PALMA DE MALLORCA, Spain (Reuters) - The Spanish king's son-in-law appeared before a judge on the island of Mallorca on Saturday to respond to charges of tax fraud in a six-million-euro embezzlement case that has eroded public support for the once-popular royal family.
The scandal and other corruption cases in which politicians are accused of taking millions of euros in bribes have enraged Spaniards at a time when unemployment has soared to 26 percent in a deep recession.
Inaki Urdangarin, a former Olympics handball player who is married to the king's daughter, the Infanta Cristina, is accused of using his powerful connections to win public contracts to put on events on the Mediterranean island of Mallorca and elsewhere in Spain.
His Noos Foundation is suspected of overcharging for organising conferences about the business of sports and hiding the proceeds abroad.
In a statement before the judge's questioning, Urdangarin, 45, distanced the royal house from the foundation's business.
"The royal house had no opinion, didn't advise on, authorise or back any activities for which I was responsible at the Noos Foundation," he said, according to sources in the courtroom.
"On the contrary, when the accusations arose, the royal house recommended I ceased any activity not considered appropriate for my institutional status, which I did."
Dozens of police officials guarded the courthouse in Palma for the closed-door hearing where Urdangarin was being questioned by Examining Magistrate Jose Castro.
Near the courthouse, a few hundred protesters chanted and held up signs reading "Down with the monarchy" and "They call this a democracy but it isn't".
In Spain's legal system, lengthy pre-trial investigations are carried out by an examining magistrate, or judge. Urdangarin is charged with fraud, forgery, embezzlement and corruption. If convicted, he could face a prison sentence and fines.
The king's son-in-law was first charged and called in for questioning in 2011, but a trial could still be months or years away as the judge continues his probe and adds or dismisses charges.
Urdangarin is fighting an order that he and a former business partner in the Noos Foundation post bail of 8.2 million euros. His assets could be seized if he does not meet bail.
The judge will also question on Saturday Carlos Garcia Revenga, former treasurer for the Noos Foundation and the private secretary to Urdangarin's wife, Cristina, 47.
The Infanta Cristina is the only one of five directors of the Noos Foundation who has not been charged with a crime.
Judge Castro is trying to find out how much she knew about the business of the foundation. A criminal indictment of the king's daughter would be an unprecedented accusation against a royal in Spain.
The royal family has tried to distance itself from Urdangarin, whose official title is Duke of Palma. Photos of him have been wiped off the royal website. He has also been banned from royal family events for more than a year.
In Spain's severe economic downturn, more companies announce lay-offs each week. Tens of thousands of homeowners have defaulted on their mortgages and been evicted from their homes. The government has cut public salaries and spending on health and education.
Public angst over the economy has been aggravated by a number of corruption cases from the 1990s and early 2000s, when a tax bonanza from a property boom fuelled massive public spending on events and infrastructure that now looks like folly.
In another case, prosecutors are looking into millions of euros in Swiss bank accounts controlled by a former politician from the ruling People's Party, Luis Barcenas, who is charged with bribery, money laundering and tax evasion.
In Palma, where a number of corruption cases have surfaced, Urdangarin has become a despised figure.
Earlier this month, the local government ceremoniously removed a street sign "Boulevard of the Duke and Duchess of Palma" and renamed the street in front of television crews.
"It's a disgrace for our islands that have been so supportive of the royal family," said Esperanza Ruiz, a resident of Palma, as she shopped in a supermarket near the courthouse.
Judge Castro was expected to question Urdangarin for most of the day on Saturday and perhaps into the early hours of Sunday.
King Juan Carlos, who took the throne in 1975, was the most popular public figure in Spain in the late 1970s because of his role in supporting the transition to democracy after the long Francisco Franco dictatorship.
But for the first time, politicians have openly called for him to abdicate and hand the throne to his son, Prince Felipe, as his prestige has eroded due to the Urdangarin case, as well as his own missteps. Metroscopia polling firm figures show his approval rating has fallen to 58 percent from much higher levels.
Last year, when Spain seemed on the brink of bankruptcy, the king fell and broke his hip during an elephant hunting safari with wealthy friends in Botswana.
The king, 75, made a surprise public apology for the trip, which had been secret until his accident.
Writing by Fiona Ortiz and Paul Day; Editing by Rosalind Russell