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Pinochet’s widow under investigation on suspicion of swindling millions

Prosecutors accuse Lucia Hiriart of siphoning funds from sales of government properties through the NGO she ran to pay off Pinochets living expenses

Lucia Hiriart, the widow of Chilean dictator Augusto Pinochet, is under investigation for allegedly swindling the Chilean treasury of millions of dollars by selling properties designated as community centers.

A report by Chilean prosecutors also accuses Hiriart, 93, of siphoning funds from the NGO she ran, CEMA Chile, to pay General Pinochets living expenses in the United Kingdom while he was under house arrest following his arrest in 1998.

Chiles minister of public property, Vctor Osorio, told the Guardian that prosecutors are preparing to file formal charges over allegations that CEMA Chile misappropriated millions of dollars in government funds.

During her 43 years at the head of the organisation, Hiriart oversaw the sale of dozens of government properties which had been donated to the foundation. Chilean officials say that profits from the sales were transferred abroad or simply disappeared.

Among the questionable transactions include the transfer of US$100,000 to Hiriart in London while her husband was under house arrest. The money was paid in two disbursements of US$50,000, one in 1998 and one in 1999.

The CEMA Chile foundation was founded in 1954 as a vehicle for charitable works by the countrys first ladies. Hiriart took over following the bloody 1973 military coup that put her husband in power, acting as the groups president and then president-for-life until she resigned the position last week.

The organisation was originally conceived as a community centre for farm workers, but Hiriart changed the focus to womens centers with a focus on quilting and cake-baking classes. CEMA Chile still has dozens of centers across the country that are run by volunteers, but according to investigators the group has largely become a vehicle to buy, sell and rent properties.

If you look at their work, the CEMA Chile foundation operates like a real estate company, Osorio told the Guardian. He called the property sales a misappropriation of public funds and a direct violation of the terms by which the properties were ceded to CEMA Chile.

We are still tallying the total of properties but we calculate the first group of 118 properties to have a value of US$123m and thats just a percentage of the overall total, Osorio said.

In July, Chilean police raided the organisations Santiago headquarters, copying computer hard drives and searching for accounting records.

Despite repeated requests, CEMA Chile officials refused to comment. A spokesperson told the Guardian: Given all the judicial charges we are not giving interviews.

Profits from the real estate sales are thought to exceed $10m but the investigation has been hampered by the fact that most records prior to 1996 are missing.

Investigators described the book-keeping at the foundation as chaotic; many properties were listed with a value of just $1, but one property was sold for US$1.2m.

It is very difficult to know where the CEMA money was deposited and into which account. The book-keeping was destroyed, said Alejandra Matus, author of a bestselling biography of Hiriart. There is no evidence whatsoever about what they did with the money for 10 or 15 years. Theres lots of missing money and missing information.

Prosecutors suspect that profits from the real estate transactions may have been laundered through Riggs Bank, the scandal-plagued and now defunct Washington DC bank where the Pinochet family held dozens of secret accounts worth an estimated $8m.

So far, investigators have discovered four transfers between accounts at Riggs Bank and CEMA Chile.

In his final years, Pinochet was investigated for tax evasion, but until the CEMA Chile probe Hiriart has faced much less scrutiny.

Under her leadership CEMA became politically powerful, with a million members and military-style hierarchy. The board of directors had just three seats one for each of Pinochets daughters.

As the controversy has grown over recent weeks, CEMA Chile unilaterally returned six properties to the government with little explanation. All this confirms that we are on the right path to recuperate these public properties in the hands of this entity, said Osorio.

The most recently recovered property, in the northern Chilean city of Copiapo, was immediately designated as new offices for an organisation representing families of political prisoners who disappeared under the Pinochet regime.

Read more: https://www.theguardian.com/world/2016/aug/19/pinochet-widow-lucia-hiriart-cema-chile


Mexican president’s family faces calls for investigation into Miami apartment

Oppositions parties and Mexican media alleged cronyism after Guardian report revealed property arrangement between Pea Nietos wife and Ricardo Pierdant

Political and civil society leaders in Mexico are calling for an investigation into the first familys use of a luxury apartment in Miami, which has raised the spectre of a fresh conflict-of-interest scandal.

Opposition parties demanded that authorities investigate the property arrangement between a Miami-based Mexican businessman and Anglica Rivera, the wife of President Enrique Pea Nieto.

Mexican newspapers and social media have led an outcry, alleging cronyism, since the Guardian reported the arrangement on Tuesday.

The revelation has prompted fresh scrutiny of the embattled presidents ethics following an earlier scandal over his familys purchase of a Mexico City mansion, known as the Casa Blanca, from a government contractor.

Suspicion in the latest case focuses on why the businessman, Ricardo Pierdant, let the first lady use the $2.05m Miami apartment and also why one of his companies paid close to $30,000 in property taxes on her behalf for a neighbouring apartment which she owns.

ocean
The two main opposition parties have asked for an investigation into the Miami apartments, which are in Ocean Tower One in Key Biscayne. Photograph: Handout

Pierdant is a close friend of the first family and his company, Grupo Pierdant, was expected to bid for lucrative contracts to run Mexicos ports.

The first lady cannot receive lucrative favours without authorisation from the federal executives legal counsel, an oversight agency, wrote Salvador Camerana, a columnist, in El Financeiro. The president of the republic cannot accept that his friends extend favours worth thousands of dollars to him, his wife, their children or to their collaborators.

Eduardo Bohrquez, head of the advocacy group Transparency Internationals Mexico chapter, told the Wall Street Journal that the first couple faced renewed scrutiny. It reignites the discussion over the links that the president and his wife have with businessmen, particularly the type of relation that they could have with someone who pays your property taxes.

The two main opposition parties, the National Action party (PAN) and Party of the Democratic Revolution (PRD) have asked for an investigation into the Miami apartments, which are in Ocean Tower One, a gated community with a pool, tennis courts and white glove concierge in Key Biscayne, an affluent enclave in Miami-Dade County.

Such an investigation would probably be the responsibility of federal auditors and the comptrollers office.

In a statement, Eduardo Snchez, the presidents spokesman, said that the first lady used Pierdants apartment only on rare occasions and that there was no conflict of interest because the businessman had no federal government contracts and was not participating in current bids.

The spokesman declined to say why Pierdants company, Biscayne Ocean Holdings, paid taxes in 2014 on the first ladys apartment, unit 404, which is directly beneath his own unit 304.

In a statement the spokesman also questioned the Guardians veracity and claimed the newspaper had apologised several years before over a separate story about the president. The Guardian has not apologised for its reporting.

Pierdant, the co-founder of DecoBikes, a bicycle-sharing program in Miami and San Diego, has declined to speak to the Guardian, but a Mexican news website quoted him saying the first lady, a former telenovela star, asked him to handle the property tax and reimbursed him.

At the time Pierdant bought the Key Biscayne apartment in 2009 he was overdue on mortgage payments for another Coral Gables property, according to court documents seen by the Wall Street Journal. Asked by Univision how he could afford to pay one apartment in cash while owing money on another property, Pierdant was quoted as saying: I had the money available.

The outcry over the first familys property dealings in Miami comes at a delicate time for Pea Nieto, who is battling a sluggish economy and rampant crime. A poll taken before the current row showed his approval ratings dropping to 23%, his worst showing since taking office in 2012. The newspaper Reforma said it was the lowest approval rating for a president since it began publishing similar polls in 1995, just after a huge currency devaluation.

The Miami property arrangements have fuelled unease because they echo aspects of the first ladys purchase of a $7m mansion in Mexico City from another businessman with government contracts the so-called Casa Blanca (White House) scandal.

It landed like a bombshell in 2014, wrecking Pea Nietos reformist credentials and reviving longstanding concerns about corruption in the ruling Institutional Revolutionary party (PRI).

The first lady later returned the property and last month Pea Nieto apologized, saying the scandal had dented faith in the presidency and government. For this reason, with all humility I ask your forgiveness.

The president made the apology as he signed into law an anti-corruption system that his PRI party hopes will boost its credibility in the run-up to the 2018 presidential election.

Read more: https://www.theguardian.com/world/2016/aug/12/mexico-president-pena-nieto-wife-miami-apartment


Vancouver slaps 15% tax on foreign house buyers in effort to cool market

Canadian authorities have taken action to tackle the affordability crisis in British Columbias biggest city where a detached home now costs C$1.56m

Foreigners looking to purchase a home in Vancouver now face an additional tax of 15%, as Canadian authorities seek to temper a heated housing market that ranks as one of the worlds least affordable.

The tax, which came into effect on Tuesday, will be levied on all home buyers in metro Vancouver who are not Canadian citizens or permanent residents. The measure will also apply to corporations that are not registered in Canada or which are controlled by foreigners.

Announcing the measure, the provincial government of British Columbia said the tax was intended to help cool the citys red-hot property market, where demand from foreign investors many of them from China has helped push the cost of a detached home to C$1.56m ($1.2m) in June, a 39% jump from a year earlier.

There is evidence now that suggests that very wealthy foreign buyers have raised the price, the overall price of housing for people in British Columbia, Christy Clark, the provinces premier, told reporters recently.

Figures collected by the province during a five-week period this summer showed that foreign nationals invested more than C$1bn amounting to about 8% of sales in real estate in the province, with the bulk of the money heading to Vancouver and the surrounding region.

Clark has long resisted calls to intervene in the real estate and construction industries, which in 2014 accounted for 25% of the provinces GDP.

In a city where the median household income in 2014 stood at about C$76,000 a year, the proportion of detached million-dollar homes now sits at 91%. If we are going to put British Columbians first, and that is what we are intending to do, we need to make sure we do everything we can to try and keep housing affordable, said Clark, who leads the provinces Liberal government.

Ultimately, the goal is to affect the demand by making sure its maybe a little tougher for foreign buyers to find their way into our market.

Money collected from the tax will be put towards housing initiatives for renters, low-income residents and first-time buyers, amid record numbers of homeless in the city.

The measure, which echoes the taxes imposed on foreign buyers in Hong Kong and Singapore, was met with mixed reviews. Gregor Robertson, the mayor of Vancouver, welcomed the initiative. Its too early to judge whether or not [the tax] will have a significant impact, but its good to see, he told reporters. Last month the city of Vancouver was given the go-ahead to impose a new tax on empty homes.

Others pointed to the loopholes that could allow foreigners to get around paying the tax by measures such as having Canadian friends or relatives purchase homes for them. The tax depends on buyers self-reporting their nationality, threatening jail time and steep fines of up to C$200,000 plus the unpaid tax for those who attempt to avoid the tax.

Still, those intent on ducking the tax will find a way around it, said David Eby, a New Democrat member of the provincial legislature. We have a wild west real estate market where there is really very little auditing or policing of it, whether its around money laundering or tax avoidance or any of these issues, so this tax is going to be subject to all of those weaknesses.

He worried the tax would make it more difficult for companies in the city to recruit and retain highly skilled workers, as it also applies to foreigners who are in the city on work permits and who pay taxes. Theres a lot of bycatch it catches a lot of people that it shouldnt, he said, citing researchers recruited by the citys universities or specialised workers needed for the citys tech industry as examples.

The effect of the tax will probably be evident within a few months, said Tom Davidoff, a professor at the University of British Columbia. This could possibly have significant impact but we just dont know how big it will be because we do not know what the foreign buyer will do.

Some could look to homes in other parts of the province or in Toronto, where the average cost of a home stands at C$746,000, a 17% increase from one year earlier. Last week, the Ontario government said it was closely watching the implementation of the new tax in Vancouver as a potential means of increasing affordability.

Davidoffs best guess is that the new tax in Vancouver would drop home prices by 10%. Some foreign buyers may find a way to get around the tax, he said. And some people will just pay the 15%. Theyre rich and theyll do it.

Read more: https://www.theguardian.com/world/2016/aug/02/vancouver-real-estate-foreign-house-buyers-tax


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