Milicogate is a corruption scandal involving officers of the Chilean Army and the fraudulent misappropriation of public funds designated by the Secret Copper Law. The scandal was brought to light in 2015 through a series of stories published by journalist Mauricio Weibel in The Clinic.[1] As of March 2019, investigations conducted by prosecutors revealed that at least 6.1 billion Chilean pesos had been embezzled.[2]

The name "Milicogate" was coined by The Clinic's creative editor, Francisco Castillo, combining "milico"—Chilean colloquial slang for a military person—with the suffix "–gate", conventionally appended to various corruption scandals.

Background

In 1958, during the second government of President Carlos Ibáñez del Campo, the Secret Copper Law was enacted,[3] granting 15% of mining tax revenues directly to the financing of the armed forces, without oversight by either the Office of the Comptroller General or the National Congress.[1] Over subsequent years, the law was amended several times, shifting from 15% of tax revenues to 10% of total sales from Codelco's copper-extraction operations.

Modus operandi

The scheme relied on fictitious invoices and receipts—not recognized by Chile's Internal Revenue Service—to siphon money through purported purchases of non-existent military materiel. Funds were drawn from surplus balances, such as those arising from currency exchanges between Chilean pesos and US dollars. Invoices for services never rendered were issued by army suppliers, including Frasim (Francisco Huincahue), Raúl Fuentes Quintanilla, and Waldo Pinto.[4]

The principal figures within the army were Colonel Clovis Montero and Corporal Juan Carlos Cruz, both of whom worked in army finance. Cruz, who handled army accounting, was responsible for extracting the funds, while Montero procured the invoices and expedited the payments.

Discovery and investigation

In March 2014, Army Treasurer Colonel Samuel Poblete noticed irregularities while reviewing invoices and discovered that the signature and rank of one of the signing officers did not match. After contacting the officer directly, he confirmed that a fraud had occurred and immediately reported it. When confronted, Colonel Montero denied any involvement and placed all responsibility on Corporal Cruz.

The case was investigated by attorney Paola Jofré of the VI Military Prosecutor's Office. None of the accused admitted full involvement in the misappropriation of funds during their declarations. As the review of invoices continued, additional irregularities emerged, with the amounts involved escalating from tens of millions to billions of pesos. In the words of Colonel Montero, the money was spent on "casinos, propiedades, caballos y fiestas" ("casinos, properties, horses, and parties").[5] Among the most widely reported expenditures was more than 2 billion pesos spent at casinos.[6]

The scope of the accusations led the ordinary civil justice system to become involved, with the Council for the Defense of the State (CDE) filing a criminal complaint against civilian participants.[7]

In 2016, retired General Héctor Ureta and Representative Jaime Pilowsky reported that data had allegedly been wiped from the servers of the Army Support Command, raising suspicions of a broader network of individuals involved. Pilowsky emphasized the near-total absence of political oversight over military affairs.[8]

Accused and proceedings

Among the military personnel charged with tax fraud and illicit enrichment is former Commander-in-Chief of the Chilean Army Juan Miguel Fuente-Alba and retired General Héctor Ureta. Paradoxically, Ureta had been among the first to accuse other army commanders of illegal acts.[9] According to the magistrate presiding over the case, Romy Rutherford, there were "well-founded presumptions that [Ureta] played a direct and immediate role in the execution of the acts as a principal perpetrator."[10]

Also charged were Colonel Jorge Silva Hinojosa for the alleged crime of defrauding the state,[11][12] and Colonel Clovis Montero Barra as the perpetrator of repeated offenses of defrauding the state and document forgery.[13]

Previously, judge Omar Astudillo, the first instructor in the case, had charged three generals who had served as Commanders of the Army Support Command with the crime of dereliction of military duty: Generals Antonio Cordero, Jorge Salas, and Miguel Muñoz. However, the Court Martial overturned the charges, ruling that while the alleged conduct might constitute administrative violations, the evidence was insufficient at that stage of the investigation to establish the offense of dereliction of military duty.[14]

Juan Miguel Fuente-Alba

In April 2016, visiting judge Omar Astudillo summoned former Commander-in-Chief General (ret.) Juan Miguel Fuente-Alba after it emerged that he possessed assets in excess of 1 billion pesos that were allegedly without legitimate justification. Evidence presented included transfers of luxury automobiles, real estate transactions, and business arrangements within the general's family. Given the disparity between his investments and purchases and his monthly salary of approximately four million pesos, proceedings were initiated for unjustified enrichment.[15] As of 2019, Fuente-Alba was imprisoned and facing charges of tax fraud and illicit enrichment.

Chamber of Deputies investigation

In August 2016, a special investigative commission of the Chamber of Deputies, charged with examining administrative responsibilities in the fraud, published its findings. Among the commission's conclusions were: a lack of oversight by the Office of the Comptroller General; insufficient legislative control by the Ministry of National Defense;[16] and former Commander Fuente-Alba's personal responsibility for monitoring expenditures. The commission also held the generals who had commanded the Army's internal audit body and the Army Support Command responsible, characterizing their conduct as negligent.[17] Its principal recommendation was the repeal of the Secret Copper Law.

See also

References

  1. 1 2 "Milicogate: El gran robo del fondo reservado del cobre". The Clinic (in Spanish). Retrieved February 10, 2016.
  2. ↑ "Otro lunar en las platas del Ejército: el turno de los millonarios fondos para la vivienda". Ciper (in Spanish). March 8, 2019. Retrieved November 17, 2019.
  3. ↑ "LEY-13196 - Ley Chile - Biblioteca del Congreso Nacional". www.leychile.cl (in Spanish). Retrieved February 10, 2016.
  4. ↑ "Informe Especial: Milicogate, corrupción en el Ejército". 24horas.cl (in Spanish). Retrieved February 10, 2016.
  5. ↑ "Extesorero del Estado Mayor del Ejército: "Se gastaron la plata en casinos, propiedades, caballos y fiestas"" (in Spanish). October 6, 2015. Retrieved May 2, 2016.
  6. ↑ "La historia del cabo que gastó más de dos mil millones en el Monticello" (in Spanish). Retrieved February 10, 2016.
  7. ↑ "Milicogate: Revisan apelación del CDE para apresar a tres ex proveedores del Ejército" (in Spanish). Retrieved February 10, 2016.
  8. ↑ "General Ureta afirma que discos duros con información sobre el Milicogate fueron borrados". The Clinic Online (in Spanish). January 20, 2016. Retrieved May 16, 2016.
  9. ↑ "Ureta acusa a mandos del ejército en fraude" (in Spanish).
  10. ↑ "Ministra procesó a general (r) Ureta por fraude al Ejército de $1.783 millones" (in Spanish).
  11. ↑ "Aparecen nuevos contratos y proveedores en el millonario desfalco del Milicogate" (in Spanish).
  12. ↑ "Fraude en el Ejército: procesan a coronel (r) por $2.153 millones" (in Spanish).
  13. ↑ "Fraude en el Ejército: Ministro procesa a coronel (r), un cabo y una sargento" (in Spanish).
  14. ↑ "La Corte Marcial revoca el procesamiento de tres generales (r)" (in Spanish).
  15. ↑ "Secreto Militar: Fiscalía investiga millonario patrimonio del ex Comandante en Jefe del Ejército Juan Miguel Fuente-Alba" (in Spanish). April 28, 2016. Retrieved May 2, 2016.
  16. ↑ "Milicogate: Comisión investigadora de la Cámara concluye que Fuente-Alba "no ejerció una adecuada supervisión"". The Clinic Online (in Spanish). September 1, 2016. Retrieved September 3, 2016.
  17. ↑ Chile, Cámara de Diputados de. "Investigadora de fraude en el Ejército de fondos de la Ley Reservada del Cobre concluyó con informe único". Cámara de Diputados (in Spanish). Retrieved September 3, 2016.
source: https://en.wikipedia.org/wiki/Milicogate