Poor old man Pinochet.

[Magda Hassan]

[Magda Hassan]

January 12, 2007

HOW DID GENERAL PINOCHET GET SO RICH?James S. Henry

Most assessments of General Pinochet, pro and con, acknowledge his responsibilityfor thousands of grevious human rights violations.But there is growing evidence that his criminality did not stop there -- as it rarely does when governments are vested with unfettered authority, whether in the name of "national security," religious truth, or just raw personal power.

As noted in our lead article on the General's legacy,only in the last three years have historians come appreciate just how far-reaching and systematic was his regime's involvement in criminal activity -- partly just because its political opponents had been systematically eliminated, so that there were few limits on Pinochet's power.

As we'll see, Pinochet was no exception to the "absolute power corrupts" cliché.Indeed, there is strong evidence that leading members of his regime were deeply involved in a wide range of crimes for profit, including diversions of public funds, tax evasion, money laundering, bribery, illegal arms exports, falsification of identity documents, drug trafficking, money laundering, and murder-for-profit.There is also strong evidence that "mi General" and his familyprofited handsomely from such crimes.From this angle, Pinochet's death in early December probably saved him and his family from convictions, stiff penalties and fines in the six criminal prosecutions and more than 300 civil suits still pending against him for charges ranging from the misuse of public funds and tax evasion to torture and murder. But at least there was a modicum of justice. The General's extensive crimes apparently contributed to Chile's decision to deny him an official state funeral. And -- the ultimate insult -- the Chilean Army also returned his ashes, refusing to bury themat the huge Lenin-like tomb that he'd built for himself at theEscuela Militar.SOURCING THE MONEYThis evidence provides the key to the puzzle posed by all the recent revelations (especially since the US Senate Permanent Investigations Committee's July 2004 report on Riggs Bank) regarding the large personal fortune that Pinochet and his family accumulated during his 17-year reign now estimated at at least $31 million in US and Swiss bank accounts and total family wealth of at least $100 million -- plus as much as $211 million more if the October 2006 allegations about 9.62 tons of Pinochet gold at HSBC hold up in the on-going investigation.BEST BUDDIESThe evidence about Pinochet's arms deals also helps us to understand another one of his many interesting attributes why the Baroness Margaret Thatcher, in particular, was so "deeply saddened" by his death.It turns out that Pinochet was no stranger to arms deals involving British companies likeBritish Aerospace, Rolls Royce, and Royal Ordnance -- companies that Mark Thatcher, the Baroness' only son, had also worked for as a highly-paid "intermediario" on huge, lucrative arms deals (for example, the $40 billion 1985 "Al Yamamah" aircraft deal, which involved hundreds of millions in payoffs. ) Indeed, when Pinochet was detained in London in October 1998, the reason he'd gone there in the first place was not his "health," but to facilitate another arms deal.

SCHIZOPHRENIA

Curiously, while even the General's most ardent admirers acknowledge his many human rights violations, they have been much more reluctant to admit there were other criminal activities.

This is partly because Pinochet carefully cultivated the image of being -- in contrast to all other modern dictators, especially those from Latin America -- an austere Prussian type who eschewed personal wealth and served his country out of sheer dedication to Deus, patria, y honor. We recall all the appeals for help with his medical and legal bills when the General was interned in London in the late 1990s appeals that some of his more middle-class followers responded to by dipping into precious life savings and selling off the family jewels.

This schizophrenia about Pinochet's crimes also derives from the sharp distinction that many of his followers draw between selfless and venal crimes. In their view -- and, at least initially, that of Chile's Catholic Church -- even his worst crimes against humanity may have been justified in the name of la causa superior saving Chile from "godless communism." On the other hand, crimes that smack of personal enrichment, the exploitation of arbitrary power, or insider influence are supposedly taboo.In practice, of course, these boundaries tend to blur, especially with a regime that held absolute power for nearly two decades and retained many "protectors" long after that.

TEMPTATIONS

With economic policy at the regime's disposal; with all judges, police, prosecutors, border agents, imports and exports, multiple arms factories, chemical laboratories, and, indeed, the national copper company (Codelco, Chile's largest exporter) under its control; with tens of thousands of the "enemies of the state" forced to forfeit their property and flee the country; and with the lives and welfare of thousands of prisoners and their families quite literally up for sale, the criminal temptations could easily prove overwhelming.

DOMESTIC CORRUPTION
There were several variations on this theme, including kickbacks from rigged privatization deals, bribes, the diversion of public funds, tax evasion, and money laundering.

Corrupt Privatization Deals. In 1973-74, and against in the 1980s, the Pinochet regime's aggressive privatization program also provided lucrative opportunities to extract corruption rents from privileged partners. More than 250 nationalized companies were re¬turned to their former owners, and 200 more were sold off at bargain prices.

The big buyers at this fire sale were a handful of closely-held grupos like Javier Vial and Cruzat-Larrain, which owned most of the local banks, and also had very strong ties to foreign banks. For example, Javier Vial Castillo, head of the powerful business conglomerate B.H.C., was a strong supporter of Pinochet's dictatorship and a close friend of the General, (whose full family name was Augusto Pinochet Ugarte Vial.)

In March 1975 Vial had paid the soon-to-be Nobel laureate Economics Professor Milton Friedman $30,000 for a five-day lecture trip to Chile, during which he delivered the legendary brutilitarian advice: "If you are going to cut the tail off a dog, you don't do it an inch at a time." Over the next three years, Vial exploited his close relationshp with the Pinochet regime to acquire a huge business empire, including Banco de Chile, the country's largest private bank. Vial used the bank as a kind of private front to borrow heavily from foreign banks like Bankers Trust and Chase, and then relent the money to acquire and finance more than 60 of his own companies, including several like Banco Andino that were based in offshore centers like Panama. In three short years, by 1978, Vial had somehow become Chile's richest man.

The shenanigans behind this fortune became public after Vial's empire cracked in January 1983, when Pinochet's monetarist fixed-exchange rate hit the wall. Chile entered a deep recession, unemployment hit thirty percent, and the six top private banks and the two largest private "grupos," Vial and Cruzat-Larrain, both folded. In 1997, after a 14-year investigation, Vial was finally sentenced to 4.5 years in jail for bank fraud, and Pinochet's former Economy and Treasury Minister Rolf Lüders, who'd also happened to have acquired 10 percent of BHC, was sentenced to four years. (Vial ultimately served just nine months of his sentence.)In 2005, Chile's Supreme Court absolved Vial and other Banco de Chile of responsibility for the fiasco on technical grounds, butChile had still got stuck with more than $500 million of Vial's unpaid debts.This was not reallly surprising to Vial's foreign bankers -- as Ron Clave, a former Bankers Trust private banker who had personally handled Vial's accounts in Panama told me, "We knew he was lending to himself, but no one wanted to pull the plug."

Looting the Treasury. in July 2006, General Manuel Contreraras Sepulveda, the former headof the DINA (Chile's CIA) who is now in prison for the disappearance of the regime's political opponents, was interviewed by a judge investigating the 1992 assassination of Colonel Gerardo Huber Olivares, an Army officer and former DINA chief in the Santiago area. According to Contreras' deposition, as well as to another Chilean investigation of the Riggs Bank case, another Pinochet routes to personal wealth was the diversion of funds from secret Army reserve accounts that had been established in the US and Canada.

Land Deals. There have been numerous investigations of corruption-ridden land deals involving the Pinochet family. For example, in the El Melocoton case, Jorge Lavandero, a courageous Chilean journalist, documented the fact that "mi General" had acquired a 29-acre estate in San Jose de Maipo, 50 miles from Santiago, and then enhanced the area with more than $2 million of roads and other infrastructure. For his efforts, Lavandero was reported attacked by gang and beaten within an inch of his life. fraud in acquisition of properties investigated at end of 1980s…..ARMS TRAFFICKINGThe global arms trade also provided strong temptations. Despite their ideological similarities, the military regimes of Chile. Argentina, and Brazil became locked in an arms race in the 1970s. They all decided to develop their own arms industries, partly to avoid being hostage to fickle suppliers like the US, which adopted an embargo against arms exports to human rights violators in 1976, at the peak of post-Watergate outrage over the Nixon Adminstration, and partly just to cash in on the booming global arms market.

The result was that by the early 1980s, Chile had become one of the world's top Third World arms exporter often in violation of US law and UN embargos.

Cardoen. With sub rosa US government support in the 1980s, , Chilean arms dealers like Carlos Cardoen Cornejo made fortunes exporting cluster bombs, modified US-made helicopters, night vision goggles and other light weapons to fellow Third World dictatorships like Iraq's Saddam Hussein, Libya's Qaddafi, Saudi Arabia' monarchy, South Africa's apartheid regime, and even Fidel's Cuba at least in the case of Saddam, with the apparent knowledge and approval of US officials like CIA Director William Casey and Deputy CIA Director (now US Secretary of Defense)Robert Gates, as well as of General Pinochet and other leading members of the Chilean military.

Commission Deals. General Pinochet and his family members also reportedly became personally involved in mediating domestic and foreign arms sales reportedly working closely with leading arms suppliers like British Aerospace and Royal Ordnance, the Swiss firms SIG, Mowag, and Oerlikon, the French firms Creusot Loire, Thomson Brandt, and GIAT, and the Belgian firm Cockerill Mechanical.

Croatia. These deals did not cease when Pinochet left office in 1990. In December 1991, for example, several tons of Chilean arms were located in a warehouse in Budapest, destined for Croatia in direct violation of a UN embargo. According to the deposition by Contreras, Colonel Gerardo Huber had been murdered on Pinochet's orders because of his knowledge of the regime's involvement in cocaine dealing and arms sales. According to Contreras, when the Croatian arms exports surfaced, Colonel Huber had been forced to resign has head of Foreign Acquisitions in the Army's Logistics Center. Within a few days, he had been questioned by Hernan Correa de la Cerda, a minister in the democratic government that succeeded Pinochet, and had suggested that General Florencio Tejos, Chief of War Materials, would know all about this arms deal. As discussed below, Huber also reportedly started talking to Correa de la Cerda about the regime's involvement in drug trafficking. At the time, of course, General Pinochet was no longer President, but was still head of the Army.

Commissions on Own Purchases. In 1998 Pinochet reported received a $4.3 million commission in connection with a $443 million frigate sale by British Aerospace and Royal Ordinance to the Chilean Navy.

> Drugs.Latin America's cocaine exports boomed in the late 1970s. While the leading exporters were Colombia, Peru, and Bolivia, the evidence suggests that Chilean gangs also became involved and that the military assisted with transport, logistics, and even chemistry.

For example, General Contreras has also alleged alleged that that much of Pinochet's fortune had been derived from drug deals arranged by his son, Marco Antonio Pinochet Liniart (MAPL), in partnership with a former DINA chemist, Eugenio Berrios, and a Chilean of Syrian extraction, Yamal Edgardo Bathich Villarroel. Bathich and MAPL were both shareholders in a car importer, Chile Focus Motores S.A., that reportedly also dealings with a Colombian drug trafficker, Jesus Ochoa Galvis, of the Ochoa Vasquez/ Medellin cartel. According to Contreras, Huber had been in charge of the Army's Chemical Complex in Talagrante in the mid-1980s, where Berrios had helped to develop "cocaina negra," a form of coke in which iron sulfate and other minerals were added so that drug dogs couldn't detect it. (In July 2005, Mexican authorities reportedly seized six tons of "cocaina negra" on a Peruvian ship, the "Colibri," that arrived in Manzanillo, after it avoided detection in five other countries.") According to Contreras, the cocaine produced by this process was shipped to the US and Europe, where it was distributed by a gang run by Monzer Al Kassar, Bathich's uncle and business partner, a Syrian arms dealer who was convicted of drug trafficking in London.

> Murder for ProfitThe Pinochet regime did not limit its victims to political opponents it also frequently turned on former agents and business partners, when it perceived them to pose a threat. Tattling, for sure, was not a life-extending activity.

Just nine days after his last conversation with the Minister in January 1992, Colonel Gerardo Huber's body was found with a single gun shot in the head. According to Contreras, he'd been murdered by members of a unit within Army Intelligence, reporting to one Coronel Manuel Provis Carrasco. At this point at least five former Army Intelligence (DINE) officers, including Eugenio Covarrubias, its former head, are being prosecuted in Chile.

Eugenio Barrios, the DINA's former chemist, was reportedly assassinated by members of Army Intelligence (DINE) in Uruguay in 1993. Several former DINE officers, including two generals, Hernan Ramirez Rurange and Eugenio Covarrubias (the former head of DINE), as well as several former Chilean and Uruguayan diplomats, are being prosecuted for his disappearance.
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[Peter Lemkin]

There is a disgusting pattern of fascist types living long and growing unnaturally rich - and spending their lives ruining/suppressing/oppressing and often ENDING the lives of others....all too many of the anti-fascists or just plain apolitical folks die young and poor - often having suffered directly or indirectly from this first group, which needs to be eliminated and prevented from further harming humanity. polity, and life on Earth any further, IMHO.

[Magda Hassan]

There is a disgusting pattern of fascist types living long and growing unnaturally rich - and spending their lives ruining/supressing and ENDING the lives of others....all too many of the anti-fascists or just plain apolitical folks die young and poor - often having suffered directly or indirectly from this first group, which needs to be eliminated and prevented from further harming humanity. polity, and life on Earth any further, IMHO.

Yes the list is long of old fascist men who get to keep their stolen loot and stay out of jail. While on the other side there are plenty of martyrs and lives cut short.

[David Guyatt]

Let's also remember that he was a good friend of Mrga Thatchcula who ensured that his arrest in the UK was short and comfortable and eventually came to nothing. He, apparently, was "one of us" to coin Thatchcula's phrase to identify those of the far right with whom she supped and supported.