Argentina’s ex-president answers bribery allegations
Cristina Fernández de Kirchner, the former president of Argentina, on Monday sought to paint herself as the victim of a conspiracy in the face of bribery allegations that have unsettled markets and led to comparisons with the corruption inquiry that has shaken Brazil. Ms Fernández de Kirchner called for the case to be abandoned in written testimony on the first day of her trial, and took to Twitter to denounce what she claimed was a conspiracy between Mauricio Macri, her successor, his media allies and Claudio Bonadio, the presiding judge.
The former president, who ruled from 2007 to 2015 with a fiery brand of populism, is accused of leading a criminal ring that took bribes, at times through extortion, from construction companies in public works projects. The scandal broke on August 1 when the Argentine newspaper, La Nacion, published an investigation based on the contents of eight notebooks of a government chauffeur during the rule of Ms Fernández de Kirchner and Néstor Kirchner, her late husband.
The driver, Oscar Centeno, noted down his deliveries of alleged bags of money given by business executives to the Kirchner administrations between 2005 and 2015. Mr Centeno logged names, dates, amounts and addresses in the notebooks.
His entries show deliveries were made to the Kirchner homes in Buenos Aires. If the economy drops more because of slower construction, it will have an impact on activity and then an impact on the elections Marcos Buscaglia, Alberdi Partners The investigation is unnerving investors at a time when emerging market currencies are struggling because of the financial crisis in Turkey.
The peso hit a record low of 30 per dollar on Monday, and the Merval index of blue-chip stocks has slid more than 10 per cent this month. Argentina’s central bank on Monday responded by lifting its Leliq policy rate by 500 basis points to 45 per cent. Investors are worried the corruption scandal will slow the recovery of Latin America’s third-largest economy, which suffered a 50 per cent plunge in its currency against the dollar earlier this year, prompting an emergency loan from the International Monetary Fund. Argentina needs capital inflows to finance its current account deficit, so political shocks are bad news, said Edward Glossop, a Latin America economist at Capital Economics in London.
“If there is a big deterioration in risk appetite over the next few months, that could cause big problems for the balance of payments and therefore for the economy.”
The scandal has hit the construction companies behind Mr Macri’s ambitious public works programme, a driver of economic growth.
The corruption allegations might make it harder for these companies to raise financing, slowing their infrastructure projects, said Marcos Buscaglia, founding partner of New York-based Alberdi Partners, a consultancy.
“If the economy drops more because of slower construction, it will have an impact on activity and then an impact on the elections,” he said. Mr Centeno had worked for Roberto Baratta, the right-hand man of Julio de Vido, the minister of planning under the Kirchners and one of their most powerful cabinet members. Mr de Vido had been in charge of energy and transport, including public works contracts and subsidies.
The alleged bribes to the Kirchners totalled $53m, according to La Nacion. While Mr Centeno subsequently burnt the notebooks, a friend had made copies and handed them to the La Nacion journalist. The reporter turned copies over to Justice Bonadio, who has brought in for questioning more than a dozen business executives and former officials.
A number of them have confessed to involvement and struck plea bargains. In her testimony, Ms Fernández de Kirchner said that “to determine or rule out an alleged corruption matrix”, the investment in all public works during her rule must be investigated.
She also argued that the case should be invalidated on the grounds that it was politically motivated, and because the evidence was gathered illicitly. Mr Centeno’s friend took the notebooks from a closed box without his permission, she wrote.
The ex-president also asked for Mr Bonadio to be taken off the case, saying that he was behind five of the six cases against her since her rule ended and was therefore neither impartial nor independent.
The scandal so far is dwarfed by that uncovered by the Lava Jato inquiry in Brazil, which has revealed more than $1.6bn in bribes. It has also so far hit only officials in the former administration of Ms Fernández de Kirchner, which could mar her campaign for a third term next year and make way for a more moderate opponent.
This could pose a bigger threat to Mr Macri’s re-election bid, said Carlos Germano, a political analyst in Buenos Aires.
“The scandal has only just begun,” he said. “There are still going to be a lot of surprises.” The case comes at a time when Mr Macri is tightening spending to rein in current account and fiscal deficits as a condition of a $50bn credit line from the International Monetary Fund in June.
Those austerity measures are hitting the already disgruntled poor and lower-middle classes the hardest. Eduardo Fidanza, a director of Poliarquia Consultores, a political consultancy in Buenos Aires, said these voters “feel orphaned”, and they may turn to an opposition candidate next year.