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Chile: 8 Political Parties Accused of Using State Corporation as Private Piggy Bank

Politicians of all political stripes in Chile are facing an investigation into misuse of state corporate funding, which has, so far, incriminated eight political parties, a scandal overshadowed only by the alleged billions stolen from a state-run corporation in neighboring Brazil.

Bloomberg compares Chile’s developing corruption scandal with the Petrobras money laundering investigation in Brazil, calling the funds involved in the former “a pittance compared with those in Brazil,” but nonetheless, a significant challenge to institutional trust in Chile. The wealthiest nation in Latin America due to decades of free-market policies, prosecutors are probing the improper acceptance and use of funds from Soc. Quimica & Minera de Chile SA (SQM), a fertilizer corporation.

“No one has accused [President Michelle] Bachelet herself of involvement but the scandal is so widespread that eight of Chile’s largest political parties have been linked to it,” Bloomberg notes.

While not directly implicated, Bachelet’s daughter-in-law Natalia Compagnon was arrested on tax evasion charges in an unrelated corruption case in January.

Assistants to the president have been accused of using SQM funds for financing campaigns or for personal benefits. But unlike Brazil, where the ruling leftist Workers’ Party stands accused of a billion-dollar kickback scheme using the state-owned oil corporation Petrobras, Chile’s leftists are not alone in being targeted.

The most prominent proof of this is the testimony provided in the corruption case by Sebastián Piñera, Bachelet’s predecessor and a free-market conservative, on Tuesday. Piñera was called to testify after Pablo Longueira, his former economic minister, was accused of accepting illegal SQM money in exchange for promoting a law favorable to the interests of the company.

“I made formal contact with the regional prosecutor in charge of the investigation,” Piñera explained after testifying Tuesday. “I offered my collaboration voluntarily, which was accepted favorably and given this morning in my residence.”

While Bachelet’s approval ratings plummet, Piñera’s decision to voluntarily aid the investigation has received praise. “I think it is a very good thing for Chile to get used to leaders who show their face and take initiative,” the legislative leader of the National Renovation (RN) Party, Nicolás Monckeberg, said Tuesday. Piñera is also a member of RN.

Despite the bipartisan nature of the investigation, the prosecutor in charge of the case, Carmen Gloria Segura, has come under fire for allegedly working with political motivations. Segura issued a statement denying any partisanship in her work. “We, as prosecuting attorneys, are not looking at the investigation from a political point of view,” she said. “There is no political slant within the investigation and we cannot have one, either.”

From accusations of political witch-hunting to the involvement of former presidents, the Chilean and Brazilian cases have much in common. Beyond appearances, however, the wider web of corruption in Chile has trapped many Brazilians firms. In addition to the investigation into SQM, prosecutors are looking at other acceptances of illegal funds through other corporations – and half of them are Brazilian. Most are construction and energy corporations, directly linking former Brazilian Energy Minister Dilma Rousseff – now the president – to more corruption.

While Rousseff is not facing charges, her predecessor Luiz Inacio Lula da Silva was. Unlike Piñera, he had to be detained and brought to law enforcement authorities to testify. More than three million Brazilians took to the streets of Rio de Janeiro, Sao Paulo, and forty other cities following his arrest to call for Rousseff to resign. Instead, Rousseff appointed da Silva as her chief of staff, granting him executive immunity and protecting him from being prosecuted in the case. Audio evidence has surfaced that Rousseff appointed him explicitly to protect him from prosecution. Rousseff has vowed “never” to resign from the presidency.

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