Amid reports that Spain's former King Juan Carlos I wants to return to his homeland from his self-imposed exile due to corruption allegations, a new scandal has hit the royal family.

Iñaki Urdangarin, who is married to King Felipe VI's sister Infanta Cristina, was photographed holding hands with another woman. A picture published by Spanish magazine Lecturas on Wednesday showed the former handball player on a walk with the woman, who is allegedly an unnamed co-worker of his at the Imaz & Asociados law firm.

Urdangarin was photographed with the woman in France, while his wife was in Switzerland with their children. Speaking to the press after the pictures were released, he said that "things happen" and the family would manage the situation "in the best possible way" with "the utmost calm and together as always." Meanwhile, a report in Hola! magazine claimed that the controversial picture might have shocked the public but it did not come as a surprise to his wife.

The 54-year-old has been married to Infanta Cristina since 1997 and shares four children with her. A source said that the couple might have spent Christmas together, but Infanta Cristina "already knew" about the relationship between him and the woman.

Meanwhile, the couple's second child Pablo, 21, told the local press, "We are all going to love each other the same."

Urdangrin had previously gotten the royal family embroiled in controversy in 2011 when he was accused of diverting public funds through his non-profit organisation, the Noos Institute. The Anticorruption Bureau confirmed that he had been sending substantial sums of public money to accounts in Belize and in the UK.

He was sentenced to six years and three months in prison in 2017 for embezzlement and money laundering in excess of £4.5 million through the charity. He appealed the ruling and the sentence was reduced to five years and ten months of imprisonment in 2018.

However, he was granted permission to move to the Grade 3 Spanish prison regime in 2020, which meant he regained his freedom of movement and would only need to report to prison once a week.

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Princess Cristina at her wedding to Inaki Urdangarin in 1997. Reuters