camps and Valencia mayor Rita Barberá at La Zarzuela over the celebration of the Valencia Summit.
  •  3 April 2013. Judge Castro files preliminary charges against Princess Cristina , but they are dropped after an appeal to the Provincial Court of Palma, which recommends further investigation into possible tax crimes.

Urdangarin had begun his private activities in the world of sports marketing around 2003, together with his former teacher Diego Torres, an instructor at the prestigious Madrid business school ESADE. This is where Urdangarin obtained a master's degree in business administration and where both men decided to start working together.

The Nóos Institute, a consulting group, had been created by Torres in 1999. When Urdangarin became president, clients started lining up in an effort to get close to a royal who was good-looking, athletic, an Olympic medalist, and a candidate to preside the IOC one day. It was the perfect setup: the companies that depended on Nóos churned out the invoices and the client base multiplied.

But in February 2006, Antonio Diéguez, a Socialist deputy in the Balearics regional assembly, asked about the 1.2 million euros in public money spent on a deal between the Balearic government and Nóos to organize a weekend event in 2005.

"I consulted with my party," recalls Diéguez. "I told them: listen, there's money being squandered here, but Urdangarin's behind it. They gave me the green light to proceed, which was not an easy thing to do at the time. We all remembered what had happened to a party member who was hung out to dry to show what could happen to you if you made any comments about the royals. I called a news conference and caused quite a commotion. My question also caused a ruckus in Moncloa [the seat of government]. Of course, it was us [the Socialists] who were in charge then. I remember Madrid asking the now deceased Alfonso Perales, then Socialist secretary for regional policies, who was in Mallorca at the time, to find out what was going on. We talked. I said: 'I know that in Madrid this issue is viewed differently.' And I remember him replying: 'You know what? Go ahead with it.' Later I learned that the reaction at La Zarzuela [royal palace] was to ask Urdangarin to stop these business dealings."

In the spring of 2007, the Socialists came to power in the Balearics and that was when the Palma Arena case really hit the fan. Named after a velodrome whose cost overruns triggered a massive corruption inquiry with 25 separate sub-investigations, the case underscored the way the outgoing premier, Jaume Matas of the Popular Party (PP), had used public money in a discretionary manner with a complete lack of oversight. It was one of these side investigations that led to the case against Urdangarin, whose Nóos Institute had benefited from millions of euros in Balearic government contracts awarded without bids.

Although the then general attorney, Cándido Conde Pumpido, attempted to abort the investigation, a legal move by the investigating judge, José Castro, prevented it. In the summer of 2007, Jaume Matas moved to Washington DC to work for a private company involved in tourism. As fate would have it, two years later, Urdangarin ended up in the same city to enjoy his own discreet retirement from the Spanish limelight.

But let us jump to May 2010 again. Four years have elapsed since that initial question by Diéguez, and even though the legal inquiry into the Matas administration is advancing inexorably, Urdangarin thinks that he is safe. Nobody has asked about him again, and he wants nothing to do with Diego Torres, even though the latter has already sought out a lawyer in preparation for what might be coming up.

And then it happens. The lawyer, González Peeters, goes to see the judge and brings documents relating to Nóos Institute. He thinks it is best to cooperate. On July 22, 2010, Judge Castro opens up a new line of investigation into the Balearic government's payments to Nóos. For nearly a year and a half, Urdangarin lives in Washington as though nothing could ever touch him. He does not reply to Torres' messages. His mind is elsewhere, to the extent that he leaves Nóos without bothering to delete his emails and the information contained in the computers he used there, even though every so often a few individuals "with ties to intelligence services" come around to clean out his hard drives, as Urdangarin himself declared in court much later.

Those computers contained generous amounts of explicit information about the royal son-in-law's private life and his activities as a partner and manager of companies dependent on Nóos, most of which were also non-profit. Yet the profit was plain to see in 2004, when Urdangarin and his wife purchased a luxury mansion in the exclusive Barcelona neighborhood of Pedralbes. The property was worth an estimated six million euros, and was renovated for a further three million euros.

From May 2010 to November 7, 2011, Urdangarin travels up and down the Americas as a lecturer and top executive at Telefónica. A year and a half goes by like this. His own lawyer is Mario Pascual, a personal friend, tennis partner and member of the exclusive Royal Tennis Club of Barcelona. Pascual establishes a strategy based on blaming Diego Torres, who has already undergone questioning by Judge Castro and become a formal target of the investigation on July 11, 2011. Urdangarin acts as though none of this affects him in any way, even though the investigation keeps moving forward. It is inevitable that Nóos will be searched by the police at some point.

Urdangarin ignored his former partner's messages while he was in Washington

It happens on November 7, 2011. The police search Nóos headquarters in Barcelona, the home of Diego Torres and the headquarters of other related businesses. Meanwhile, other officers are gathering data at Valencian government buildings. But the relevant documents are not to be found, including all the personal files and emails. That is when the Urdangarin case breaks in the media.

Diego Torres loses all of his clients, one by one. In a press release from Washington, Urdangarin asserts that he will prove his own "honor and innocence." It is November 11, 2011, the first time that the former handball player actually talks about the subject. On December 10 he states that he laments "the serious damage" this affair is causing to the royal family. Two days later, Zarzuela issues its own statement, describing Urdangarin's actions as "not exemplary" and pulling his name from all official ceremonies. On Christmas Eve, King Juan Carlos delivers his annual holiday address and pronounces that "justice is the same for everyone." On the 28th, for the first time ever, the monarchy reveals its finances and explains that Urdangarin never received any revenues from the Royal Household. A day later, the gag order is lifted on the Urdangarin case and preliminary charges are filed against the former Olympic handball medalist. The attempt to isolate him is not quite working.

That is why Rafael Spottorno, the head of the Royal Household, recently said in an interview that the case has represented "nearly three years of suffering" for the monarchy. But there are only around two years between November 2011 and January 2013. Spottorno's memory is adding an extra year of anguish, possibly the year in which the case did not officially exist yet. Very little is known about what happened that year prior to the preliminary charges. For instance, why was a deal not reached with Torres? There is another legal investigation underway, still under secrecy orders, regarding the CNI's [Spanish intelligence services] alleged involvement in this matter, following strange episodes featuring Diego Torres' lawyer, the prosecutor and the judge, and the discovery of 20,000 of Urdangarin's emails in the office of a CNI aide named Matias Bevilacqua. Those documents showed up in May 2012 during a police search for a different case involving a network of private detectives who made money selling people's personal data. Bevilacqua's excuse is that he was hired by Urdangarin's lawyer to put some emails in order.

More than a decade has elapsed since the Nóos Institute was created. Was it Diego Torres who sought out Urdangarin or was it the other way around? There is an email written by the Duke of Palma stating that he has found the ideal person to help him "with my plans for expansion." This person is Diego Torres, owner of a company called Association Institute for Applied Research. When he teamed up with Urdangarin, the name was changed to Nóos, perhaps because Urdangarin already had a company named Consultora Nóos.

Urdangarin took questions from the judge on February 25, 2012. The interrogation stretched over two sessions, lasting a total of 21 hours. His lawyer's strategy was to place the blame on Torres and his aides, including Torres' wife Ana María Tejeiro. Not even sources at La Zarzuela understood the point of this, considering that Tejeiro was irrelevant to the case and that comparing her with Urdangarin's wife would be detrimental to the latter: the secretary to Princesses Elena and Cristina, Carlos García Revenga, also sat on the board of Nóos. Not only that, but the Pedralbes mansion was purchased through Aizoon, a ghost company owned jointly by Urdangarin and Cristina, with advice from Federico Rubio Carvajal, a high-ranking official in the Tax Agency who once also provided assistance to the Royal Household. When there was still a chance for Urdangarin's lawyer to support withdrawing the preliminary charges against Torres' wife, he failed to do so. Torres and Urdangarin should have been on the same page on this issue, leaving both wives out of it, say all the experts. But none of that happened. The email war was about to begin.

Between April 22, 2012 and April 6, 2013 Torres produced up to seven sets of email exchanges to prove that the Duke of Palma was an active player in all of Nóos' activities, as well as those of its dependent units; the messages also aimed to show that Princess Cristina was aware of these activities and a partner in the same, and that members of the Royal Household were acting as supervisors: King Juan Carlos, Crown Prince Felipe, the king's friend Corina zu Sayn-Wittgenstein, Carlos García Revenga, secretary to the princesses, and the lawyer José Manuel Romero, legal advisor to the Royal Household.

As a result, on April 3, 2013 Princess Cristina became a formal target in the investigation herself, although she got off the hook through the combined opposition of the Provincial Court of Mallorca, the prosecutor Pedro Horrach and the Attorney General's Office.

Meanwhile, Judge Castro and Horrach were also going through personal hell: there was pressure, surveillance of their private lives, disagreements between them. Since then, the investigation has been focusing exclusively on Cristina's finances and on Aizoon, and on whether there is any hard evidence of tax fraud and money laundering. The probe finds that the princess spent 698,824 euros written off against Aizoon's income. The judge feels that he must try again: he has just made her a formal target of the investigation and issued a summons to interrogate her on March 8.

Iñaki Urdangarin now spends long periods of time in Geneva, where his wife moved several months ago. He traded his seven-room house in a posh Washington residential estate, which was paid for by Telefónica, for a four-room attic in downtown Geneva, paid for by La Caixa. He has put the Pedralbes mansion up for sale, after having it seized by the judge to cover his civil liability. Meanwhile, his partner Diego Torres has become an outcast: no client is brave enough to hire his services. So everyone is not equal in their suffering. It took 227 pages of ruling to target Cristina, but a mere line and a half to target Torres.

The reams of information still in Torres' power are such that the case can hardly be considered closed as long as both women (Ana María Tejeiro and Cristina de Borbón) fail to receive the same treatment. That is how what began as the Urdangarin case has now morphed into the Cristina de Borbón case.

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