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Allegations over offshore funds swirl around Spain's former king

<span>Photograph: Esteban Félix/AP</span>
Photograph: Esteban Félix/AP

Damaging allegations over the financial arrangements of Spain’s former king Juan Carlos have placed the royal family under unprecedented scrutiny but are unlikely to result in current or futures monarchs losing their constitutional immunity, according to legal experts.

Juan Carlos abdicated in favour of his son, Felipe, six years ago, renouncing the throne after a series of damaging scandals including in a controversial elephant-hunting trip to Botswana as Spain was devastated by the financial crisis.

But allegations of impropriety have continued to follow the former monarch and have hobbled King Felipe’s efforts to move the monarchy out of his father’s shadow.

Recent reports in the British, Swiss and Spanish press have increased the pressure on the royal family. In March, Felipe stripped Juan Carlos of his annual stipend and renounced his personal inheritance from his father following reports that he was in line to receive millions of euros from a secret offshore fund with ties to Saudi Arabia.

Crowds in Madrid greet news of the abdication of Juan Carlos in 2014.
Crowds in Madrid greet news of the abdication of Juan Carlos in 2014. Photograph: Andrés Kudacki/AP

Last month, Spain’s supreme court launched an investigation into the role the former king played in a deal in which a Spanish consortium landed a €6.7bn (£5.9bn) contract to build a high-speed rail line between the Saudi cities Medina and Mecca.

The inquiry is intended to “define or discard the criminal relevance of events that occurred after June 2014”, when Juan Carlos abdicated and ceased to enjoy constitutional immunity from prosecution.

Meanwhile, Swiss prosecutors are looking into a number of accounts held in the country by the former monarch and his alleged associates.

It is alleged in documents from the Swiss prosecutor that Juan Carlos received a $100m “donation” from the king of Saudi Arabia that he put in an offshore account in 2008. Four years later, he allegedly gifted €65m from the account to his former lover, Corinna Larsen.

Last week, Spain’s El Confidencial website reported that Juan Carlos withdrew €100,000 a month from the account between 2008 and 2012, and used the money to pay for some of the royal family’s expenses.

Juan Carlos has said that he never told his son he was set to benefit from two offshore funds, but has made no further comment on the allegations.

Although the Socialist party, which heads Spain’s minority coalition government, has sided with rightwing parties to head off a parliamentary inquiry into the king’s finances, it has been blunt into its assessment of the matter.

“It’s obvious that, collectively, Spaniards are hearing some unsettling reports that disturb all of us, and which disturb me, too,” the prime minister, Pedro Sánchez, said last Wednesday.

“But I think there are some things worth mentioning in all this. First, that there are some media that aren’t looking the other way – on the contrary, they’re reporting all this. Second, there’s a justice system that’s taking action. Third – and this is something I’m grateful for – the royal house itself had distanced itself following these disturbing reports.”

Sánchez also said the 1978 constitution – which stated that “the person of the King is inviolable and shall not be held accountable” – needed “to evolve in accordance with the standards and political conduct that society demands”.

Carlos Flores, a professor of constitutional law at the University of Valencia, said that while there had long been “doubts or suspicions” about the former king’s private activities, “what’s happening now with the discovery of all these business dealings is unprecedented”.

King Felipe and Queen Letizia of Spain on a visit this month to Botaya to visit its monastery.
In March, Felipe (pictured this month with Queen Letizia on a visit to Botaya) stripped Juan Carlos of his annual stipend and renounced his personal inheritance from his father. Photograph: Carlos R Alvarez/WireImage

But he questioned how any efforts to separate private behaviour from the public role would work in practice.

“The thing is that the king is the head of state – he’s a symbol of the state – and it’s impossible to distinguish between the public and the private,” said Flores.

“The public and the private are intertwined. If the king goes to open a monument and runs over a pedestrian with his car on the way, is that a public or private matter? And if he holds a banquet for the head of a neighbouring country and someone gets food poisoning, is the king responsible publicly or privately?”

Flores also said it would be “absurd” to try to change the constitution for the sake of the king’s immunity when there were many more pressing reasons for it to be overhauled.

Joaquín Urías, a lecturer in constitutional law at the University of Seville, agreed that while the allegations about Juan Carlos’s finances were having an “unprecedented impact” on the monarchy, any revisiting of the Spanish constitution was extremely unlikely given the yawning divisions in the country’s politics.

“Right now, changing the constitution is impossible, politically speaking, because of the ideological divisions within the country,” he said.

“It’s impossible to imagine political agreement over the king … or over territorial issues, such as Catalonia and the Basque country.”

Urías said both the government and current king appeared to be taking a pragmatic line when it came to the former monarch.

“I think the government is doing the only thing it can, which is trying to separate King Felipe VI from his father,” he said,

“And that’s what the royal house is also doing – I imagine at the suggestion of the government. It’s the most intelligent play for anyone wishing to maintain the system.”

Corinna Larsen plans to bring a case in UK courts alleging a continuous campaign of intimidation directed against her by elements of the Spanish state since details of the former king’s finances emerged.

Her legal team says she is relieved that proceedings have been opened in Switzerland.

I think the government is doing the only thing it can, which is trying to separate King Felipe VI from his father

“There has been wide-ranging illegal conduct against her in multiple jurisdictions to cover up the deceitful schemes of powerful figures in Spain,” said her lawyer, Robin Rathmell. “Those same people have attempted to make her the scapegoat for their decades-long improper conduct. She welcomes the opportunity to be heard publicly and for the matter to be properly investigated.”

The British historian and Hispanist Paul Preston, who has written biographies of General Franco and Juan Carlos, said Spain’s disenchantment with its former monarch should not detract from the “extremely courageous” role the king played in helping Spain in its transition to democracy.

“Whatever one says, one shouldn’t forget the historical legacy,” he said. “As far as things are concerned now – and this is true in a way of all the democracies – with the rise of populism, we’re seeing a dreadful loss of faith in the political elite for the obvious reason that they’re a lot of lying, incompetent bastards … The odd thing is why the disillusion doesn’t go further than it does.”