Despite coming second in the race for the Buenos Aires province in Sunday's congressional elections, Argentina's former President Cristina Kirchner secured a seat in the Senate and crucial parliamentary immunity. She is facing a slew of corruption charges, several of which include allegations of kickbacks in exchange for public works contracts in what the various indictments describe as a repeated embezzlement scheme. InSight Crime takes a look at some of the different charges against Kirchner and some of the institutional flaws that allowed the alleged embezzlement operations to flourish.
Former President Cristina Fernández de Kirchner won a senatorial seat for the Buenos Aires province during Argentina's October 22 mid-term elections despite losing the race to the ruling party's candidate Esteban Bullrich, reported Agence France Presse. The emblematic Peronist also won something else -- immunity from incarceration, although the various judicial proceedings she faces will continue their course.
Kirchner is set to appear twice in front of a judge in the next few weeks. First, on October 26, when she will respond to allegations of a state cover-up during the investigation into the 1994 terrorist bombing in Buenos Aires. Then, on November 9, in the kickbacks-for-contracts case referred to as "Hotesur." In the ten business days following each court citation, the judge should decide whether to dismiss the case for lack of evidence; offer prosecutors more time to investigate further; or move proceedings to the next stage and charge Kirchner.
The former president, who denies all accusations and claims she is a victim of political persecution, has already been charged in three cases for wrongdoings committed during her tenures (2007-2015), and seen an astonishing amount of more than 10.1 billion pesos (around $590 million at current exchange rate) worth of assets frozen. Yet despite the piling trail of evidence, the chances that Cristina Kirchner may soon see the inside of a prison cell have just gone from slim to none.
"Of more than 1,600 corruption cases opened since 1983 and until this present day, there have been only five sentences […] The cases last, on average, 16 years," Daniel Santoro, an award-winning investigative journalist and editor at the Argentine newspaper Clarín, told InSight Crime.
Former President Carlos Menem (1989-1999), sentenced in 2015 to four years and a half in prison for embezzlement, was the defendant in one of these successful corruption cases. Menem is now an 87 year-old senator and just won re-election in the latest ballot, also coming in second in his contested province. He has never seen a day behind bars, despite having also been convicted of weapons trafficking to Ecuador and Croatia.
Judiciary shortcomings appear to have stoked this impunity. A 2014 reform attempted to leave the old, inquisitorial system for prosecution behind in favor of an accusatory system but was only partially implemented, says Santoro.
"The key is the two federal judges from the Federal Capital who handle all the cases of corruption targeting national officials," said Santoro, alluding to the political pressure on judges who hold a central role in the investigation under Argentina's prosecution system.
Other strong institutional flaws came into play. The various indictments depict an evident lack of efficient overview mechanisms for the attribution and pricing of public contracts, even as the same individuals held discretionary power over this process for more than a decade. And more worryingly perhaps, these cases also lay bare a lack of institutional safeguards against the creation of a criminal structure via the appointments of co-conspirators in different government jobs -- a modus operandi which operated freely for years.
The Hotesur Case
Kirchner has not yet been charged in the Hotesur case for which she is set to appear before a judge on November 9. But prosecutors believe public contracts were illegally handed out to favored businessmen, including Lázaro Antonio Baez, Fabian De Sousa and Cristóbal López, in exchange for kickbacks. Bribes from Baez, for instance, were transferred via a four-step process involving front companies and described here in an article by Perfil.
First, the businessman is suspected of having funded the acquisition by Kirchner and her late husband (and presidential predecessor) Néstor Kircher of three hotels in the Santa Cruz province, the couple's historical political stronghold. To that end, Baez-owned companies loaned money to the Kirchners via the Banco de Santa Cruz private bank and bought-off properties owned by the presidential family during 2007 and 2008. Second, once bought, the hotels were managed by a legal entity in the form of a limited liability company named Valle Mitre and owned by the Grupo Baez (Baez Group). Valle Mitre served as a screen between the Kirchners and government money received by construction companies from the Grupo Baez.
During the third phase, Valle Mitre served to launder money received by the Grupo Baez from illegally-attributed and overpriced government contracts, as funds were siphoned off to the three hotels that appeared legitimate. Hotel salons and rooms that were never used were rented out, in some instances for Grupo Baez construction employees working on public works 400 kilometers away from the hotels' location. Finally, Valle Mitre allegedly paid disproportionate sums to the presidential family in exchange for operating the hotels, thereby padding the Kirchners' personal fortune.
Baez, a personal acquaintance of the Kirchner family, is currently incarcerated and has been indicted in six different cases. His name repeatedly surfaces in corruption scandals involving both Kirchner and her late husband.
As Perfil pointed out, Baez declared just over 800,000 Argentine pesos in total assets in 2003 (then around $270,000), the year in which Néstor Kirchner was elected president. By 2014, the businessman and friend of the late Mr Kirchner was worth nearly 2 billion pesos in personal and business assets combined -- nearly $250 million by 2014's average annual exchange rate. As for the presidential couple, based on their own official declaration of assets, their personal fortune rose by just under 850 percent during their twelve successive years at the head of Argentina, reported Clarín. This does not take into account money transferred as heritage to their children.
The 'K Money Route'
One of the ways in which Baez is thought to have amassed his fortune is by being awarded 80 percent of public work contracts in the Santa Cruz province during the Kirchner presidencies (2003-2015), while the province itself received a disproportionate amount of federal funds for local works in comparison to Argentina's 23 other provinces, according to Clarín. The 46 billion Argentine pesos involved in these overpriced contracts -- many of which were never completed -- were then partly redirected to renting property owned by the Kirchner family (as a measure of comparison, Argentina's annual minimum wage grew from 2,850 pesos in 2003 to 60,000 pesos in 2015).
These kickbacks are at the heart of the case referred to as the "K Money Route" (Ruta del Dinero K) centered on public work contracts being systematically and illegally attributed to the same tight-knit group of businessmen.
In December 2016, Federal Judge Julián Ercolini charged Cristina Kirchner for criminal association and aggravated fraudulent administration. The indictment accuses Kirchner and others suspects of "having formed part of an association, which operated at least between May 8, 2003 and December 9, 2015, destined to commit crimes, in order to illegally and deliberately seize the funds assigned to public roads works, initially, in the province of Santa Cruz."
The scheme started with the creation of the Austral Construcciones company by Baez and his associates in 2003, just days before Néstor Kirchner's arrival in office and with the specific purpose of bidding for public work contracts, according to the indictment.
Meanwhile, Mr Kirchner placed "trusted people" in strategic federal and provincial offices responsible for the attribution of public contracts to form an "institutional structure" that his wife would later maintain. These individuals involved Julio de Vido and José Francisco López (who was caught on security camera, armed with a military rifle and dropping $9 million in bags of cash in a convent). The two federal officials respectively served as minister of planning and public investment and secretary of public works throughout the entirety of Kirchner presidencies from 2003 to 2015.
Once in place, the structure systematically delegated federal duties of the National Highways Agency (Dirección Nacional de Vialidad - DNV) responsible for road work funds to the Santa Cruz' General Administration of Provincial Highways (Administración General de Vialidad Provincial - AGVP) that took over processes such as bidding and pricing.
"The objective was for Santa Cruz' AGVP to attribute to a single conglomerate the funds received from the DNV via contracts for the public road works to be realized in [the Santa Cruz] province, to the benefit of Lázaro Antonio Baez. Thus, out of a total of 88 works carried out in that jurisdiction during the 2004-2015 period, 52 works were contracted to companies related to Baez," reads the indictment.
Hotesur's twin case: 'Los Sauces'
In April 2017, Federal Judge Claudio Bonadio charged Kirchner and 20 other individuals for criminal association and money laundering in the case referred to as "Los Sauces."
The accusations are extremely reminiscent of the "Hotesur" scheme, but this case stands out because "both Cristina Elisabet Fernández and [her son] Máximo Carlos Kirchner [were] the leaders of the group," reads the indictment.
Among the 21 indicted individuals are the usual suspects, including Báez, Fabián De Sousa and Cristóbal López, all described as "organizers" of the scheme.
Judicial authorities suspect that Kirchner received bribes via the rental of hotel rooms and properties owned by the Kirchner family real estate company "Los Sauces S.A," in exchange not only for public works contracts but also gambling licenses and permits related to petroleum and other sectors.
According to Infobae, companies owned by López and Báez accounted for 63 and 24 percent respectively of payments ever received by Los Sauces S.A.
Bonadio froze 130 million pesos (roughly $7.5 million at current exchange rate) from the former president, her son and Báez. Florencia Kirchner (the ex-president's daughter), López and De Sousa each had 100 million pesos (around $5.8 million) in assets frozen, and all 21 suspects were prohibited from leaving Argentina.