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Tell me another: one more chapter in Argentina’s recent history

Former president Cristina Fernández de Kirchner.
Former president Cristina Fernández de Kirchner.
Former president Cristina Fernández de Kirchner.
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From President Macri to the Kirchners and going back even further, conflicts of interest have been par for the course for recent national governments

As accusations of conflicts of interest mount up against President Mauricio Macri’s administration, it should not escape observers that this is just one chapter, the latest one, in the country’s long history. The national government is not the only one who had officials entwined in irregular relations with the private sector.

The first Baring Brothers loan to Argentina in 1824 was already controversial and the word “corruption” was widely used to justify the Revolution of 1890 preceding the creation of the Radical party. But perhaps the first specific case of corruption was the “meat-packing scandal” exposed by Progressive Democrat Senator Lisandro de la Torre in 1935 — when Anglo meat-packers already favoured by the Roca-Runciman pact of 1933 were accused of tax evasion condoned by bribed government officials.

When Juan Domingo Perón came to power in 1946, he ended up nationalising corruption like many other things. Quite apart from deliberate corruption, it was also involuntarily advanced via at least two major structural changes.

Firstly, Perón hugely expanded the role of the state and public spending, including public works which gave birth to the “contractual fatherland.” Secondly, he made trade unionism the “spine” of his movement, thus starting a long line of shady labour bosses who continue to this day. Both these phenomena persisted throughout the alternation of military and civilian governments between 1930 and 1983.

But nothing equals the last dictatorship that ruled the era of state terrorism. The exponential growth of the foreign debt and the dilution of barriers between private business and the state ones opened the doors to a systematic corruption scheme that trapped the following democracy.

Stretching back from President Macri through the Kirchners, the neo-conservative Peronist Carlos Menem and centre-right Radical leader Fernando de la Rúa and right back to the very beginnings of the country, government officials’ business relations to major businesses have always been questioned. But whether a conflict of interest turns into a corruption case depends upon whether the media, independent government institutions, and finally the judiciary are allowed to investigate.

“Argentina’s corruption problem is linked to the weak institutions. Latin American countries don’t have control mechanisms that function rapidly, like in North America when they act quickly when they detect possible cases of corruption,” the Herald was told by Poder Ciudadano (Citizen Power) Justice and Action director Germán Emanuele, an organisation that promotes transparency in government policy.

The Kirchners

During former president Néstor Kirchner’s administration, six corruption cases were opened by courts. The number increased in the succeeding administration of Cristina Fernández de Kirchner to 18 cases in her first term, and 28 cases in the second term. And an estimated eight additional corruption cases were opened last year in 2016, according to the La Nación daily. However, the complaints issued before the courts were hundreds since 2003.

The most notorious conflict of interest investigations are the Hotesur and Los Sauces cases involving alleged money-laundering and embezzlement.

The Hotesur scandal is linked to the firm owned by the Kirchner family that administers and owns several hotels, including the Alto Calafate. This hotel was at the centre of an alleged corruption scheme after it was discovered that hundreds of unoccupied rooms had been rented to the Kirchner family’s business associate Lázaro Báez for months, at the same time that he was being granted millions of dollars of public works projects in Santa Cruz province which the former Kirchnerite government officials would sign off on.

Báez, who has been remanded in custody for almost a year now, was recently confirmed to have supplied more than 50 percent of the revenue earned by the Alto Calafate hotel, allowing the Kirchner family to make millions of dollars. At the end of last year, Judge Claudio Bonadio, who is leading the Hotesur investigation and is well-known for his animosity against the former president, slapped a multi-million-dollar lien on her assets.

The other well-known case is the investigation into the Los Sauces SA firm, which is owned by Fernández de Kirchner and her children Máximo and Florencia Kirchner. The Los Sauces firm administers, purchases, sells and rents out properties. Its two main clients happen to be Báez and Cristóbal López, the head of the Indalo Group which majority owns the Herald.

López rented the properties administered by Los Sauces via their Inversora M&S and Alcalis de la Patagonia companies, and denies any wrongdoing as the contracts were valued at market prices.

Fernández de Kirchner is reported to have been transferred 20.7 million pesos in dividends during that period.

Prosecutors says there were various irregularities found in the transactions made in Los Sauces, specifically between 2009 and 2013. For example, in 2009 the account at the end of each month was always in the red.

While many transfers for millions of pesos had no justification, they allegedly would rotate between other companies owned by the Kirchners and their partners but mainly going to companies owned by the businessmen who primarily benefitted from the public works projects.

The Hotesur case is being investigated by while Federal Judge Julián Ercolini while the Los Sauces case was opened by Claudio Bonadio. Fernández de Kirchner and other defendants claims that both accusations are based on the same issue and accused Bonadio — a fierce enemy of the former president — of replicating the lawsuit as he had lost the Hotesur case due to irregularities in the judicial proceeding.

“Argentina goes between two extremes, the capture by the state, in which private companies pay government officials fees or a return of their profits for state contracts, or kleptocracy when government officials earn the majority of their income via satellite companies,” Natalia Volosin, a legal expert who is doing her PhD in Yale examining corruption within private-public partnerships told the Herald this week.

There are even decades-old cases which are ongoing investigations of conflicts of interest from presidents who haven’t been in power for over 20 years.

Menem, De la Rúa

In recent decades, former Peronist president Carlos Saúl Menem became notorious for massive conflicts of interest and corruption cases. Despite being convicted, Menem (who will turn 87 in July) continues enjoying Congressional immunity as a senator.

In 2015, he was sentenced to four years in prison for permitting the embezzlement of public funds used to pay bonus salaries to officials in his administration, including his former economy minister Domingo Cavallo. This came out of an estimated US$466 million set aside to allegedly pay the former SIDE Intelligence agency but which was really used for ministers and other government employees.

Menem was also sentenced to seven years for ordering gun-running operations of arms to belligerent states Croatia and Ecuador, violating international arms embargoes.

His successor as president, Fernando de la Rúa spent only two years in office, a short term that, however, allowed him to bribe ruling party an opposition senators to pass a labour reform, an institutional scandal which weakened his administration in the middle of the worst economic crisis in decades. As the controversial right wing CGT White and Blue labour union leader Luis Barrionuevo once answered when told that government officials were stealing two billion pesos annually from the state: “We need to stop robbing for two years,” to fix the government’s problems.

— Herald staff

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