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Storm in a cloudy SGAE

Criminal charges apart, the system of royalties management is in urgent need of revision

The entry of the Civil Guard in the headquarters of the Sociedad General de Autores Españoles (SGAE), which administers royalties on copyright material, and the arrest of nine persons, including its top executives, as part of an investigation into embezzlement and corporate crimes, dramatically revives the debate on the transparency of this organization. For the moment the presumption of innocence protects those suspected of criminal activities, but the very existence of the investigation poses questions which, unfortunately, are far from new.

This ugly episode lends new force to the longstanding demands for serious reflection on the oligopoly of rights-administration firms in Spain, which was already the object of criticism last year, and not from any crank or anti-system quarter. In a report, the National Competition Commission defended the need to correct the legal framework within which these companies operate, to "prevent abuses and inefficiencies." The Commission made no mention of crimes being committed, but showed concern about the opacity of such companies.

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Copyright organization chief faces 10 years in jail for diverting funds

The Intellectual Property Law empowers the Ministry of Culture to authorize the creation of these entities- provided that they "favor the general interest"- to supervise their conduct and, if necessary, withdraw their authority to administer copyright royalties. The Culture Ministry's first reaction has been to point out that a Constitutional Court ruling, upon an appeal from the Basque and Catalan governments, confirmed that such supervision was now a regional government power. It is odd enough that these powers are thus claimed and then not exercised; but in 2008 and 2009 the Spanish government commissioned from the Evaluation Agency two reports on copyright administration companies which found nothing suspicious about them. On Friday a SGAE executive referred to these reports, claiming that "we have always turned out to be clean," and suggesting that the present investigation stems from a conspiracy.

The raid on the Madrid headquarters happened the day that the results of the SGAE's internal elections became known. The electoral mechanism is an unusual one. The candidacy which obtained 43 percent of the votes will gain no representation on the board. A company that administers 365 million euros a year on a non-profit basis must be particularly scrupulous. Especially when one source of its income is the revenue from the digital canon, challenged by internet users and the audiovisual industry. Indeed, the government is already obliged to change the canon's abusive nature after a ruling by the European Court.

The corruption case has its origin in a complaint filed in 2007 by organizations opposed to the canon, which called for the clarification of allegedly grave irregularities in the SGAE- filed both here and in Brussels. Now it will not be enough to punish fraudulent administrators, if such be the case. There must be change not only in personnel, but in the obsolete system of copyright administration.

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