More Details On Spanish Music Collection Society Corruption: Accused Of Stealing $550 Million From Artists

from the lovely-people dept

Wed, Jul 6th 2011 1:09am — Mike Masnick

Late last week, we wrote about the corruption-driven raids on the Spanish music collection society SGAE, and the arrest of its boss, Teddy Bautista. Over the weekend, more details have come out. Jose Luis Campanello points us to the news that officials believe that SGAE execs may have diverted approximately $550 million (US) to their own (or others) profits, at the expense of the actual musicians who should have received that money (Google translation of the original Spanish).

TorrentFreak has additional details as well, about the scheme that seems extremely questionable. Basically, the accusations are that SGAE hired some "consultants" to set up a supposedly independent subsidiary. The thing is, some of those consultants were relatives of SGAE execs:

The complaint alleges that SGAE operatives set up companies and used revenue destined for artists to generate profit for themselves and their families, and that money bound for artists living abroad was diverted to personal Swiss bank accounts.

At the center of the storm is SDAE, the digital rights arm of SGAE. Although a notionally separate entity, SDAE is fully operated by SGAE. It appears that when SDAE was being set up, SGAE hired a for-profit company called Microgenesis as consultants.

Microgenesis describe themselves as �a team of specialists in engineering, consultancy and development, managed by individuals with established experience in the fields of intellectual property, as well as the culture and entertainment industries.�

Microgenesis operated a number of companies which provided various services for SGAE and SDAE, some of them suspiciously registered at SGAE/SDAE�s own office address. The problems only deepen when one learns who is behind Microgenesis.

Jose Luis Rodriguez Neri is Director General of SDAE and ex-director of SGAE. His wife, Maria Antonia Garcia Pombo, is the ex-president of Microgenesis. Partner-Chief Legal Officer of Microgenesis is Eva Garcia Pombo. She is Neri�s sister-in-law.

This all sheds additional light on SGAE's rather fanatical approach to increasing who it could collect the digital levy from. It sounds like they weren't necessarily looking for more money from artists, but potentially for themselves...

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Filed Under: collection society, corruption, music, spain, teddy bautista
Companies: sgae

48 Comments

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Anonymous Coward, 6 Jul 2011 @ 2:20am

^^^ THIS is piracy. THIS is theft.

You paying attention trolls?
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Anonymous Coward, 6 Jul 2011 @ 2:29am

Moral of the story?

It's obviously ok to rip off musicians by illegally downloading the music they are offering for sale because it *supposedly* pales in comparison to this "theft".

Right Mike?
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- Planespotter (profile), 6 Jul 2011 @ 3:10am
  
  Re:
  Well on one hand hand we have actual numbers on the cash stolen (SGAE/SDAE/Microgenesis) and on the other we have no actual numbers on the cost of piracy as you cannot base it on 1 file shared = 1 sale lost.
  
  Mike has never said it is ok to rip off musicians through filesharing, but for some reason the part of your brain that should understand that seems to be defective.
  [ link to this | view in chronology ]
  - mike allen (profile), 6 Jul 2011 @ 3:19am
    
    Re: Re:
    i agree what 1 file shared = is potenually more sales because someone likes what is heard. what this is is pure defrauding the artist of money that is theirs and has already been colected in the artists name no getting away from it this is far worse than any filesharing as the artists actually trust this bunch of thives. But do trolls have the brain power to work that out.
    [ link to this | view in chronology ]
    - Anonymous Coward, 6 Jul 2011 @ 3:23am
      
      Re: Re: Re:
      Everybody that has gigs of music on their drives that they listen to regularly never would have bought any of it.
      
      Awesome believable story, bro.
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      - mike allen (profile), 6 Jul 2011 @ 3:27am
        
        Re: Re: Re: Re:
        I have gigs of music and i bought a lot of it digitised from vynal recording bough way back others i have sent to me to play on my radio shows so in europe any way the artist stil get paid by the royalties from the radio stations. So you are wrong again.
        [ link to this | view in chronology ]
      - Prisoner 201, 6 Jul 2011 @ 4:28am
        
        Re: Re: Re: Re:
        Dude. Very few people could afford 5 gig of music, much less be interested in spending that much money on music.
        
        That busts the 1 DL = 1 missed sale. Unless the average teenager is much wealthier than I thought.
        
        As for the music that I "listens to regularily" - yep those bands meet my criteria of quality and are supported accordingly. I.e. I buy their stuff.
        
        You see, I'm one of those annoying people that make up the "spends money on music because of piracy" demography that the MAFIAA is so uncomfortable with.
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      - cc (profile), 6 Jul 2011 @ 9:04am
        
        Re: Re: Re: Re:
        People are listening to more music and the overall music industry is thriving. That sounds like good business for both the artists and the public. Not to mention that file-sharing is legal in Spain.
        
        Recording industry middlemen embezzling the artists' money is theft -- real theft that does not benefit the artists in any way. And fraud is certainly not legal in Spain.
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- FuzzyDuck, 6 Jul 2011 @ 4:11am
  
  Re:
  Fact is the people shouting loudest about "protecting" artists are those stealing the most from artists. Quite literally it turns out.
  
  They never really cared about artists, they care only about their own profits.
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  - That Anonymous Coward, 6 Jul 2011 @ 7:23am
    
    Re: Re:
    I finally get it!
    
    The RIAA and their foreign counterparts need to scream about the "losses" caused by piracy so they can explain the millions of dollars they keep pocketing.
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- abc gum, 6 Jul 2011 @ 4:43am
  
  Re:
  Same old unsubstantiated accusation - right AC?
  [ link to this | view in chronology ]
- The Devil's Coachman (profile), 6 Jul 2011 @ 5:03am
  
  Re:
  Stop the lame boring and repetitive posts you inflict on everyone here! Really! Just stop! You are hopelessly boring and terminally lame. Oh, and you're certainly one of the most obvious shills around. Your neighbors must despise the very sight and shrill sound of you. I know you have no friends.
  [ link to this | view in chronology ]
- DannyB (profile), 6 Jul 2011 @ 6:49am
  
  Re:
  > It's obviously ok to rip off musicians by illegally
  > downloading the music they are offering for sale
  > because it *supposedly* pales in comparison to this "theft".
  
  Is that the new position you are taking? Or are you quoting it from somewhere? Did someone say that? I surely never read it anywhere else.
  
  > Right Mike?
  
  The power of words written on a blog are truly amazing. Mike is the focus of your attention. You never miss an opportunity to slander, accuse, or insinuate.
  
  Historically it has always been easier to attack the messenger. It is always an option to do so when you have nothing else you can say.
  
  What? Nothing to say about artists? Nothing to say about the substance of this article. Nope. It's just Mike, Mike, Mike. Piracy. Put words in his mouth.
  
  Your trolling is really pathetic.
  
  It's nice to have a permanent documented record of the ones who argue for the dinosaurs and flat earth.
  [ link to this | view in chronology ]
- BeeAitch (profile), 6 Jul 2011 @ 10:35am
  
  Re:
  Funny that when you speak of copy'right' infringement, you call it theft when it's not: it's infringement.
  
  Yet when there are actual dollars stolen you feel you must put the word "theft" in quotes.
  
  Telling. You shills keep getting more and more desperate.
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Anonymous Coward, 6 Jul 2011 @ 2:51am

Actually...
Get your story straight, the crime is violating the patent on the RIAA's business model.
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- Chronno S. Trigger (profile), 6 Jul 2011 @ 4:58am
  
  Re: Actually...
  No, the RIAA's business model isn't being infringed upon. The SGAE tried to do it under the table without anyone knowing. The RIAA patented model involves putting into the contract the right to do anything they want. That way, if they get called on it, the RIAA can just say "The artist knew what they were getting into and must have found value in our work".
  [ link to this | view in chronology ]
  - Anonymous Coward, 6 Jul 2011 @ 5:13am
    
    Re: Re: Actually...
    Ah, so it's a derivative work. Double fault then! Do not pass go, do not collect royalties.
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mike allen (profile), 6 Jul 2011 @ 3:12am

mike first this line, It sounds like they weren't necessarily looking for more money from artists, but potentially for themselves...
the word from surely should be for. Just shows these societies dont care about the artists at all.
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- The eejit (profile), 6 Jul 2011 @ 3:33am
  
  Re:
  No, it's definitely from in this case.
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  - mike allen (profile), 6 Jul 2011 @ 3:41am
    
    Re: Re:
    so they wanted more money FROM artists to give to artists mmm sounds about right for a collection agency.
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- Nick Coghlan (profile), 6 Jul 2011 @ 5:52am
  
  Re:
  Definitely a typo, but a rather appropriate one, since they're apparently stealing from the artists to line their own pockets :)
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Anonymous Coward, 6 Jul 2011 @ 3:41am

Typica
Is this not the same thing tha RIAA etc are and have been doing for years none of it is for the benefit of the artists
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- Chargone (profile), 6 Jul 2011 @ 3:45am
  
  Re: Typica
  this was pretty much my thought.
  'yay for getting busted on that... but... isn't that basically standard behaviour for collection societies in general?'
  
  i guess the issue here is that they were using non-standard means of getting that money into their pockets, rather than just conspiring with their superiors to get insane payouts for finding more ways to screw everyone over.
  [ link to this | view in chronology ]
jenningsthecat (profile), 6 Jul 2011 @ 6:04am

What a surprise.
A collection society screwing artists AND the public? Imagine that!

At least in Spain the government appears to be fighting that kind of corruption. Here in North America the governments actively participate in the extortion racket.
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Killer_Tofu (profile), 6 Jul 2011 @ 6:09am

It all makes sense now
It all makes so much sense now. All of these collection agencies and representative groups always say they are doing it for the artists. They really are. They are there to do their best to ensure that the artists never get enough money to live on. They want every group and band to have that indie feel by all being starving artists. They are there to protect them from the evils and corruption that money brings with it. They have taken it upon themselves to absorb this evil money so that the artist doesn't feel its taint.
They're just trying to help the artists! It makes sense to me now.
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Anonymous Coward, 6 Jul 2011 @ 7:18am

The translation is a bit on the wonky side. The diversion wasn't 550 million, rather that the total of the fund created by the government could reach 550 million, so the potential for diversion would be that level.

puede alcanzar

So they aren't accused of stealing 550 million. They are accused of working a diversion plan against a fund that could have up to 550 million in it.
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- Anonymous Coward, 6 Jul 2011 @ 7:20am
  
  Re:
  Lets add this: The case example they cite says this in the translation:
  
  Among the allegations is that unions Jose Luis Rodriguez Neri, a senior executive of the SGAE, of allegedly diverting tens of thousands of dollars to companies owned.
  
  In a scam of 550 million, do you honestly think that they would report "tens of thousands" as significant?
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  - The eejit (profile), 6 Jul 2011 @ 7:59am
    
    Re: Re:
    They would if the rest of it was held in a financial-privacy haven, such as Switzerland or the Caymans.
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    - Anonymous Coward, 6 Jul 2011 @ 8:04am
      
      Re: Re: Re:
      You have to agree though, when you re-read the story in spanish, it is clear that the fund pile was 550 million, not the amount stolen. They were taking from a pot that was that big, they didn't take the pot.
      [ link to this | view in chronology ]
      - The Devil's Coachman (profile), 6 Jul 2011 @ 8:26am
        
        Re: Re: Re: Re:
        That's how the Mafia operates - they just want to "wet their beak". Until there's no more in the pot.
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        Anonymous Coward, 6 Jul 2011 @ 8:30am
        
        Re: Re: Re: Re: Re:
        But would you agree at this point that the title and content of the story as posted on Techdirt is wrong or misleading? They didn't steal 550 million, did they?
        
        Sort of like getting an extra $20 for the cash machine, and claiming that you stole all the money in the bank.
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        cc (profile), 6 Jul 2011 @ 8:43am
        
        Re: Re: Re: Re: Re: Re:
        The original article clearly says "Acusan a directivos de la Sociedad de Autores de apropiarse U$S 550 millones." That obviously says the directors are accused of appropriating $550 million.
        
        It then goes on to say they are believed to have defrauded up to $550 million. It doesn't say they defrauded $20 from a $550 million pot like you claim.
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        Anonymous Coward, 6 Jul 2011 @ 9:22am
        
        Re: Re: Re: Re: Re: Re: Re:
        The size of the fund they were "stealing" from was up to 550 million.
        
        Do you have a link to the "original story" you are working from? Every one I see so far makes reference to the size of the fund, but few seem to specify how much was "stolen".
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        Anonymous Coward, 6 Jul 2011 @ 9:38am
        
        Re: Re: Re: Re: Re: Re: Re: Re:
        Also, it should be noted that all of these allegations seem to be tacked onto the Culture minster attempting to run for President or something along those lines. There is some pretty clear indications of a smear campaign in all of this.
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      - cc (profile), 6 Jul 2011 @ 8:40am
        
        Re: Re: Re: Re:
        It looks like $550m is the maximum estimated amount they might have defrauded. In other words, they took less or equal to that amount.
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Austin (profile), 6 Jul 2011 @ 9:26am

I Blame the Artists
This is 2011. We've finally hit a point where artists can self-promote to the point where they can earn as much money as a signed act without a studio behind them. Furthermore, their fan base will be smaller, but they'll be more engaged, and more likely to buy. If I was an artist, I'd rather have 10,000 fanatics than 1 million casual fans. With the advent of the internet, any Artist can now achieve this without a label.

So yeah, I blame the Artists. If they had chosen the wiser path, and done this on their own, they wouldn't need a label, and a label they wouldn't be signed to wouldn't be stealing their profits.

Or to distill this for any Artists who may be reading: Wake up and smell the savings guys! The suits in Hollywood and Nashville are giving you 50 cents every time they sell a $20 CD with your hard work on it! A record contract is NOT the answer! Your fans ARE the answer!
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- Anonymous Coward, 6 Jul 2011 @ 9:50am
  
  Re: I Blame the Artists
  the fans aren't the answer, because the fans want it for free. 50 cents (and a ton of money to record and get your tour going and promotion and marketing and support) is way better than free and have a nice day.
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  - Anonymous Coward, 6 Jul 2011 @ 10:23am
    
    Re: Re: I Blame the Artists
    The fans aren't the answer? Do you know how art works? It needs an audience or else it ain't art.
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  - BeeAitch (profile), 6 Jul 2011 @ 10:50am
    
    Re: Re: I Blame the Artists
    "the fans aren't the answer"
    
    Sums up your masters' attitude nicely. No wonder your business model is failing.
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    - Anonymous Coward, 6 Jul 2011 @ 10:53am
      
      Re: Re: Re: I Blame the Artists
      Your fans aren't your fans if they are really just looking for a hand out. They want your stuff, they want your life, they want your innermost secrets, direct contact, your tweets and the right to interrupt you at dinner to gush. But they also want to take all your stuff for nothing, they don't want to pay, they don't feel they have to support the artists to get anything.
      
      Those "fans" aren't fans... they are just leeches.
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      - Killer_Tofu (profile), 6 Jul 2011 @ 10:59am
        
        Re: Re: Re: Re: I Blame the Artists
        Those "fans" aren't fans... they are just leeches.
        
        In that case you need to A) Focus on turning them into fans, or B) Stop worrying about them.
        Forcing them to pay won't work because they wouldn't pay.
        It makes perfect logical sense, which is why the labels won't listen to it.
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      - BeeAitch (profile), 6 Jul 2011 @ 11:04am
        
        Re: Re: Re: Re: I Blame the Artists
        Again with the reading comprehension difficulties?
        
        Treat your fans like shit and they will not pay you money.
        
        Treat your fans with respect and they will pay you.
        
        It's been proven on this site time and again. If you can't comprehend what is written here, we can't help you.
        
        Go take a remedial reading comprehension course and come back.
        (Or better yet, find a job that doesn't require you to lie to get paid, shill.)
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        Anonymous Coward, 6 Jul 2011 @ 12:01pm
        
        Re: Re: Re: Re: Re: I Blame the Artists
        No reading problems.
        
        Treat your fans with respect, and they turn around and treat your work like shit. They take copies, they give them away, and they don't intend to ever support you.
        
        The lack of respect for artists is huge. It's incredibly disappointing.
        
        Perhaps you might want to read what I post (as opposed to what you wish I posted) and then you might understand my views.
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        Anonymous Coward, 6 Jul 2011 @ 12:19pm
        
        Re: Re: Re: Re: Re: Re: I Blame the Artists
        I illegally downloaded the HBO series Game of Thrones from the Internet even though it's offered through the same pipe via cable to my household. I enjoyed it so much I illegally downloaded the book.
        
        Then I went out and purchased them, all of them, all four books. George R. R. Martin has made a fan for life through his work even though I "stole" from him and then gave him my money.
        
        It's an ecosystem but keep treating it like it's not.
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        Anonymous Coward, 6 Jul 2011 @ 2:25pm
        
        Re: Re: Re: Re: Re: Re: I Blame the Artists
        "The lack of respect for artists is huge. It's incredibly disappointing."
        
        that's what i think everytime i think of the MAFIAA
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        The eejit (profile), 6 Jul 2011 @ 3:12pm
        
        Re: Re: Re: Re: Re: Re: I Blame the Artists
        But they also want to take all your stuff for nothing, they don't want to pay, they don't feel they have to support the artists to get anything.
        
        That's what you posted. And yet, there are examples, time and time again, that say that you are at least partially incorrect. Jamendo, for one. Artists can actually make a living from Jamendo - Granted, it won't be the kind of living Keith Richards did, but it will be doable.
        
        Jamendo has both CC and pay-for music. And yet, it still doe a decent job of promoting people, considering it has almost no pull with radio stations.
        
        Perhaps you might want to read what I post (as opposed to what you wish I posted) and then you might understand my views.
        
        I think he understood them well enough. I do, however, have a question: are you a 'failed' musician that was signed to a major label?
        [ link to this | view in chronology ]
        
        BeeAitch (profile), 7 Jul 2011 @ 1:23pm
        
        Re: Re: Re: Re: Re: Re: I Blame the Artists
        My statement:
        "Again with the reading comprehension difficulties?"
        
        Your reply:
        "No reading problems."
        
        Thanks for proving my point, you fucking idiot.
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  - RadialSkid (profile), 6 Jul 2011 @ 8:51pm
    
    Re: Re: I Blame the Artists
    because the fans want it for free.
    
    That's because the market dictates the cost, you selfish, entitled whiner. Supply the people what they want, or stay out of the way and let others do it.
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