Dávalos secured a Ch$6.5bn (US$10.4m) loan from the Banco de Chile for the small business Caval Limitada 50% owned by his wife Natalia Compagnon for the purpose of acquiring rural land in the municipality of Machalí in the south-central O’Higgins region. He did so after meeting the bank’s vice-president Andrónico Luksic, one of the wealthiest men in Chile who assumed the position last March. The timing of this meeting gives the worst possible impression: the loan was approved the very day after Bachelet won the presidential elections on 15 December 2013. The loan was granted on the grounds that the rural land would be re-zoned for urban use, but it was sold earlier this month to a developer for a net profit of Ch$3bn (US$4.8m).
Dávalos protested his innocence but he wasted little time in resigning on 13 February (shortly after the loan story broke) as head of a socio-cultural charitable foundation customarily run by Chile’s First Lady. Bachelet, a single mother, had appointed him to the position of ‘First Man’.
Survey setback
The latest weekly Cadem survey showed Bachelet’s approval rating down nine points on 31%, while her disapproval rating increased by eight points to 54%. The vast majority of respondents (79%) suspected that Dávalos had used privileged information to purchase the real estate in O’Higgins region and had benefited from influence peddling. As many as 60% felt Bachelet knew all about the loan and its use and 63% that it would undermine her credibility and affect her image.
The UDI gleefully seized on ‘nueragate’ (nuera: daughter-in-law) as it was swiftly baptised in the latest demonstration of the Chilean media’s obsession with dubbing any scandal ‘gate’. The UDI was recently seriously rattled by a ‘gate’ of its own: ‘Pentagate’, a campaign-finance scandal that broke last October [WR-14-42]. The sincerity of the party’s professed contrition over this scandal has been somewhat belied by its determination ever since to prove that parties within the ruling left-wing coalition Nueva Mayoría were every bit as guilty of campaign-finance irregularities as the UDI. Most recently it seized on ‘yachtgate’, revelations last January of a fundraising meal for the Nueva Mayoría aboard a luxury yacht in New York in September 2013 in the middle of the general election campaign [WR-15-03].
Bachelet breaks silence
Returning from a three-week holiday on 23 February, Bachelet spoke for the first time about the allegations against her son, saying that she had endured “painful moments” as “a mother and a president” since finding out about the matter through the press. This did not satisfy the UDI. The head of the party bloc in the lower chamber of congress, Felipe Ward, accused Bachelet of evasion and said the UDI would draw up a questionnaire for her by 3 March to ascertain whether she knew about the loan. Ward said her speech had failed to clear up doubts sufficiently.
On the surface ‘nueragate’ is much less serious than ‘Pentagate’. It does not involve elected politicians and it has far fewer legal implications, but the political repercussions could be far greater. It involves the President’s own son, and as such directly affects her image. It also damages her credibility. It will be much more difficult for her to sustain the campaign promise which swept her back to power - to create a meritocracy in Chile - when her own son appears to have enjoyed the sort of privileged access which would be a pipe dream for ordinary Chileans.
Boon for the UDI
The UDI will not benefit from the scandal in terms of public support: it might feel some vindication that the party was not alone in abusing the system, although from the public’s perspective the whole political class in Chile is tarnished. But where the UDI will benefit is in terms of the likely change in direction of the political debate.
The UDI ultimately lacks the power to block reforms as the Nueva Mayoría controls both chambers of congress but the upshot of ‘nueragate’ could be that Bachelet dilutes the more radical leftist reforms she plans to send to congress now. This is because the Nueva Mayoría’s centre-left Democracia Cristiana (DC) will feel emboldened to challenge anything too radical sent down from the La Moneda presidential palace.
The DC has made no secret of the fact it feels uncomfortable with the presence of the Partido Comunista de Chile (PCCh) in the coalition and the radical reforms it advocates. Meanwhile, the PCCh will itself rebel if it feels Bachelet has become more timid. Either way any future indiscipline in the ruling coalition in congress, where its majority is slim, can only benefit the UDI and its junior partner the centre-right Renovación Nacional (RN).
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