Taxman investigates royal couple's real estate firm

Tax investigators began an inquiry eight months ago after they discovered suspicious movements of money transfers between the Nóos Institute, which was presided by royal son-in-law Iñaki Urdangarin, and the real estate firm Aizoon owned by him and his wife, Princess Cristina.

According to the more than 2,700-page case file, the national tax office AEAT opened an investigation when auditors said they detected a withdrawal of 147,800 euros in 500-euro notes in 2008 from the Nóos Institute account, which was re-deposited two weeks later.

The money was withdrawn by Ana María Tejeiro, the wife of Urdangarin's former business partner Diego Torres.

Nóos' lawyer, Marco Tejeiro, told tax inspectors last year that the money was to go to pay an outstanding bill the institute had owed Aizoon since 2005 for work it performed during a sports and tourism conference in the Balearic Islands.

After he determined that this type of "cash operation was inefficient," Tejeiro said that the money was re-deposited and Aizoon was paid through a bank transfer instead. However, representatives of Aizoon told AEAT auditors that they never got their money.

Aizoon, which charged a total of 556,300 euros of the 1.2 million Nóos received from the Balearic Islands government, is one of Urdangarin's companies being looked at in the ongoing investigation in the diversion of public funds known as Operation Babel.

Princess Cristina is not a target in the inquiry but her husband Urdangarin has been subpoenaed to appear before a judge on February 6. The princess appears as a director at the Nóos Institute and was part-owner of two of the firms, including Aizoon, that received money from the non-profit institute.

Tax investigators have asked Palma de Mallorca Judge José Castro, who is heading up the investigation, whether they should continue their own inquiry or allow the court to take it from here. They say they haven't been able to find a justification for the money. The scandal has rocked the entire Spanish royal family.

Investigators in the Urdangarin case have also questioned the owners and administrators of 63 companies that allegedly billed the royal son-in-law's non-profit Nóos Institute for work that was never performed.

The witnesses told court investigators that they never worked on any events with Nóos related to a sports and tourism conference organized for the Balearic Islands regional government at a cost of 2.3 million euros. The Nóos Institute justified some 500,000 euros in expenses with false bills issued by the firms, investigators believe.

Urdangarin, the son-in-law to King Juan Carlos, has been subpoenaed to testify before a Palma de Mallorca judge next month after he was charged as a defendant for allegedly embezzling public money. Among the evidence police found were bills submitted with dates posted before contracts had actually been signed.

Tax investigators believe that Urdangarin funneled the public money given by the Balearic government to his private firms. Urdangarin also perpetrated a similar scheme with the Valencia government, authorities say. His wife, Princess Cristina, has not been charged in the case even though she appears as a director at the Nóos Institute and was part-owner of two of the firms, including Aizoon, that received money from Nóos.

Employees and other witnesses told Judge José Castro that the princess' presence at the institute wasn't relevant. Ignasi de Juan Creix Breton, one of the witnesses the judge quotes in his case file summary, said that Princess Cristina was a board member at Nóos but didn't participate in the decision-making process at the institute.

In 2007, King Juan Carlos ordered an end to Urdangarin's business affairs after he got wind of the possible criminal investigation, sources have said.

But Urdangarin, who moved to Washington DC with his family in 2009, continued to make decisions about money transfers and billings even after the king ordered him to stop. Investigators confiscated a host of emails between him and his former associates discussing money and evictions of renters from properties his company owned. Some of the communications came out of Brazil where Urdangarin was on a business trip for Telefónica as a company representative in Latin America. He went to work for Telefónica when the king ordered an end to his business ventures.

Urdangarin's main business partner, Diego Torres, has also been indicted in the case.

In all, Nóos received some six million euros from both the Balearic Islands and Valencia regional governments. Coincidentally, the two former regional premiers - Jaume Matas of the Balearics and Francisco Camps of Valencia - who reportedly gave Nóos the contracts, are both on trial for alleged corruption in unrelated cases.