MADRID (AFP) - A key suspect has accused Spanish King Felipe VI's brother-in-law Inaki Urdangarin of embezzling public funds, according to written testimony submitted by the prosecutor Thursday.

Accountant Marco-Antonio Tejeiro, a fellow suspect in the fraud case facing Urdangarin, offered the first direct evidence against the 46-year-old husband of Felipe's sister, Princess Cristina.

The scandal, subject of a four-year investigation by a judge in Palma de Mallorca, soured the reign of former King Juan Carlos, who tearfully handed the crown to his son last month.

Felipe, 46, took the throne on June 19 promising an "honest and transparent" monarchy.

Now he has to deal with the scandal's fallout, including the threat of his 49-year-old sister Cristina facing an unprecedented criminal trial on related tax fraud and money-laundering charges.

Urdangarin, a former Olympic handball player, is accused along with a former business partner, Diego Torres, of creaming off six million euros ($8 million) in public funds from contracts awarded to Noos, a supposedly non-profit foundation.

Noos's former accountant Tejeiro, who is to receive a lighter sentence for cooperating with prosecutors, according to a court source, alleged systematic fraud by the two men.

"The profit that should have been pooled within the Noos Institute was not used for the ends and means of the association but was transmitted to the private companies of Messrs. Torres and Urdangarin," Tejeiro said in the testimony, a copy of which was obtained by AFP.

Noos issued false bills to regional governments that served only to allow Torres and Urdangarin to "share out the profits" and divert them into their own companies, he said.

Further, the accountant said he knew of "simulated" employee contracts in Noos and a related firm Aizoon, accusing the two men of pocketing the money supposedly used to pay those wages.

But he did not implicate Princess Cristina, underscoring that Torres and Urdangarin "led the group as its bosses, having absolute control and decision-making power over it".

Cristina on Wednesday appealed against the tax fraud and money-laundering charges she faces.

Lawyers for the princess are seeking to overturn a June 25 ruling by investigating judge Jose Castro, which upheld charges against her related to Urdangarin's business dealings.

The ruling is a penultimate step towards a possible trial.

"Not one procedure has been carried out that has provided rational indications that a tax crime or money-laundering was committed by our client," Cristina's lawyers wrote.

The prosecutor, too, has appealed against the judge's decision to charge the princess.

Questioned in court by Castro in February, Cristina, a mother of four with a master's degree from New York University, said she had simply trusted her husband and had no knowledge of his business affairs.

Urdangarin and Cristina have been excluded from royal activities since 2011.