![Keep Us Strong](../../../static/gfx/ja-cg.jpg)
![WikiLeaks logo](../../../static/gfx/WL_Hour_Glass_small.png)
Currently released so far... 3954 / 251,287
Articles
Browse latest releases
2010/12/01
2010/12/02
2010/12/03
2010/12/04
2010/12/05
2010/12/06
2010/12/07
2010/12/08
2010/12/09
2010/12/10
2010/12/11
2010/12/12
2010/12/13
2010/12/14
2010/12/15
2010/12/16
2010/12/17
2010/12/18
2010/12/19
2010/12/20
2010/12/21
2010/12/22
2010/12/23
2010/12/24
2010/12/25
2010/12/26
2010/12/27
2010/12/28
2010/12/29
2010/12/30
2011/01/01
2011/01/02
2011/01/04
2011/01/05
2011/01/07
2011/01/09
2011/01/10
2011/01/11
2011/01/12
2011/01/13
2011/01/14
2011/01/15
2011/01/16
2011/01/17
2011/01/18
2011/01/19
2011/01/20
2011/01/21
2011/01/22
2011/01/23
2011/01/24
2011/01/25
2011/01/26
2011/01/27
2011/01/28
2011/01/29
2011/01/30
2011/01/31
2011/02/01
2011/02/02
2011/02/03
2011/02/04
2011/02/05
2011/02/06
2011/02/07
2011/02/08
2011/02/09
2011/02/10
2011/02/11
Browse by creation date
Browse by origin
Embassy Athens
Embassy Asuncion
Embassy Astana
Embassy Asmara
Embassy Ashgabat
Embassy Ankara
Embassy Amman
Embassy Algiers
Embassy Addis Ababa
Embassy Accra
Embassy Abuja
Embassy Abu Dhabi
Embassy Abidjan
Consulate Amsterdam
American Institute Taiwan, Taipei
Embassy Bujumbura
Embassy Buenos Aires
Embassy Budapest
Embassy Bucharest
Embassy Brussels
Embassy Bridgetown
Embassy Bratislava
Embassy Brasilia
Embassy Bogota
Embassy Bishkek
Embassy Bern
Embassy Berlin
Embassy Belgrade
Embassy Beirut
Embassy Beijing
Embassy Banjul
Embassy Bangkok
Embassy Bandar Seri Begawan
Embassy Bamako
Embassy Baku
Embassy Baghdad
Consulate Barcelona
Embassy Copenhagen
Embassy Conakry
Embassy Colombo
Embassy Chisinau
Embassy Caracas
Embassy Canberra
Embassy Cairo
Consulate Curacao
Consulate Casablanca
Consulate Cape Town
Embassy Dushanbe
Embassy Dublin
Embassy Doha
Embassy Djibouti
Embassy Dhaka
Embassy Dar Es Salaam
Embassy Damascus
Embassy Dakar
Consulate Dubai
Embassy Kyiv
Embassy Kuwait
Embassy Kuala Lumpur
Embassy Kinshasa
Embassy Kigali
Embassy Khartoum
Embassy Kampala
Embassy Kabul
Embassy Luxembourg
Embassy Luanda
Embassy London
Embassy Lisbon
Embassy Lima
Embassy Lilongwe
Embassy La Paz
Consulate Lagos
Mission USNATO
Embassy Muscat
Embassy Moscow
Embassy Montevideo
Embassy Monrovia
Embassy Minsk
Embassy Mexico
Embassy Maputo
Embassy Manama
Embassy Managua
Embassy Malabo
Embassy Madrid
Consulate Munich
Consulate Montreal
Consulate Monterrey
Embassy Pristina
Embassy Pretoria
Embassy Prague
Embassy Port Au Prince
Embassy Phnom Penh
Embassy Paris
Embassy Paramaribo
Embassy Panama
Consulate Peshawar
REO Basrah
Embassy Rome
Embassy Riyadh
Embassy Riga
Embassy Reykjavik
Embassy Rangoon
Embassy Rabat
Consulate Rio De Janeiro
Consulate Recife
Secretary of State
Embassy Stockholm
Embassy Sofia
Embassy Skopje
Embassy Singapore
Embassy Seoul
Embassy Sarajevo
Embassy Santo Domingo
Embassy Santiago
Embassy Sanaa
Embassy San Salvador
Embassy San Jose
Consulate Strasbourg
Consulate Shenyang
Consulate Shanghai
Consulate Sao Paulo
Embassy Tunis
Embassy Tripoli
Embassy Tokyo
Embassy The Hague
Embassy Tel Aviv
Embassy Tehran
Embassy Tegucigalpa
Embassy Tbilisi
Embassy Tashkent
Embassy Tallinn
USUN New York
USEU Brussels
US Mission Geneva
US Interests Section Havana
US Delegation, Secretary
UNVIE
Embassy Ulaanbaatar
Browse by tag
AF
AM
AE
AG
AR
ASEC
AS
AU
AORC
AJ
AMGT
AGMT
AFIN
APER
ABUD
ATRN
AEMR
ACOA
AEC
AO
AX
AMED
ADCO
AODE
AFFAIRS
AC
AL
ASIG
ABLD
AA
AFU
ASUP
AROC
ATFN
CH
CE
CA
CASC
CU
CLINTON
CO
CI
CVIS
CDG
CIA
CACM
CDB
CS
CBW
CD
CV
CMGT
CJAN
CG
CF
CN
CAN
COUNTER
CIS
CM
CONDOLEEZZA
COE
CR
CY
CTM
COUNTRY
CLEARANCE
CPAS
CWC
CT
CKGR
CB
CACS
COM
CJUS
CARSON
COUNTERTERRORISM
EUN
EG
EAID
ENRG
ETTC
EFIN
ECON
ETRD
EPET
EINV
EMIN
ECIP
ECPS
EINDETRD
EAGR
EU
EN
EZ
ELAB
ER
ET
ES
EUC
EI
EAIR
EIND
EWWT
ELTN
EREL
ECIN
EFIS
EINT
EC
ENVR
ECA
EXTERNAL
EINVETC
ENIV
EINN
ENGR
EUR
ESA
ENERG
EK
ELECTIONS
ECUN
EINVEFIN
IR
IS
IZ
INRB
IAEA
IN
IT
ID
IO
IV
ICTY
IQ
ICAO
INTERPOL
IPR
IRAJ
INRA
INRO
IC
IIP
ITPHUM
IWC
ISRAELI
IRAQI
ICRC
IMO
IF
ILC
IEFIN
INTELSAT
IL
IA
IBRD
IMF
ITALY
ITALIAN
KCOR
KDEM
KNNP
KU
KWBG
KPAL
KN
KS
KZ
KAWK
KISL
KPAO
KCRM
KJUS
KSEC
KIPR
KGHG
KIFR
KTFN
KDRG
KV
KSUM
KWAC
KAWC
KDEMAF
KFIN
KGIC
KTIP
KOMC
KHLS
KSPR
KGCC
KPIN
KG
KBIO
KHIV
KSCA
KE
KFRD
KPKO
KNUC
KMDR
KPLS
KOLY
KUNR
KIRF
KIRC
KACT
KRAD
KCOM
KMCA
KHDP
KVPR
KDEV
KWMN
KTIA
KPRP
KCIP
KCFE
KOCI
KTDB
KMRS
KLIG
KBCT
KICC
KGIT
KSTC
KPAK
KNEI
KSEP
KPOA
KFLU
KNUP
KNNPMNUC
KO
KTER
KHUM
KRFD
KBTR
KDDG
KWWMN
KFLO
KSAF
KBTS
KPRV
KMPI
KNPP
KNAR
KWMM
KERG
KTBT
KCRS
KRVC
KR
KPWR
KMIG
MOPS
MZ
MO
MNUC
MASS
MARR
MY
MEPP
MCAP
MA
MR
ML
MX
MIL
MTCRE
MPOS
MOPPS
MTCR
MAPP
MU
MG
MASC
MCC
MK
MTRE
MP
MDC
MAR
MEPI
MRCRE
MI
MT
MQADHAFI
MD
MAPS
MUCN
PREL
PTER
PGOV
PO
PHUM
PINS
PARM
PK
PINR
PINT
PBTS
PROP
PE
PL
PREF
POGOV
PINL
POL
PBIO
PSOE
PHSA
PKFK
PGOF
PARMS
PA
PM
PMIL
PTERE
PF
PALESTINIAN
PY
PGGV
PNR
POV
PAK
PAO
PFOR
PHALANAGE
PARTY
PNAT
PROV
PEL
PGOVE
POLINT
POLITICS
PEPR
PSI
PU
POLITICAL
PARTIES
PECON
SNAR
SA
SY
SOCI
STEINBERG
SP
SENV
SCUL
SF
SO
SR
SG
SW
SU
SL
SMIG
SN
SHUM
SZ
SYR
ST
SANC
SC
SAN
SIPRS
SK
SH
SI
UNSC
UP
UK
USEU
UG
UNMIK
UV
UZ
UY
UN
US
UNGA
UNO
USUN
UE
UNESCO
UAE
UNEP
USTR
UNHCR
UNDP
UNHRC
USAID
UNCHS
UNAUS
Browse by classification
Community resources
courage is contagious
Viewing cable 09SANTIAGO867, CHILE: Conservatives Beat Back Skeleton in Pinera's Closet
If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs
Understanding cables
Every cable message consists of three parts:
- The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.
- The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.
- The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.
Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol). Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #09SANTIAGO867.
Reference ID | Created | Released | Classification | Origin |
---|---|---|---|---|
09SANTIAGO867 | 2009-10-09 15:03 | 2010-12-27 21:09 | CONFIDENTIAL | Embassy Santiago |
VZCZCXRO0994
OO RUEHAO RUEHCD RUEHGA RUEHGD RUEHHA RUEHHO RUEHMC RUEHMT RUEHNG
RUEHNL RUEHQU RUEHRD RUEHRG RUEHRS RUEHTM RUEHVC
DE RUEHSG #0867/01 2821543
ZNY CCCCC ZZH
O R 091543Z OCT 09
FM AMEMBASSY SANTIAGO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0136
INFO WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
C O N F I D E N T I A L SECTION 01 OF 03 SANTIAGO 000867
SIPDIS
STATE PLEASE PASS TO WHA/BSC, INR/B
AMEMBASSY BRIDGETOWN PASS TO AMEMBASSY GRENADA
E.O. 12958: DECL: 2019/10/09
TAGS: PGOV ECON KCOR CI
SUBJECT: CHILE: Conservatives Beat Back Skeleton in Pinera's Closet
REF: SANTIAGO 755
SANTIAGO 00000867 001.2 OF 003
CLASSIFIED BY: Carol Urban, Deputy Chief of Mission, State
Department, US Embassy Santiago; REASON: 1.4(B)
¶1. (SBU) Summary: Eduardo Frei attempted to taint presidential
challenger Sebastian Pinera with renewed allegations of insider
trading. Pinera's skilled campaign team flipped the issue into a
referendum on the NGO that reported the incident. A competitive
businessman and politician prone to taking risks, Pinera has been
linked to a number of questionable actions in the past and is
likely to continue to face questions about past business deals, but
voters seem relatively unconcerned by these charges. End Summary.
Insider Trading Allegations Resurface...
--------------------------------------------- ------
¶2. (U) A highly motivated businessman willing to take risks,
Alianza presidential candidate Sebastian Pinera is no stranger to
scandal. The most recent accusations of impropriety surfaced
during a televised presidential debate on September 23, the first
major debate of this election cycle. Assigned to talk about
corruption, Concertacion candidate Eduardo Frei avoided speaking
about a series of fairly minor scandals that have tainted his
coalition's reputation and instead accused Pinera of insider
trading, citing an annual and worldwide Transparency International
report issued that day. The report noted that in July 2006, while
president of LAN Chile, Pinera purchased 3 million LAN Chile shares
just hours after receiving the company's latest and unpublished
financial report. Chile's Securities and Exchange Commission
investigated the transaction and charged Pinera with "abuse of
privileged information" in 2007. Pinera paid a USD 700,000 fine
and stepped down as president of the company, but denied any
wrongdoing. One claim is that the purchase had been programmed
before he obtained the company's financial report, and that his
mistake was not cancelling the purchase after he obtained the
information.
...but Attention Shifts to the Accuser
--------------------------------------------- ---
¶3. (U) In response to Frei's charge during the debate, Pinera
reiterated his denial of any illegal activity and demanded that
Frei apologize. Immediately following the debate, Pinera advisors
accused Chile Transparente, the local arm of Transparency
International, of political bias. In the following week, the topic
spurred a polemic debate--not about Pinera's actions, but rather
about the accuracy and objectivity of the report. One board member
of Chile Transparente, the local arm of Transparency International,
very publicly resigned from the organization amid the clamor.
Amidst the daily headlines questioning the objectivity and
management of the previously respected organization, Pinera's
alleged insider trading was all but forgotten.
Pinera on the Lam?: Alleged Financial Fraud in the 1970s
--------------------------------------------- ----------------------
--------
¶4. (C) Frei's debate offensive marks the second time that old
accusations of Pinera misconduct have resurfaced during the
presidential campaign. In July 2009, a Pinochet-era Justice
Minister stated that she had intervened on Pinera's behalf to
obtain an injunction that would prevent Pinera from being served
with an arrest warrant (reftel). This revelation related to
charges stemming from Pinera's tenure as general manager of the
Bank of Talca from 1979 - 1980, a period when there was little
oversight or regulation of Chile's banking industry and many banks
and bank executives enjoyed considerable success, often through
shady dealings. Like many other banks of the time--and not unlike
the recent financial crisis in the U.S.--the Bank of Talca made
many very risky loans, which initially led to handsome profits but
ultimately led to bankruptcy. However, Pinera and other Talca
SANTIAGO 00000867 002 OF 003
executives went beyond the typical improprieties of the day. In
addition to the bad loans they approved, they also created dozens
of fake companies, gave these companies loans from the bank, and
then used the funds to buy more bank shares. They profited again
when the government stepped in and bailed out the banking sector --
and its shareholders -- while the loans to fake companies were
written off and Pinera and other executives did not have to repay
the principal.
¶5. (U) In April 1982, a judge ordered Pinera's arrest. Pinera
went into hiding for 24 days in order to avoid being formally
served with the arrest warrant. His lawyers placed an injunction
on the case, which was heard by the Supreme Court. The injunction
was accepted and the case dismissed. The charges were never
investigated.
Links to a Price-Fixing Pharmacy
------------------------------------------
¶6. (U) More recently, Frei also attempted to highlight the
(relatively weak) link between Pinera and a 2008 price-fixing
scandal. In December 2008, Chile's National Economic Prosecutor's
Office sued three pharmacy chains for USD 15 million each, alleging
that they had colluded to raise the price of more than 200
medicines by as much as 200 percent in 2007 and 2008. In March
2009, one of the firms, Farmacias Ahumada agreed to pay a USD 1
million fine in exchange for having the charges dropped. The same
month, the press reported that Sebastian Pinera owned 2 per cent of
that retail chain via his investment fund, Santa Cecilia. Pinera
confirmed that he owned a small stake in the company, but claimed
he was unaware of these holdings, saying that he was "just like
millions of Chilean investors and individuals whose pension funds
hold stakes in the company." Pinera promptly sold his shares.
How About Frei?
---------------------
¶7. (C) Concertacion candidate Eduardo Frei's past has also come to
haunt him during this year's presidential campaign. In 1994,
then-President Frei pardoned Angel Vargas Parga, a drug trafficker
convicted of smuggling half a ton of cocaine into Chile. While
Frei claimed that he was motivated by Vargas' good behavior in
prison, opponents allege that Vargas' well-connected Christian
Democrat family was the real reason behind the release. (Note: A
longtime Frei confidante and advisor told us recently that
then-Justice Minister Soledad Alvear made the decision to pardon
Vargas. Frei was not involved in the decisionmaking and found out
after the fact, but has to defend the decision nonetheless. End
Note.) Alianza has also accused Frei of being improperly involved
in managing his investments during his presidential term.
Nonetheless, Frei--who is widely viewed as solid, respectable, and
frankly a bit boring--seems to have fewer skeletons in his closet
than his opponent.
Do the Voters Care?
--------------------------
¶8. (SBU) Chilean voters seem relatively unconcerned by the
allegations against Pinera. Polls suggest that voters see
corruption as a real problem in Chile, but don't rate tackling
corruption as a top priority. In an August poll by Ipsos, 53% of
those surveyed said that Chile was a corrupt country. However,
polls consistently show that voters' top concerns are unemployment,
crime, health, and education; corruption lingers near the bottom of
the list. Moreover, Pinera's image as an astute businessman seems
to be reflected in how voters see his strengths vis-a-vis Frei's.
Frei comes out slightly ahead of Pinera in measures of perceived
SANTIAGO 00000867 003.2 OF 003
honesty, while Pinera has a wide lead in terms of perceived
intelligence and ability to assemble a good political team.
The Forgotten Skeleton in Pinera's Closet: "Pineragate"
--------------------------------------------- ----------------------
-------
¶9. (U) Other potential minefields in Pinera's political and
business history remain and may surface during the presidential
campaign. The most significant of these stems from a 1992 phone
conversation in which Pinera discussed strategies to destroy
political rival Evelyn Matthei. The call--which featured Pinera
using coarse language and referring dismissively to Matthei as a
little girl--was secretly recorded by military intelligence and
passed to television-station owner Ricardo Claro, a business
magnate and Pinera rival. It aired on Chilean television in August
1992 when Claro made a surprise appearance on his station's public
affairs show. The ensuing scandal, referred to as "Pineragate,"
exposed Pinera's scheming; the fractious divisions within the
right; and continued military interference in politics. The
scandal torpedoed both Pinera and Matthei's hopes for the 1993
presidential election, and led to a rift between the two that has
only recently been repaired.
Comment
-------------
¶10. (C) Driven and competitive, Sebastian Pinera pushes both his
businesses and his politics to the limits of the law and ethics.
Some of his actions--such as lending money to fictitious
companies--seem to clearly cross the line into legal impropriety.
At other times, though, he seems more to be a victim of
circumstance, carelessness, or the sheer vastness of his fortune.
Disparaging your political opponent in a private telephone
conversation or investing in one troubled company amidst a diverse
portfolio hardly seems surprising for a hard-charging businessman
turned politician. These charges have aired at various times in
the past, and when they have resurfaced during this campaign have
had relatively little impact on the general public, which seems to
see them as a mix of old news and business as it used to be. What
is particularly noteworthy about the latest episode is the way the
tables have been completely turned to focus on the shortcomings of
the manner in which Chile Transparente managed the report, rather
than the underlying charges of insider trading. Such a reversal
can be attributed to three things: an impressive Pinera campaign
team eager to go on the attack, Frei's lackluster communication
strategists, and the generally conservative Santiago press. End
Comment.
SIMONS