No more smiles for Balearics' boom-time boss

Destiny is sometimes filled with coincidences. Jaume Matas, the indicted former regional premier of the Balearic Islands, moved in 2007 to Washington DC where he took up a job with a multinational corporation. Two years later, Iñaki Urdangarin would make a similar move at the behest of his father-in-law, King Juan Carlos, after the royal family got wind that he was being investigated in a spinoff probe from the inquiry into Matas' enrichment. Both men must have thought that by moving away they would be forgotten - they were wrong.

Their paths almost crossed. In January 2009, Matas was forced to return to Spain after he was indicted in the so-called Palma Arena case, an investigation that dealt a blow to the Popular Party (PP) in the Balearics with the arrests of several former politicians. In September that same year, Urdangarin traveled to Washington where he took up a job with Telefónica, perhaps never thinking that he would also have to return shortly after to answer a subpoena to appear before a Palma de Mallorca judge to respond to charges that he purportedly diverted public money given to his non-profit Nóos Institute.

This is only one of 26 cases that the Palma Arena inquiry has spawned

When indicted he put his home up as collateral for a three-million loan

"Matas did what no one in authority in a democracy should: flaunt his wealth"

In that same courthouse, Matas went on trial Monday for allegedly authorizing illegal contracts to his co-defendant Antonio Alemany, a former reporter with the newspaper El Mundo , who wrote his speeches as well as publishing brownnosing reports for the Spanish daily about Matas' administration. Alemany set up a news service called the Balearic News Agency, which received about 500,000 euros. Prosecutors are demanding eight years in jail for Matas and more than five years for Alemany.

The trial itself is small in scale, expected to last around a month, but it is only one of 26 separate cases that the Palma Arena inquiry has spawned in relation to an alleged fraud scheme in connection with the construction of a sports arena for the islands. Indeed, the Palma Arena case may have barely registered on the news radar screen this week if it hadn't been for Urdangarin's implication in one of the offshoot inquiries, Operation Babel.

The investigations demonstrate how rampant corruption was in the Balearics during Matas' days of wine and roses, when the cash really flowed. Matas became PP leader in the Balearic Islands in 1991, rising to the post of regional premier in 1996. In 2000 Prime Minister José María Aznar named him environment minister before he returned to the islands in 2003 for a second spell as premier, until 2007.

Now prosecutors want to him to explain how an indoor cycling complex that was budgeted by the regional government for 44 million euros ended up costing 100 million euros, and, more importantly, what happened to the money along the way. The entire case is centered on Matas, who was indicted on nine separate counts.

But while scores of reporters and journalists over the Christmas holidays camped outside Urdangarin's parents' home in the Basque capital of Vitoria, waiting for him to visit his ailing father, few people took much notice of the elegantly dressed man who went to Mass that morning at a small Palma church near his four-million-euro palatial home. It is said that Matas paid with 500-euro notes to decorate and furnish it.

His political power was so great that few people in the islands really questioned where he got his money. After he was first indicted in the spring of 2010, Matas put his home up as collateral to obtain a three-million-euro loan from Banco de Valencia - the same bank that was taken over recently by the government - to pay his bail and avoid being sent to prison. But in two weeks, Matas stands to lose that home; it is to be auctioned on January 25 after he failed to pay the interest on the loan.

During his time in office, Matas was obsessed about his image. He would appoint his press chiefs to head up the local television IB3 station, and would assign radio and Digital Terrestrial (DT) frequencies to his supporters. In six years, IB3 racked up a debt of 250 million euros.

At Christmas Mass a few weeks ago, Matas listened in silence to the priest. His face reflected the tension and pressure he has been going through over the last few years, and he has put on more weight. He is no long the same trim Matas who was recognizable for his flashy signature smile in the more than 30,000 photographs that were taken of him during his first term (1996-99) as regional premier.

During that period, it was well known how one had to deal with Matas. "You are going to have to eat that front-page story with French fries," he ripped into one reporter after the journalist revealed that he was being investigated for political spying on a Socialist leader.

In another investigation, Matas was suspected of buying votes from Argentinean immigrants in favor of the PP during an election in Formentera. Some of the incriminating documents were found in the regional premier's office, but the investigation didn't go far. He took advantage of his post as a Cabinet member in the Aznar government to quash the inquiry.

In 2000, Matas appeared to be one of the friendlier faces during Aznar's second term. Along with Josep Piqué, then foreign minister, Matas was considered liberal and centrist.

"I created a lot of problems for myself inside my own party with my regional attitude over the Catalan language and because of my relationship with some reporters," he once acknowledged in an interview.

It was never clear if Matas pulled the same weight as a true PP party baron, but he did have some interesting allies, including the flamboyant El Mundo editor Pedro J. Ramírez, with whom he would often play paddle ball.

His tenure at the Environment Ministry was undistinguished. The Prestige oil spill disaster happened on his watch, and he would later confess to friends that during those first days of the emergency his legs shook under the table each time Aznar stared at him during Cabinet meetings. It is not known what brought Matas' ministerial career to a close, but in 2003 Aznar sent him back to the Balearics so he could run again for regional premier. The PP won with an absolute majority.

He would often tell his Socialist opponents that he had more pedigree as a leftist than they had. "My family was more Socialist than you," he would say. His grandparents and uncles fled to Italy in 1936 at the start of the Civil War. When Francisco Franco would later visit Palma de Mallorca, the Matas clan closed their businesses and stayed away from church.

In his second term as regional premier Matas tried to turn Mallorca into an international celebrity resort, a kind of Spanish Monte Carlo, and attract big events. He wanted it all - from an opera house with panoramic views of the Mediterranean to big-name sporting events. And he could count on Urdangarin, the former handball player who had married Princess Cristina and set himself up as a business consultant, to help promote the islands. Urdangarin is now being investigated for allegedly channeling millions of euros from his event-organizing and consultancy fees through the Nóos Institute to his own pocket.

The beginning of the end of Matas' Balearic fairy tale came in 2006 when the so-called Andratx case blew open the first of a wave of property bribery scandals involving politicians. Among those indicted was Jaume Massot, a director general in the Matas government. But Matas didn't take the inquiry lightly; he went to Madrid to demand explanations from Attorney General Cándido Conde-Pumpido as to why anti-corruption prosecutors were snooping around in the Balearics. To the surprise of some judges and colleagues, Conde-Pumpido received him in his office. But Matas was unable to defuse the inquiry this time around as he had done with the Argentinean votes affair.

"Jaume Matas wrote the book of errors of what anyone in authority in a democracy should never do - accumulate wealth and then flaunt it. He was mesmerized with being a minister and with the lives of the rich and famous people he hung out with in Madrid and Palma," said one witness in his case.

After Matas testified for 15 hours in 2010 as part of the Palma Arena investigation, Judge José Castro wrote in the prosecutorial indictment: "It appears he came here to make fun of the rest of us mortals."

Matas gave big projects to his friends, and he wanted them done on a large scale regardless of the costs. Among his big pets were the Palma de Mallorca subway system, the Ibiza highway, a large health center in Mallorca, the Calatrava Opera House overlooking the bay, a large port in Menorca, and, of course, the Palma de Arena sports complex, built with Siberian pinewood brought in from Ukraine.

The complex was inaugurated in May 2007 with a special tennis exhibition match between Roger Federer and Mallorca's most famous son, Rafa Nadal. That same month, Matas lost the Balearic elections, and the following year, the investigation got into full swing.

It began with a single anonymous complaint: Matas' wife, Maite Areal, and her brother, Fernando, were making too many jewelry and dress purchases with 500-euro notes. Fernando Areal was charged with secretly putting down 71,038 euros for the PP election campaign in 2007.

A lot of cash was also used to buy Italian furniture and paintings, and pay for a complete remodeling of the Matas "palace." The Matas were not able to enjoy their home for long. After his term as regional premier was over, Matas, his wife and three children moved to Madrid where they purchased another home (the judges and anti-corruption prosecutors believe they did so under another name) in the upscale Salamanca neighborhood, and they later left for the United States. He would only return to keep his appointments with justice.

It was just two Christmases ago that Matas had some uninvited guests over the holidays to his palatial home. They were armed with a warrant, and would search in vain for a secret. The court officers would find it - a secret safe - hidden behind a closet. They also took an inventory of his fabulous art collection, Italian furnishings, the dozen or so flat-screen TVs, and the expensive wines in his personal cellar.

Matas wanted to live high on the hog but didn't have enough time - anti-corruption prosecutors were closing in. Today the once-smiling friendly PP premier is just another disgraced politician on trial for corruption.