A report by the Spanish Tax Office into corruption allegations at the SGAE Society of Authors and Publishers, which collects royalties on behalf of its members, shows that senior board members of the organization hived off some - 30 million in expenses, gifts, and transfers for non-existent services to their own companies.
On July 1 and 2 a total of nine people, including the former SGAE president Teddy Bautista, were detained in the Civil Guard-led raid at the organization's Madrid headquarters and other locations that included private homes. The Tax Office report says that a complex network of front companies was set up to funnel money from the SGAE for non-existent services. It lists cars, luxury holidays, summer homes, gifts, lingerie, electronic and domestic goods, and even supermarket foodstuffs: "Expenses that have little to do with a service provider and more appropriate to a household." Among the "sumptuous" expenses included in the report are bills for hotel stays in Rio de Janeiro's Copacabana Palace and the Ritz in New York.
The investigation against the SGAE was launched by a complaint filed by computer, internet and restaurant business associations against the organization in 2007. Cited in the complaint are the Digital Society of Authors (SDAE), which is controlled by SGAE, and its general director, José Luis Neri. Created in 2000, SDAE's role is to protect authors' digital rights. Neri is accused of diverting funds through a company called Microgénesis.
The SGAE, the Spanish counterpart to American collecting societies like ASCAP and BMI, is known for its high fees and aggressive enforcement tactics. It has been often accused of exceeding its remit by going as far as to infiltrate private weddings to check whether fees had been paid for the music being played at the reception. The SGAE's "digital canon" - a blank media tax on digital devices such as CD players or music-enabled cellphones - has been extremely unpopular among the Spanish public. Less than two weeks after the raid, Bautista stepped down. The organization, from whose accounts some 400 million euros is believed to be missing.is undergoing major re-organization that includes new board members.
The SER radio network, which has seen the Tax Office report, says that Neri and fellow board member and former pop singer, Ramoncín, contemplated transferring SGAE funds out of Spain. The pair allegedly met in a Madrid restaurant less than six weeks before the police raid on the SGAE headquarters in Madrid, and their conversation was monitored.
Ramoncín was heard to ask "how is that topic going?" while Neri says he is unhappy at how much tax he has had to pay that year. The police say Ramoncín enjoyed a close relationship with the SGAE board, but the singer has denied any wrongdoing, telling SER that the conversation with Neri was about the some tax problems the SGAE was having with its overseas investments.