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Former Spanish Diplomat Jailed In Money Smuggling Scheme

February 6, 1985

MADRID, Spain (AP) _ A retired Spanish diplomat entered Madrid’s Carabanchel Prison on Wednesday after a judge questioned him about a money smuggling scheme.

Police sources confirmed that Judge Luis Lerga questioned Francisco Palazon, 55, but said Lerga had ordered the investigation kept secret and they did not know if he had brought charges against Palazon. Spaniards can be jailed by a judge pending charges and trial.

Lerga said in a statement that as much as 2 billion pesetas ($11 million) may have been illegaly taken from the country. He said four people - attorney Eduardo Garcia de Enterria, 61, and his wife; Count Juan Antonio Gamazo; and Carlos Varela Dopazo - were under investigation but free on bail.

De Enterria was a consultant on political matters to Spain’s former dictator, Gen. Francisco Franco, and last year received a coveted social science award from King Juan Carlos.

News reports said authorities arrested Palazon at Madrid airport several days ago as he was about to fly to Geneva, where he was consul general from 1975-81 and still maintains a residence. Legal sources also said Palazon was carrying Spanish currency, but did not say how much or when he was arrested.

Spaniards are allowed to take a maximum of 200,000 pesetas ($1,175) on each trip abroad. Offenses are punishable by up to 12 years in prison.

The Spanish news agency EFE said Palazon was suspected of hiring ″clients″ to smuggle money to Switzerland and possibly Andorra, the tiny nation between Spain and France.It said at least 18 people were involved.

News reports also linked Princess Maria Teresa de Baviera, 42, a second cousin of the king. She told the Madrid radio station Cadena Ser on Wednesday that she had known Palazon for a long time but had never smuggled money abroad.

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