MADRID -- In the most serious espionage case yet uncovered in Spain, prosecutors have charged five members of Spanish military intelligence and a businessman of spying for the Cuban government.

The ring's activity involved secret meetings in Miami between the Spanish spies and their Cuban handlers, plus money laundering, industrial espionage and disseminating disinformation favorable to Cuba, court documents show.

Spanish intelligence chiefs became aware that something was wrong when efforts to track more than 100 suspected Cuban spies were stymied because microphones hidden in several offices and apartments around Madrid suddenly stopped working.

Certain suspects were also successfully evading surveillance squads and no longer discussing sensitive subjects in the usual places, a hint that Cuba was somehow learning a lot about Spain's spy-catchers.

``We were confronted with the first penetration of our . . . intelligence service since the East Germans tried it during the Cold War,'' said a Spanish intelligence officer who asked not to be identified.

The accused officials of Spain's military intelligence agency, the Center of Defense Information and Studies (CDIS), will not be publicly identified until they appear before a special security court later this week, but the identity of the businessman is known.

He is Jose Fernandez, an executive of several hotel and travel companies. He was denounced by a business partner, Fernando Molina, who lost money investing in Cuba, according to published reports.

Scandal surfaced

The scandal was broken last month by the Madrid newspaper La Razon and has heightened sensitivities surrounding King Juan Carlos' first visit to Havana, tentatively scheduled for March.

According to court records and intelligence sources, Cuba's main overseas spy agency, the Ministry of the Interior's Directorate of Intelligence (DI) managed to infiltrate the CDIS through an officer identified so far only by his first name, Luis.

Spokesmen for CDIS confirm that he held military rank and a position in the agency's spy-catching counterintelligence section, code-named IB-4, when he was recruited by the Cubans several years ago.

Another CDIS employee described as a civilian technical specialist was also spying for Cuba, according to official sources who maintain that he has signed a confession and has been suspended from the service.

Three other CDIS officials are being charged with helping Fernandez carry out his intelligence work for the Cubans, according to court records.

Base was moved

Cuba's Intelligence Directorate moved its main European base to Madrid in the early 1990s, after its previous base in Prague came under increased monitoring by pro-American Czech intelligence, U.S. officials said.

CDIS officials believe Luis was approached by female Cuban agents in Madrid in 1991, before he was sent to Havana briefly as part of a special contingent when the Spanish Embassy became jammed with dissidents seeking political asylum.

It was then that CDIS believes their officer was ``doubled.'' His reports were filled with recommendations for giving in to Cuban government demands for the return of the dissidents, and warnings of an imminent raid on the embassy by elite Cuban troops that never took place.

Spanish officials said Luis has since spied on Spain's military integration with NATO, the private lives of leading officials, and special operations units and electronic warfare capabilities, including a type of aircraft acquired from the United States that could be used against Cuba.

According to CDIS sources, Luis came under suspicion after a series of visits to Miami, where he regularly contacted some companies believed to be used as fronts by Cuban intelligence.

The Miami connection

``Miami was an important exchange and debriefing station for DI operations in Spain as it was considered an area where someone from Spain could travel regularly without generating suspicion,'' according to a source in the Spanish Defense Ministry. Some companies used by Cuban intelligence are believed to have been set up with the assistance of Spanish businessmen working for the Cubans, according to the CDIS, but none have been publicly identified.

The accused spy, Jose Fernandez, helped to set up some DI fronts operating as travel agencies and other commercial enterprises in Florida, Madrid, London, Canada, Japan, Italy and Germany, according to recent Spanish media reports.

Court documents in the case identified one of the companies as Grupo Oasis, a tourism firm registered in Panama that lists its business address in Cancun, Mexico, and runs several beach resorts in Cuba.

Oasis has been linked to Spain's biggest corruption scandal, involving banker Mario Conde, currently jailed on embezzlement and fraud charges. Sources said Fernandez helped Conde funnel some $2 million to Cuba.

Cuban Tourism Minister Osmani Cienfuegos made a discreet weeklong visit last summer to the Spanish resort of Marbella, where he was the guest of the mayor, Jesus Gil, a real estate developer recently convicted on charges of embezzlement. Marbella city officials allege that Gil's deputies regularly carry large quantities of cash to Cuba in briefcases.

The spy scandal is the worst intelligence conflict between Madrid and Havana since Cuban agents tried to abduct a defecting Cuban diplomat from the streets of Madrid in 1986. That incident drew a diplomatic protest from the Socialist government of Felipe Gonzales.

CDIS officials insist that the Cuban spy ring caused no substantial or long-term damage to Spain and expressed confidence that the moles were caught ``at a relatively green state'' before gaining promotion to higher positions.

Cuban intelligence defectors also report that the cash-strapped Cuban economy is inhibiting its intelligence services.

``The Castro brothers now demand strict accounting of all money spent. This is demoralizing field operatives,'' one said.