Sep. 21, 2015

Four Prominent Chilean Politicians Are Charged With Tax Fraud

  • Labels: Audit , Fraud , Risk Mapping , SAP
     

    SANTIAGO, Chile — Four prominent opposition politicians and members of Chile’s Congress were charged Monday with tax fraud in a high-profile corruption case related to illegal campaign financing.

    These are the first politicians to appear before a court as prosecutors unravel a vast system in which the financial holding firm Penta and the mining giant SQM, among other companies, appear to have illegally channeled campaign funds to dozens of candidates across the political divide over the past decade.

    Prosecutors accused the four — Senator Iván Moreira; Congressman Felipe de Mussy; Jovino Novoa, a former senator and official in Gen. Augusto Pinochet’s dictatorship; and Pablo Zalaquett, a former mayor in Santiago — of using trusted individuals and firms as intermediaries to issue false invoices to these companies in order to obtain funds for their campaigns. They are all members of the right-wing opposition party Independent Democratic Union, known as U.D.I.

    Judge Juan Carlos Valdés ordered Mr. Zalaquett under partial house arrest during the investigation, and though prosecutors requested house arrest for Mr. Novoa, he was rushed out of the courtroom and into a clinic after a sudden drop in his blood pressure. Judge Valdés will decide the matter on July 6.

    Mr. Moreira and Mr. de Mussy have parliamentary immunity, which the Supreme Court may eventually revoke as the investigation continues.

    The national prosecutor, Sabas Chahuán, showed evidence Monday that Mr. Novoa had instructed his secretary and the U.D.I.’s former chief of communications to issue false invoices to Penta.

    Another prosecutor, Carlos Gajardo, charged that Mr. Zalaquett had had two companies issue false invoices to eight firms to finance his 2013 failed candidacy to the Senate. “They include a variety of companies: from banks to large retail stores, real estate companies, SQM, and smaller companies,” he said. SQM refers to Sociedad Química y Minera, a Chilean chemical company.

    A fifth politician, Alberto Cardemil, a former congressman for the rightist party Renovación Nacional who served as undersecretary of the Interior Ministry under General Pinochet, was expected to be charged Monday, but his hearing was postponed so his lawyers could assess new charges filed late last week.

    The sweeping investigation began with an anonymous tip to the Chilean tax authorities last August that led prosecutors to conclude that Penta was illegally financing U.D.I. candidates and evading taxes in the process. Within months, investigators revealed a widespread system involving a broad array of companies and used by most of the political establishment, including the two main opposition parties on the right and the center-left New Majority coalition now in power, with the exception of the Communist Party.

    In March, a court charged Penta owners and executives, members of Chile’s Internal Revenue Service and a former government official with tax fraud, bribery and money laundering. Four of the 10 men were taken into custody but were eventually released pending trials.