Chilean president Impeached after Pandora Papers Revelations

Chilean president Impeached after Pandora Papers Revelations

Nov 9 (ICIJ)

Lawmakers in Chile voted to impeach President Sebastián Piñera Tuesday morning, accusing him of violating the constitution, following revelations in the Pandora Papers about a possible conflict of interest in the sale of a mining company by his children to a close associate. Part of the payment was contingent on the government not moving to enact new environmental regulations that would prevent the mining project.

The vote took place at around 8 a.m. after a legislative session that lasted nearly 24 hours.

Opposition lawmakers in the lower house of the legislature, the Chamber of Deputies, gathered just enough votes to move forward with the process. The impeachment proceedings now move to the Senate, which acts as a jury and where a supermajority vote is needed to remove the president from office. The opposition is not expected to secure enough support for the impeachment in the Senate.

“I want it to be an example and testimony that this parliament is capable of putting an end to the abuses, to the impunity with which this government has acted,” said opposition leader Jaime Naranjo, who spoke for more than 14 hours of the session.

Speaking from the floor of the legislature in the early hours of the morning, Piñera’s attorney Jorge Gálvez blasted the proceedings. “There isn’t a single piece of evidence” linking Piñera to any wrongdoing, he said. The impeachment process was rushed for political reasons, he said. “There cannot be a purely political hearing to remove the president of the republic,” Gálvez said.

Piñera is one of three sitting Latin American presidents whose offshore dealings came to light in the Pandora Papers, a global investigation led by the International Consortium of Investigative Journalists. Of the 35 current and former heads of states who appear in the records, 14 are from Latin America.

The vote to impeach marks the latest fallout from revelations in the leaked records, which have fueled hundreds of stories from ICIJ and partnering newsrooms and seen major fallout around the world, including investigations against world leaders named in the exposés, tax probes and pledged reforms.

ICIJ partners, the Chilean Center for Investigative Reporting (CIPER) and Labot, reported that in December 2010, nine months into Piñera’s first term as president, his children sold their part in a mining company for $152 million to a close friend of Piñera, Carlos Alberto Délano.

The mining company, Minera Dominga, was exploring a controversial $2.5 billion copper and iron project that would take place close to a sensitive habitat for whales, dolphins, birds and Humboldt penguins.

According to a contract found in the Pandora Papers, the first $138 million of the sale was made through shell companies registered in the British Virgin Islands, and was to be paid in three installments. The contract included a clause that said the third installment of $9.9 million would only be paid if, by December 2011, there was an absence of regulatory measures that would “irrevocably” prevent a mining project under consideration, like the creation of a nature preserve. Those protective measures would depend on decisions made by Piñera’s administration.

No regulatory changes were made and it is unclear whether the final payment went through. The mining project has been in legal flux for years and is still pending approval.

Piñera has denied that there was a conflict of interest, saying that he hasn’t managed his family’s businesses in 12 years. He also says that the information revealed in the Pandora Papers was already known and part of a 2017 investigation in which he was cleared of any conflict.

The Chilean news outlet CIPER reviewed records of the 2017 hearing  and found no reference to the British Virgin Islands contract. Information about the controversial clause conditioned on no environmental action wasn’t disclosed to the judges ruling on the case.

Piñera is separately under criminal investigation by Chile’s national prosecutor, who launched a probe five days after the Pandora Papers were first published. The probe focuses on the 2010 deal and could lead to bribery and tax-related charges.

Piñera's Holdings

Sebastián Piñera launched a credit card company in the 1970s, and served in Chile’s Senate for most of the 1990s, before running for president twice. The Bancard founder is worth an estimated $2.8 billion.

Piñera was first elected president in 2010, and he won his second term in 2018. Chilean law bars sitting presidents from running for consecutive terms.

As a candidate in 2018, Piñera promised that he and his family would put all of their holdings into blind trusts, ceding control of the management of their assets.

But the trusts applied only to his family’s Chilean holdings, and not to offshore companies owned by his children. Those companies held investments worth hundreds of millions of dollars. Chilean law mandates that any person domiciled in or a resident of Chile is subject to taxes on income earned anywhere in the world.

In 2017, the Chilean Center for Investigative Reporting (CIPER) reported that Piñera opened two of those offshore companies, but later transferred ownership to his children.

Piñera in the Pandora Papers

The Pandora Papers reveal Piñera’s involvement in several offshore deals.

His businesses have provided all of the funding for two companies registered in the British Virgin Islands in 1997 and 2000. One of his sons became a director for one of those companies before it was closed in 2018.

A Chilean mining company in which Piñera’s children owned a 33.3% stake, used a BVI shell company to sell their shares to his close friend’s BVI shell company.

The deal, made in December 2010, nearly nine months into Piñera’s first term as president, was for $138 million, to be paid in three installments. But the sales contract contained a contingency:

The last payment, $9.9 million due Dec.11, 2011, would not be made if any steps were taken that would “irrevocably” prevent a mining project under consideration — for example, the creation of a nature preserve.

Four months before that deal was made, Piñera stopped the construction of a thermoelectric plant in an environmentally sensitive area near the proposed mine, saying that he wanted to protect a “nature sanctuary”. However, despite pressure from environmental groups, Piñera did not put any such protections in place. It’s unclear whether the nature preserve would have scuttled the proposed mine, or if the final payment went through. The proposed mine is still pending approval.

Just days before Piñera began his second presidential term in 2018, documents show that one BVI company connected to him, Parque Chiloé Overseas Inc. merged with the Chilean company, Parque Chiloé SA, and were subsequently absorbed by another Chilean firm, Inversiones Odisea, in which his four children are shareholders.

Nicolas Noguera, who manages the family’s investments, told ICIJ that Piñera did not take part in, nor was he informed of, any matter related to the mining project sale and that currently, neither President Piñera nor any any member of his immediate family control any company incorporated in the BVI.

Source: ICIJ