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Spanish Authors' Rights Society Raided in Latest Corruption Probe
Police investigate a possible scam that collects royalties for music played on late night television.
Police raided the Madrid offices of Spain’s Authors and Publishers Society (SGAE) on Tuesday, an operation that heralds another chapter in the continuing corruption saga of the beleaguered yet powerful copyright collection organization. Eighteen people have reportedly been detained.
Officers from the Specialized and Violent Delinquency Unit of the national police searched the SGAE headquarters as part of an investigation aimed at various members of SGAE and employees of several television stations. According to a written communication from Spain’s national police force quoted in El Pais and other newspapers in Spain, the agents were searching for documentation related to "the creation of low quality music and the registration of false arrangements of musical works which are in the public domain." According to the police, after the music goes through that laundering process, it is registered in the name of "front men" and publishing companies.
"The purpose is to broadcast it on late night programs on various television stations in the early hours of the morning, generating intellectual property royalties," the police statement said. No one answered the phone at the SGAE offices on Tuesday when Billboard attempted to contact representatives of the organization.
Police said the accused "counted on people at the heart of the television stations, who, acting as intermediaries, would favor the broadcast [of the tracks in question] on the channels that they work for, in exchange for determined percentages of the rights earned in some cases, as well as a financial reward for their labor."
At the same time, the tracks are registered to publishers owned by the television stations themselves, according to El Pais, which puts them in the position of paying royalties to SGAE for playing the music, but also earning 50 percent of the royalties on the same tracks. A former SGAE executive and a former board member of the rights society told the newspaper that some "composers" who are credited as authors on the tracks are not even musicians, yet they take a five to 25 percent cut of the royalties.
This practice, known in the hallways of SGAE as “la rueda” (the wheel), has been the subject of “never-ending internal wars,” according to El Pais, which reported that a small group of SGAE members have engaged in the activity for years with gains of millions of euros, surpassing even Spanish music stars in royalty earnings.
SGAE made headlines in 2011 when its headquarters and 16 other related locations, including private homes, were raided in an investigation into misappropriation of funds. Longtime SGAE Board of Directors President Teddy Bautista and eight others were detained in the investigation that was dubbed “Operation SAGA;” he resigned from his post shortly after the scandal broke. Pedro Farré, the rights organization’s former head of corporate relations, was sentenced to 30 months in prison. On the eve of his release, he has published a book about his experiences at SGAE in which he reveals rampant misbehavior, including regular visits to brothels that were charged as expenses on SGAE credit cards, and broaches the question of why is he the only senior official of the organization to have been jailed.
Batista’s successor, Antón Reixa, was forced out after he started a campaign against practices like “the wheel.” The next SGAE president, Jose Luis Acosta, resigned in 2016 after less than three years. The entity’s current president, musician and composer José Miguel Fernández Sastrón, was voted into the post in April 2016.