As previously reported by Billboard, Spain’s Ministry of Culture last month blocked the distribution of royalty advances of more than 2.5 million euros (over $2.8 million) by SGAE. The move came after the Spanish Minister of Culture announced he was seeking a partial government takeover of the embattled rights society.
SGAE confirmed via a statement on Feb. 7 that the Ministry of Culture had “paralyzed” the payment of advances against future royalty revenue that would have been paid to 250 author and 12 publisher members of SGAE via an official communiqué sent to the SGAE offices. The SGAE statement qualified the government order as “extraordinary.”
The letter from the Ministry, obtained by Spain’s El Pais newspaper, stipulates that from now on all advance payments must be verified to ensure that their payment “does not compromise the final result of royalty distributions.”
The Ministry called the action “a measure of control over what type of advances are going to be granted, under what conditions, to whom they are granted and if it will affect the overall allocation of rights.”
At the end of January, more than 50 SGAE members, including film director Pedro Almodovar, singer Miguel Rios and Warner/Chappell Spain director Santiago Menéndez-Pidal sent a letter to the Minister of Culture requesting the intervention and demanding Hevia’s removal from the presidential role.
Guirao specified that the objective of what he called a “partial” intervention would be to resolve three problems: to clarify the traceability of distributions of collected royalties, update the statutes of the society according to current regulations, and establish electronic voting for SGAE members, which has been a bone of contention for members who do not live in Madrid.
"When these pending issues are resolved, control will be returned to the society," Guirao said.
In December, the International Confederation of Societies of Authors and Composers (CISAC) launched a sanctions procedure against SGAE, which could result in the expulsion of SGAE from the global organization.
"CISAC continues to monitor very closely the situation in Spain," a CISAC spokesperson told Billboard last month. "The sanctions procedure opened against SGAE by the CISAC Board of Directors in December 2018 is in process and will determine the organization’s status within the global authors’ rights community. In parallel, we remain in regular contact with SGAE and the Spanish government and offering all the support we can to bring about a solution to the problems surrounding the society."
CISAC’s action is a follow-up to an investigation into questionable practices at SGAE. In a 65-page report published last May, CISAC revealed "serious concerns" about SGAE's conflicts of interest, "distorted and inequitable distribution of royalties" and "lack of regard for the common good." The commissioned report included strong recommendations for SGAE to fix the shortcomings in its governance and distributions.
SGAE's longstanding problems have heated up since the summer of 2017, when Spanish agents again raided the organization’s Madrid headquarters, and arrested 18 people suspected of involvement in la rueda (“the wheel"), a royalty scam involving an unproportionate amount of music placed on little-watched late night television programs. According to police documents, the music habitually includes classical public-domain compositions by Mozart, Vivaldi and other composers that have been registered as copyrighted arrangements by participants in the scheme -- not only in their own names but in the names of their mothers, children and even their dogs -- to downplay the volume of their output.
In another SGAE scandal, multinational publishing companies Warner/Chappell, peermusic and EMI Songs threatened to pull their catalogues from SGAE after they were all ejected from the entity’s board.
In October, Eduardo "Teddy" Batista, the former longtime president of SGAE who is awaiting trial on charges of misappropriation of funds which authorities say cost the organization €20 million (almost $26 million), attempted to make a comeback at the organization by running for a seat on the board and a possible return to the presidency. In the end, Bautista did not get enough votes to bring him back to SGAE.