Major film and music rights society SGAE will face investigations and a complete overhaul of its structure and policies following allegations of the embezzlement of around €400m in funds intended for film-makers and musicians.

At the start of this month, the Madrid-based office of SGAE, a powerful society of authors and editors, was raided by police and the president of the society Teddy Bautista was arrested, along with eight members of the board of directors, relating to charges of the misappropriation of funds.

The allegations related predominantly to the Spanish Digital Society Of Authors (SDAE), a subsidiary of SGAE that deals with digital rights, and more specifically its head Jose Luis Neri, who is accused of diverting society funds to a consultancy company called Microgenesis, which was previously headed by Neri’s wife Maria Antonia Garcia Pombo.

The raid and arrests came just hours after a new SGAE board of directors had been appointed. The society said at the time that it was collaborating with authorities and fully trusted the innocence of its executives.

Teddy Bautista has since resigned, but in an effort to improve the reputation of the organization, a new governing committee set up at the SGAE, including film-maker Imanol Uribe, has drawn up a list of major changes to be implemented that it will present to the society’s board of directors on July 28.

First and foremost they have called for new and more open general elections to elect a new board of directors, possibly to take place in September. They have also asked for an investigation committee to be set up led by Ramon Lopez Vilas (ex-magistrate of the supreme tribunal) to get to the bottom of the charges and report his findings to the society’s members. 

Furthermore, a new CFO should be appointed to review all budgetary control procedures and to perform an audit of none essential people and processes at the SGAE.

Finally, they have called on the society’s members to participate in transforming the shattered image of the society.
There are concerns in the industry that these latest developments will hamper Spanish government attempts to tackle internet piracy, especially the implementation of the Sustainable Economy bill, which was approved by parliament earlier this year and will allow the courts to close down sites offering illegal downloads.

SGAE is Spain’s leading collection society with over 100,000 members from the film, music and theatre industries to whom the society distributed some €365 million last year.