Hidden-Vault Plans Trip Fernandez as Argentine Economy Limps
A Sunday night ritual has Argentines tuning in and President Cristina Fernandez de Kirchner taking heat.
Since April, the political TV show “Journalism for All” has drawn top ratings by implying that Fernandez and her late husband, former President Nestor Kirchner, enriched themselves taking kickbacks from a friend being investigated for money laundering. Among the revelations: testimony by Kirchner’s ex-secretary that she saw bags she believed contained cash moving through the presidential palace and the blueprint of a vault the show alleges was built at the Kirchners’ home in Patagonia.
The scandal has emboldened Fernandez’s enemies, who are wielding the allegations to further damage a president already wounded by a currency crisis, 24 percent inflation and rising unemployment. As Fernandez’s approval rating plunges, the ruling alliance’s performance in October’s congressional elections is at risk along with an attempt by supporters to change the constitution so she can seek a third consecutive term in 2015.
“We’re heading inevitably toward the end of a cycle,” said Fabian Perechodnik, a political analyst at Buenos Aires-based pollster Poliarquia Consultores, adding that even if Fernandez wins the mid-term vote she’s unlikely to have enough support to extend her rule. “The government has lost the momentum due to the accusations of the last month and a half.”
Fernandez, 60, hasn’t commented on the allegations, except for an allusion to glib-talking “loons” in her first appearance two days after the scandal broke on April 14. Cabinet chief Juan Manuel Abal Medina told La Red radio on April 24 that the accusations lack substance and are part of “a media show.”
Presidential spokesman Alfredo Scoccimarro didn’t return e-mails and phone calls seeking comment.
The TV program is the work of veteran investigative journalist Jorge Lanata and is aired weekly on Grupo Clarin SA’s Channel 13. Clarin is locked in a five-year battle with Fernandez over an antitrust law requiring it to sell major assets, a fact not lost on government supporters who say Lanata is doing the bidding of Argentina’s biggest media group and recycling old, unproven charges against the government.
In recent weeks, Lanata has presented documents and interviews alleging the existence of a money laundering ring run by Lazaro Baez, a businessman who befriended Kirchner two decades ago when he was governor of Santa Cruz on the tip of the South American mainland.
In an April 14 program, two former associates of Baez, Leonardo Farina and Federico Elaskar, said that in 2011 they used private planes and front companies in Panama, Belize and elsewhere to spirit offshore upward of 55 million euros ($71 million) in cash siphoned from state contracts won by Baez’s Austral Construcciones SA.
The two recanted within days, saying they had spoken falsely on camera. Farina said “everything I said was fiction because that’s what Lanata wanted to hear.” Elaskar said he lied to implicate others so he could collect an unpaid debt by people close to Farina who would have an interest in buying his silence.
Still, their accusations have since been supported by flight records and land titles uncovered by other media outlets. A federal judge also deemed them serious enough to open an investigation and raid the offices of Elaskar’s finance company, which Farina called “La Rosadita,” the “Little Pink House,” in reference to the Casa Rosada presidential palace.
There’s no evidence tying Kirchner or Fernandez to the alleged misconduct. Baez has denied any wrongdoing and vowed to sue Farina and Elaskar for slander. Repeated calls and e-mails to Austral and Baez’s lawyer, Nicolas Guzman, were not returned.
Still, in a country where former President Carlos Menem once called tax evasion a “national sport,” the rise in wealth of Baez, a former bank employee, and his proximity to power over the past decade has fueled suspicion.
Baez donated the construction in Santa Cruz of a mausoleum for Kirchner, who died in 2010. Baez’s company also built homes on properties owned by the Kirchner family and won 98 percent of the public work contracts in the oil-rich province when his friend occupied the presidency, according to Lanata.
“Lazaro and Nestor are two sides of the same coin,” Lanata, an 11-time winner of journalism’s top prize in Argentina, said in a phone interview. “They were partners.”
‘How Much Is There?’
Others have also come forward with accusations, including Kirchner’s longtime secretary, Miriam Quiroga, who said she witnessed aides moving bags she was told contained cash after meetings with businessmen at the Casa Rosada.
“Sometimes they told me, here, weigh it. How much is there?,” she told Lanata, adding that she never verified what was inside the bags.
Then on May 12, Lanata built a life-size replica of a walk-in vault that an architect said he constructed for the family in the basement of their home in El Calafate, near Patagonia’s glacier-carved peaks.
“For the first time you have more than rumors, you have evidence that’s shown on TV,” said Martin Redrado, who Fernandez ousted as central bank president in 2010 for refusing to go along with a plan to tap reserves for debt payments. “It’s something different to have a person saying where the money was kept and in what way.”
The scandal is eroding support for Fernandez. Since being re-elected in October 2011 with 54 percent, her approval rating has plunged to 29 percent, according to an April 15-26 poll of 2,000 people by Management & Fit Consultores. That’s the lowest since September 2009. Of the 75 percent of those surveyed who had watched or heard of “Journalism for All,” almost 80 percent said they believe its reporting is at least partly true, the same poll found.
Slandered Like Peron
The government has its defenders, especially those who praise the passage of a law allowing gay marriage and prosecution of leaders of the nation’s 1976-1983 military dictatorship for human rights crimes.
Tens of thousands of supporters gathered outside the Casa Rosada on May 25 to celebrate the Kirchners’ 10 years in power. There, Fernandez told the crowd that she and her husband have been the “most slandered and insulted in our history after Peron and Evita,” referring to Argentina’s first power couple, former President Juan Domingo Peron and his wife Eva, who championed the poor during their rule starting in 1946.
Still, the allegations have the government on the defensive, said polling analyst Perechodnik. Since the allegations were aired, Fernandez pushed through Congress a law mandating elections for judicial disciplinary panels that opponents say limits courts’ ability to investigate corruption.
The kickoff of matches by the nation’s two most-popular soccer clubs were also pushed back to 9:30 p.m. to coincide with Lanata’s program, which has drawn as many as 3 million viewers in greater Buenos Aires alone, according to ratings company Ibope Argentina. That’s almost a quarter of the metropolitan area’s population.
The strategy doesn’t appear to be working: In the first head-to-head matchup May 26, Ibope said almost 1 million more people tuned into Lanata, dressed in the blue and white jersey of Argentina’s national team, than they did the game between Boca Juniors and Newell’s Old Boys. Soccer matches have been aired by state-owned TV since 2009, when the government ended the exclusive rights of private channels to televise matches.
Last night, Lanata’s ratings beat those of the soccer game for a second time, drawing 260,000 more viewers than the official channel that transmitted the match between River Plate and Argentinos Juniors.
While Fernandez and her husband pushed through wage increases that fueled a boom in consumption as the nation recovered from its 2002 economic collapse, that achievement has been undermined by a 34 percent expansion in the money supply over the past 12 months that has stoked the world’s fastest inflation after Iran and Venezuela.
The government says inflation is running at 10.5 percent through April, or less than half the rate estimated by private economists. Argentina in February became the first nation to be censured by the International Monetary Fund for providing data considered inaccurate by the Washington-based lender.
The economic imbalances and Fernandez’s refusal to settle claims with bondholders stemming from a $95 billion default in 2001 are why investors demand 1,167 basis points in extra yield to hold Argentine debt instead of U.S. Treasuries, the biggest spread among emerging markets, according to JPMorgan Chase & Co.
Economic growth, which reached 9 percent in 2010 and 2011, has also slowed. After expanding 1.9 percent last year, South America’s second-biggest economy is forecast to grow 3 percent this year, according to the median estimate of 23 economists surveyed by Bloomberg. Unemployment rose to a two-year high of 7.9 percent in the first quarter and consumer confidence among the poor is at its lowest since 2001.
The lack of private investment spurred the government to push through Congress last month a tax amnesty bill to lure back capital that has fled the country as Fernandez asserted greater control over the economy. With restrictions on buying dollars in place since 2011, Argentines have turned to the black market, where the peso has plunged 24 percent this year.
“It’s like watching an ice cream cone melt in the sun,” Redrado, referring to the course of the economy, said in a phone interview from Buenos Aires.
Government defenders have questioned Lanata’s motives. The chain-smoking 52-year-old is the founder of Pagina/12, a newspaper that rose to prominence detailing human rights abuses committed by the military junta. The paper, which he’s since left, is now one of the government’s biggest backers.
‘Halls of Justice’
“The studios of channel 13 aren’t the halls of justice, it’s not the Supreme Court,” said Carlos Heller, a pro-government lawmaker. “Since the opposition can’t win on other subjects -- the declining debt, job creation and social advances -- they want to install a debate over corruption.”
Martin Etchevers, a spokesman for Clarin, didn’t return a phone call seeking comment.
Heller says the accusations are timed to hurt the government in October elections for half of the lower house and a third of the Senate. Aided by a divided opposition, the government is counting on expanding its majority in Congress to obtain the two-thirds of seats necessary to amend the constitution to allow Fernandez to run again.
Lanata, who likes to flick the middle finger at those he considers hypocrites, says his work isn’t politically-motivated.
“I’ve been a journalist for many years and I’ve never seen this degree of corruption,” he said in closing remarks on his April 14 program. “What most angers me is them talking as if they were Mother Teresa.”
To contact the editor responsible for this story: Andre Soliani at email@example.com