The Pentagate has turned out to be one of the biggest political scandals in the history of Chile. It has even been compared to the MOP-Gate case faced by former president Ricardo Lagos in 2003. The district attorney Carlos Gajardo is investigating the Penta Group –whose majority shareholders are Carlos Eugenio Lavín and Carlos Alberto Délano– for obtaining tax deductions through the fraudulent funding of electoral campaigns. The issue has raised questions concerning the influence that private companies hold on political parties, especially if the generous donations could bias a legislator’s opinion when he or she votes in Congress.
The center-right party Independent Democratic Union (UDI) is one of the most affected by the political scandal. The crisis has been met by a dubious counter strategy that ended up worsening the party’s image amongst the general public.
The party leadership commanded by deputy Ernesto Silva denied having ties to Penta when the case first broke. However, such a task turned impossible as new evidence directly implicated UDI officials to the events that took place.
A change of strategy then ensued, as Mr. Silva chose to play the victim. He argued that the country faced a greater problem concerning the funding of politics. According to the new scheme, all parties use irregular mechanisms to pay their electoral expenses. The only difference is that the UDI was caught red handed in doing so.
The goal was to force a tie with the Nueva Mayoría, the country’s ruling coalition. The gremialistas accused Public Works Minister Alberto Undurraga of having received Penta money after his failed congressional race in 2013. Communist deputies Camila Vallejo and Karol Cariola were also questioned for the relationship their party holds with Universidad Arcis – which is going through a tough financial situation. A break from the spotlight came when the media published that Minister Heraldo Muñoz hosted a luxurious fundraiser for Bachelet’s presidential campaign, though it proved to be short-lived.
However, the UDI’s efforts to divert attention were undermined after Mr. Gajardo made public his investigative file. As further proof of the linkage between party officials and Penta made newspaper headlines, Mr. Silva began admitting to “possible errors” in the resources used for their electoral campaigns. Yet he refused to acknowledge any sort of illegal activity.
Unfortunately for the UDI, the tactic became an immediate failure. A series of emails, recorded conversations and testimonies made it clear that the questioned mechanism of finance was in fact a common practice.
Senator Iván Moreira was the first to admit irregular funding. He held a press conference in early January and apologized for his actions, offering his full disposition to collaborate in the investigation. He also took the liberty to criticize Mr. Silva for his approach to solving the crisis.
A second senator shortly followed. After weeks of silence, Ena Von Baer –who on a live television interview denied all connections to Penta– withdrew her testimony and argued that the incident had been an “involuntary error.” Following her statement, she didn’t take on any questions and quickly left the room.
Nevertheless, one of the most serious charges is held against Pablo Wagner, Mining Undersecretary (2010-2012) for president Piñera. He is accused of bribery after receiving a “second salary” while overseeing projects that could have benefited Andes Iron, a company associated to Penta.
The party has recently sought to distance itself form those who are tangled in the ongoing mess. Hence, the leadership now points towards attributing personal responsibilities instead of following a collective defense. Yet the wrong signals have been provided. So far only Mr. Wagner has resigned from the UDI, while the rest of those involved simply wait for a judiciary resolution (Mr. Moreira only recently gave up his seat in the party’s National Directive).
Mr. Silva’s strategy has been mostly reactive, failing to appropriately separate individual actions from harming the overall image of the party. Additional problems have risen from him being the nephew of Mr. Délano. This has limited his ability to detach himself from an evident conflict of interests, questioning the overall legitimacy of his actions.
The Pentagate has also turned into a strong distraction in the midst of an intense legislative agenda. President Bachelet’s reforms will likely face little opposition from the UDI as it continuous directing its attention to undermine the effects associated to the scandal.
Mr. Silva is hoping that the noise will wear out as political activity decreases with Congress entering a recess in February. Nonetheless, coming March the Chamber of Deputies will launch a special committee on the subject and Mr. Gajardo’s investigation might provide new –possibly troublesome– insights. Thus, party leaders must distance the UDI from those who are involved in order to avoid paying greater political costs. The decision might seem difficult –due to the prominent positions that some of the accused hold within party lines–, but it could be the only way to save the situation in time before next year’s elections.
