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By Teresa Larraz Mora
PALMA DE MALLORCA, Spain, Feb 8 (Reuters) - Spain's Princess Cristina gave testimony before a judge on Saturday in a corruption case that has deepened public anger over graft among the ruling class and discontent with the royal family.
Cristina, the younger daughter of King Juan Carlos, faces preliminary charges of tax fraud and money laundering linked to her use of funds from a shell company she co-owned with her husband Inaki Urdangarin, who is charged with crimes including embezzling 6 million euros of public money.
It is the first time since the monarchy was restored in 1975 after the Francisco Franco dictatorship that a member of the royal family has been summoned in a criminal proceeding.
The princess, 48, arrived at the courthouse shortly before 10 am (0900 GMT) to face dozens of questions from the judge in a closed-door hearing in Palma de Mallorca, capital of the Balearic Islands.
Urdangarin, a former Olympic handball player, is accused of using his royal connections to win generous no-bid contracts from the Balearic government to put on sports and marketing events during the boom years before a 2008 property market crash, when local governments were awash with cash.
He and his partners in a consulting firm called the Noos Institute are accused of overcharging, and of charging for services never provided.
The court gave the princess - accused of using Noos Institute proceeds to pay for items such as an expensive remodelling of her Barcelona mansion - special permission to be driven to the courthouse door, citing security reasons.
The decision sparked public outrage because it allowed the princess to dodge hundreds of television cameras and further heated a debate over whether she has been given favourable judicial treatment.
She was driven down the ramp and walked the last few steps to the courthouse, smiling at the press and dressed soberly in a white shirt and black jacket.
Spanish broadcasters have incessantly replayed footage of her grim-faced husband walking into court along a pedestrian ramp when he went before the judge last year.
"I'm a monarchist, but if they have done wrong they should return what they stole and be exposed just like the rest of us," said Angel Rodriguez, an 80-year-old pensioner passing by the court.
There were almost 400 reporters outside the court and around 200 police officers.
The scandal has run parallel to a prolonged slide in the popularity of the once-revered King Juan Carlos after a series of gaffes showed his high-flying lifestyle to be woefully out of step with a nation suffering economic hardship.
An opinion poll released last month put the king's popularity at a record low, with almost two thirds of Spaniards wanting him to abdicate and hand the crown to his son.
As Spain slowly shakes free of a prolonged economic and financial crisis, national and local governments are tightening their belts and judges are looking into hundreds of corruption cases from the easy-money years before 2008.
The multiple probes of top politicians, union leaders and bankers are being pushed by anti-graft groups, while state prosecutors balk at tackling politically sensitive cases.
That is the case with Judge Jose Castro's investigation of Princess Cristina. He has pursued the case spurred on by private anti-corruption groups and despite resistance from the state prosecutor, who has come out in defence of the princess.
After Saturday's hearing, Castro could formalise the charges and move to trial, or he could drop the charges or allow the princess to plea to lesser charges.
Many Spaniards think she will get off lightly.
"This is a country where there are no consequences for being corrupt. They get a free ride," said Maria Gomila, an 18-year-old student.
Dozens of civil servants demonstrated near the courthouse late on Friday against public spending cuts and "institutionalised corruption".
Castro brought the preliminary charges against the princess in January in a 227-page ruling. Last year he brought charges of aiding and abetting, only to have them thrown out by a higher court. The investigation began four years ago.
Both the princess and Urdangarin - who have not represented the Crown at official events since 2011 - have denied wrongdoing.
The princess has stuck by her husband, but last year moved with their four children to Switzerland to escape media attention. She works for a charitable foundation there.
More than 200 extra police officers were on hand in Palma de Mallorca in case of protests near the courthouse and road blocks were put up in the neighbourhood. (Additional reporting by Elisabeth O'Leary; Editing by Fiona Ortiz and Sonya Hepinstall)