Two Chilean Lawmakers Face Charges in Political Funding Scandal

Two Chilean lawmakers are likely to be charged Monday in a campaign funding scandal that threatens to engulf politicians from all sides of the political spectrum.

A judge is expected to charge opposition Senator Ivan Moreira and Deputy Felipe de Mussy with using fake receipts to obtain funds from Banco Penta at a hearing in Santiago. Both lawmakers enjoy parliamentary immunity.

Allegations of irregular funding have already cost the jobs of two government ministers and threaten to lead to the prosecution of a leading fundraiser for the ruling alliance and President Michelle Bachelet. Finance Minister Rodrigo Valdes has said the scandals are undermining business confidence and fueling a two-year drop in investment. It could get worse.

“We don’t know if this is just the beginning or if the investigation is winding down,” said Patricio Navia, assistant professor at New York University’s Center for Latin American and Caribbean Studies.

Among other politicians likely to be charged Monday are the former mayor of Santiago, Pablo Zalaquett, ex deputy Alberto Cardemil and a former leader of the opposition Union of Democratic Independents, Jovino Novoa.

Lawmakers from both chambers of the Congress have said they will make a mea culpa, apologizing to the nation for the funding scandals that have undermined investor trust in politicians and pushed Bachelet’s approval rating to a record low.

Not Impressed

Navia was not impressed by the prospect of an apology.

“Most legislators had plenty of time to come forward and volunteer the information on their involvement with irregular campaign funding,” Navia said in an e-mailed reply to questions. “Yet, they all kept quiet and only apologized when they were finally exposed. They missed the opportunity to redeem their wrongdoings.”

Bachelet removed the Interior Minister Rodrigo Penailillo in May after it was revealed he received payments from companies for advisory work, allegedly to help finance the ruling alliance’s election campaign.

Not all the funding went to campaigns though. Jorge Insunza, the minister responsible for relations with the Congress, resigned June 7 after only four weeks in the post, saying that he had received payments from mining company Antofagasta Minerals while he was a deputy in Congress. He denied breaking the law.

Funding System

Chile’s funding system is in a mess, Navia said. It was legal for Insunza to receive funds from a company operating in his district while he was a lawmaker, but illegal for lawmakers to receive funds from anyone before the 90-day official campaign period.

“It is not hard to believe that politicians used irregular ways to fund their activities,” Navia said. To the contrary, “it makes all the sense in the world” given the current regulations, which the government has said it will change.

What happens now may depend on who replaces the national prosecutor Sabas Chahuan when he steps down in October at the end of his eight-year term.

“It seems unlikely that Bachelet will name and the Senate will ratify someone fully committed to continuing the investigation at all costs,” Navia said.

Chile needs to learn that election campaigns are expensive and begin long before the official period.

“The fact that Chileans did not want to accept that fact is responsible for the entire set of scandals triggered by political and campaign finance,” Navia said.