SGAE and SDAE, two related non-profit organizations tasked with the collection of royalty payments on behalf of Spanish musicians, composers and songwriters, had their bank accounts frozen and offices raided in connection with a fraud investigation.
According to Spanish authorities, the executive officers of the General Society of Authors and Editors (SGAE) and its subsidiary, the Digital Society of Authors and Editors (SDAE), diverted funds towards companies in which they had interests.
TorrentFreak reports that when SDAE was spun off from SGAE in order to collect royalty payments for the digital distribution of works, a company called Microgenesis was hired to provide consulting and DRM solutions.
It turns out that the ex-president of Microgenesis, Maria Antonia Garcia Pombo, is the wife of Jose Luis Rodriguez Neri, the director general of SDAE. Furthermore, his sister-in-law, Eva Garcia Pombo is the Microgenesis chief legal officer.
The police raids lasted 14 hours during which time multiple employees of the involved organizations were questioned. The SGAE headquarters was sealed off and all computers were seized.
SGAE's president Eduardo Bautista, as well as the organization's chief financial officer Ricardo Azcoaga and director general Enrique Loras were arrested.
Microgenesis's office was also raided. Maria Antonia Garcia Pombo, her husband Jose Luis Rodriguez Neri and her sister Eva Garcia Pombo, were taken into custody, and so were Microgenesis chief executive officer Rafael Ramos, majority shareholder Elena Vazquez and chief financial officer Celedonio Martin.
The law enforcement action was dubbed Operation Saga and saw the participation of over fifty police officers, tax officials and workers from the Spanish Audit Office. The investigation began back in 2007 as a result of a complaint about financial irregularities filed by the Spanish Association of Internet Users (Asociacion de Internautas).
The incident comes at a time when Spanish entertainment industry associations are lobbying for tougher anti-copyright legislation. Meanwhile, freedom of information and anti-copyright activists have long argued that very little of the money handled by these organizations actually go back to the artists.