Unlike Argentina where the Pandora Papers claims of financial impropriety have impacted both sides of the political divide, in Chile it is President Sebastián Piñera, on the right of the political spectrum, who looks likely to be hit hardest.
The worst-case scenario for President Piñera is that the Pandora Papers revelations will lead to his impeachment. In fact, on 5 October opposition members of the lower chamber of congress said they were preparing a formal impeachment request.
Camila Rojas, a deputy from the left-wing Frente Amplio (FA), said she believed Pandora Papers revelations were sufficient grounds to impeach Piñera for violating the principle of probity (Article 8 of the Constitution) and for “compromising the honour of the nation”. Another FA deputy, Jaime Naranjo, said formal impeachment papers could be filed next week. Democracia Cristiana (DC) deputies were considering supporting impeachment or a phased escalation of initiatives starting with a commission of enquiry.
In fact, impeachment looks unlikely. Presidential elections are due next month. Piñera is not a candidate, and he has only five months left in office. A simple majority of votes is needed for the lower chamber to trigger impeachment hearings in the senate. Nevertheless, in November 2019 an earlier attempt to impeach Piñera, on the grounds that his government was responsible for major human rights violations during that year’s wave of street protests, failed to prosper.
Taking all these elements into consideration, and particularly given the proximity of elections, it is hard to see impeachment succeeding in this late-in-the-day second attempt. However, for some parties there may still be political and electoral capital to be had from simply initiating the process. Just talking about impeaching Piñera can be a device to weaken the electoral appeal of Sebastián Sichel, the candidate he and the ruling right-of-centre Chile Vamos coalition supports.
- Left responds
Gabriel Boric, the current frontrunner in the presidential elections standing for the left-wing Apruebo Dignidad coalition, described the revelations as “extremely serious” because they showed, he said, that President Piñera was using offshore operations to evade taxes and putting his family interests above those of the nation. Yasna Provoste, the left-of-centre candidate from Democracia Cristiana (DC), accused the government of failing to protect the environment.
Central to the accusations against Piñera are a series of transactions concerning Minera Dominga, a copper and iron ore mine. The Pandora Papers leaks show that Carlos Alberto Délano, a businessman and personal friend of the president, bought out minority shareholders in the mining company, including those held by Piñera and members of his family, for US$152m in 2020. The largest part of the transaction (US$138m) was conducted offshore through companies registered in the British Virgin Islands (BVI). Payment was to be made in three instalments, with the last conditional on the mine and an associated port receiving environmental approval.
The project, which had failed to obtain environmental approvals during the second centre-left presidency of Michelle Bachelet (2014-2018), did however get a green light in August this year. Environmentalists say developing the mine could harm a nearby nature reserve considered a biodiversity ‘hotspot’ and a unique habitat for 80% of the world population of Humboldt penguins. Critics of the presidency therefore say there are many unanswered questions, including the possibility that the transaction was structured in the BVI so as to evade taxes, and the suspicion that there was a direct conflict of interest, with undue influence being exerted by Piñera on the environmental approvals process.
Piñera has denied any wrongdoing in the transaction and sought to rebut criticism. In a statement Piñera, one of the country’s richest businessmen, said he was not involved since he had ceased all business activities 12 years ago when he went into politics, placing his business assets into a blind trust. He also said there was nothing new in the Pandora allegations concerning Minera Dominga, since there had been an investigation by a Chilean state prosecutor in 2017, eventually dismissed for lack of evidence.
A separate release of data from the International Consortium of Investigative Journalists (ICIR) also claims to show that Piñera transferred a number of his substantial business interests to his four sons as a way of avoiding conflict of interest claims. This was done offshore in the BVI and involved holdings in credit card company Transbank, airline LAN (now known as Latam), and TV channel Chilevisión. What was not clear was whether these donations to his children attracted the 25% inheritance tax liability required under Chilean legislation.
Right responds
The two right-wing candidates, both ideologically close to President Piñera, took distance. Sebastián Sichel, the candidate of the ruling Chile Vamos coalition, called for “total transparency” and for Piñera to “give all explanations necessary”. José Antonio Kast, of the far-right Partido Republicano (PR), called for “an urgent investigation to determine responsibilities”.
Cartes modifies statement of assets
Paraguay’s former President Horacio Cartes (2013-2018), who remains politically active, is also mentioned in the Pandora Papers as onetime owner of Panama-based offshore companies. Cartes admitted he had failed to declare those assets during his presidency, but, according to his lawyers, corrected the oversight as of 30 September.
Paraguayan legislation requires the president and other public officials to make sworn statements of assets at the beginning and end of their terms in office. As a result of the Pandora Papers revelations, lawyers for Cartes have admitted he failed to declare various offshore companies in Panama, controlled by himself and his family. They said he had amended the record on 30 September, only a few days before the ICIR published its findings.
One of the companies, Dominicana Acquisitions SA, was linked to Cartes and his children. Lawyers for Cartes said the firm had been acquired in 2011, just before he began his campaign for the presidency, and was eventually used to buy a department in Miami (valued at US$1m), before being wound up. The lawyers stressed that using an offshore company to purchase overseas property remains legal under Paraguayan law.
Apart from his ongoing political activity, Cartes is also a prominent businessman in Paraguay, with interests in tobacco production and banking. He has in the past been accused of money laundering. In 2011, according to intercepts obtained by Wikileaks, there were claims that he was being investigated by the US Drug Enforcement Administration (DEA). In 2019 Brazilian prosecutors issued a warrant for his arrest as part of a money-laundering investigation.