Chilean President Michelle Bachelet on Wednesday dismissed rumors that she was resigning. Amid a series of corruption scandals one that included her son has drastically decreased the popularity of the reformist president.
Sebastian Davalos was to be questioned by prosecutors on Wednesday about his role in a controversial and possibly illegal real estate transaction. Davalos and his wife, Natalia Compagnon, stand accused of using their political connections to obtain a $10m bank loan which they allegedly used to flip a property in order to earn millions of dollars in a matter of weeks.
Last month, Chilean prosecutors seized computers, cellphone records and $4m as they continued to investigate the business dealings of both the president’s son and her daughter-in-law. While Compagnon testified on Wednesday, Davalos cancelled his appearance on the advice of his lawyers, fueling speculation that he has something to hide.
The Davalos case is focused on a proposed change to municipal zoning that would have sent real estate prices soaring. But the suspicion that a Bachelet family member was involved in illicit business has come to symbolize a widespread malaise in the Chilean body politic.
In February, Davalos was forced to leave his government job directing the President’s sociocultural agenda. While Bachelet denies any knowledge or involvement in the real estate transaction, a majority of Chileans don’t believe her.
Public opinion polls in March showed the president’s approval ratings fell to 31%, down drastically from the 84% with which she finished her first term in 2010. Over the past year the percentage of Chileans expressing disapproval with Bachelet’s leadership jumped from 20% to 61%.
Long a champion of Chile’s poor, Bachelet is now battling to maintain her ambitious social reform agenda amidst massive public criticism.
“There is an important crisis of confidence,” the president said, “But it is a tremendous opportunity to fill the legal loopholes so this doesn’t happen again.”
Over the past 12 months, Bachelet has had multiple legislative victories, including an increase in corporate tax rate to finance free or heavily discounted higher education for tens of thousands of students. The president, a pediatrician, is also pushing to build thousands of free day care centers throughout Chile.
The collapse in public support for Bachelet has been trumped by an even more spectacular fall by Chile’s rightwing UDI party – the nation’s largest – with an approval rating that fell to 11% in recent months.
But Bachelet’s government crisis has been accompanied by wider public discontent centered on high-profile financial scandals, in which powerful businessmen have been caught laundering money or donating to political candidates.
Soquimich, a billion-dollar Chilean mining company run by Julio Ponce Lerou, former Chilean dictator Augusto Pinochet’s former son-in-law, is facing multiple criminal charges after tax authorities found the company used fake invoices to funnel hundreds of thousands of dollars to politicians across the political spectrum. Soquimich is now facing intense scrutiny from Chilean prosecutors and several dozen US law firms are preparing to file lawsuits against the publicly traded company.
The amount of money in the Soquimich political campaign cases is thought to be less than a million dollars, minuscule when compared to corruption scandals in Argentina and Brazil where hundreds of millions of dollars in government funds are alleged to have been siphoned off by corrupt officials.
“We can’t shut our eyes, corruption has arrived,” said Ramiro Mendoza, the Chilean comptroller general on Tuesday while stressing, “We have institutional measures to prevent the growth of this scourge.”