Iñaki Urdangarin, husband to Princess Cristina, the youngest daughter of King Juan Carlos and Queen Sofía, was handed contracts worth four million euros between 2004 and 2006 to organize tourism and sports events in the Valencian and Balearic regions through a non-profit company he chaired, the Noos Institute.
In the Balearics, Noos was awarded two contracts worth 1.2 million and 1.1 million euros by the government of Jaume Matas without any public tender, the investigation shows.
Material seized by police at the offices of Diego Torres, Urdangarin's business partner, suggests misappropriation of public funds. Sources close to the inquiry said it was "inevitable" that Urdangarin would be asked to explain the nature of the hefty invoices issued to regional governments.
"Even if we accept them all as real, they don't even begin to justify the amount of money received," said sources from the Anticorruption Attorney's Office, which suspects many of these invoices are phony or artificially high. This agency holds the Noos Institute "set prices that were completely disproportionate to the services it rendered to public agencies, and after receiving the public funds, it pretended to hire fictitious services from companies [...] controlled by Diego Torres and Iñaki Urdangarin."
In one case, the institute paid Urdangarin's brother to write a speech for one of the events. Investigators also found a hole of nearly one million euros in the organization's accounts.
The deals took place under the administrations of former Popular Party premiers Jaume Matas in the Balearics and Francisco Camps in Valencia, both of whom are being investigated on wider corruption charges.
The Royal House would not comment on the news, but said it wants all relevant legal action to be pursued and that it would keep abreast of developments.
Urdangarin's business partner, Torres, who has already been charged, underwent a long interrogation at a Barcelona police station on Tuesday. His lawyer said he will appeal the search warrant that resulted in material being seized from his client's offices, because "it does not respect the principle of proportionality."
Another man who was arrested in connection with the wider Palma Arena case, José Luis Ballester, is a close friend of former Olympic handball star Urdangarin and was one of the key contacts between Noos and the Balearic government.