Justice and corruption in Chile: Illegal loans, political favoritism and fatal hit-and-runs
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Justice and corruption in Chile: Illegal loans, political favoritism and fatal hit-and-runs

Amid the scandals surrounding certain politicians and business owners in Chile, the newly elected president of the Supreme Court, Sergio Muñoz, inaugurated the judicial year with a speech about equality before the law and the responsibility that institutions have to guarantee it. Muñoz also promised a “new justice” for Chileans.

“The country has a pending task in regard to equality and, as judges, it is our responsibility to materialize this right in each and every decision,” Muñoz said.

“A congressman or -woman accused of a criminal charge will have to accept the reality of the due process in equal conditions, like any other citizen of the Republic … without benefits and privileges,” he added.

But relying on the legislative and judicial system to do their job while remaining impartial feels like wishful thinking, at least in Chile.

Even before Augusto Pinochet’s military dictatorship changed all the constitutional rules, impunity reigned for the rich and powerful. In 1868, President Manuel Montt bailed out a nephew charged with murder, and patronage has been the foundation of Chile’s political system since colonial times. It seems as though justice has always worked a lo compadre (between buddies) in Chile.

Read more: Penta, SQM, Dávalos: The continuing controversy of Chile’s never-ending political scandals

As famous lawyer and professor Eduardo Novoa Monreal wrote in 1970:

“Justice acts in favor of the dominant class, who interprets and exercises the law favoring the social groups that benefit from the current socio economic regime in detriment of the workers, who make up the majority of the country.”

A crisis of confidence

Forty-five years later, Chile is facing probably one of the biggest institutional crises of its history as a nation. A survey conducted by Desarrollo y Libertad on perception of corruption among business owners and executives found that 69 percent of respondents think that corruption will be worse in the future. Even worse, 40 percent have witnessed acts of corruption themselves.

Another survey on the perception of corruption among civil society shows that 76 percent of Chileans have a very low opinion of their politicians. Contributing to the public opinion problem, local newspaper The Clinic reported that 84 judges have been penalized for sexual harassment, getting into fist fights, lying or drunk driving since 2009.

In Chile, the use of public resources to gain personal privileges is as institutionalized as institutions themselves.

Here are just a few examples of how the rich and the powerful find ways to cheat the system:

Illegal campaign contributions: Carlos Alberto Délano and Carlos Eugenio Lavín

In August 2014 an anonymous letter was sent to Chile’s tax authority suggesting it investigate an employee, Iván Álvarez, regarding a possible tax fraud scheme. Álvarez helped several clients commit tax fraud by modifying their accounting. During the investigation authorities uncovered the name Hugo Bravo, former director of Penta, one of the biggest holdings in Chile. Investigators also found that the heads of Penta, Carlos Alberto Délano and Carlos Eugenio Lavín, were making illegal campaign donations to several right-wing Independent Democratic Union (UDI) politicians such as Ena von Baer, Laurence Golborne Jovino Novoa and Iván Moreira.

The district attorney released a series of emails written by UDI politicians begging Lavín and Délano for money to fund their political campaigns. A private conversation between Bravo and Lavín also confirmed ties between them.

At the beginning of 2015, 10 people involved in the ‘Pentagate’ scandal had their first hearing. The judge requested preventive detention for six of the accused – among them Lavín and Délano – until the day of the trial.

Both are currently being held at the Anexo Captián Yáber penitentiary and face up to 15 years in prison if found guilty.

Impunity: Martín Larraín

On the morning of September 18, 2013, Martín Larraín — son of right-wing Deputy Carlos Larraín — and two of his friends, Sofía Gaete and Sebastián Edwards, were part of a deadly hit-and-run. The three friends were leaving a party in the southern town of Curanipe when Larraín ran over Hernán Canales with his Land Cruiser. He fled the scene, while his friends went to the police to report the accident. Larraín admitted, but then denied, having had drinks before getting in the car.

Both Edwards and Gaete told local authorities that Larraín was not the perpetrator. Larraín contradicted them, saying Gaete told him to flee the scene due to the “public nature” of his family name.

The contradicting stories of the three accused, the ambiguous evidence and the fact that Larraín did not take an alcohol test right after the incident led judges to sentence him to 540 days of parole and withhold his drivers license for two years.

Unsatisfied with the verdict, the district attorney requested a second hearing to ask for a higher sentence. Instead, the judges acquitted Larraín of any criminal charges.

Ironically, during the second hearing, Larraín’s friends were charged with obstruction and sentenced to 61 days of parole and a fine.

Larraín himself will probably never see the inside of a cell since, in Chile, if the accused is acquitted during the second hearing, it is extremely difficult — if not impossible — to appeal.

Canales’ family is seeking to take the case to international courts.     

Influence peddling: Sebastián Dávalos

The latest case of influence peddling in Chile is the multi-million-dollar loan granted to Bachelet’s son Sebatián Dávalos, through his wife’s company, to buy property in 2013, during the presidential campaigns.

Caval Limited, owned by Davalos’ wife Natalia Compagnon and Mauricio Valero, was looking to seal a real-estate deal on 44 hectares of land in Machalí, a region that is currently experiencing a business boom. Although the land-use planning stipulated that the terrain was for rural use only, Caval bet on an upcoming change in regulation that would permit urban use of the property, allowing the company to resell the hectares at a profit. Dávalos was acting as project manager at the time.

Since the small enterprise did not have the $10 million requested for the land, Dávalos and his wife held a private meeting with the vice president of one of the biggest banks in Chile, Andrónico Luksic. Luksic gave the company the loan, no questions asked. Caval then sold the land to another company for $14.8 million, making a profit of approximately $3.9 million. This lead to allegations accusing Dávalos of using his social position as “the President’s son” to secure the loan.

Read more: Bachelet’s government shaken to its ideological core amid ‘Nueragate’ loan scandal

An investigation is now being conducted at the request of several right-wing Deputies who think that the loan might have violatd the law. The company that bought the land is also suing Caval for fraud.

Dávalos was last seen enjoying himself at Lollapalooza Chile, watching Molotov’s show from the side of the stage. No one knows — or wants to take responsibility — for how he got the VIP pass.

This network of corruption is a common practice not only in Chile but in many other, if not all, countries in Latin America and around the world. Although citizens may be fed up, these cases suggest that corruption among elites won’t be ending anytime soon.

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