The so-called “notebooks of corruption” scandal continues its exponential growth as a result of the information provided by the actors from the public and private sector who are marching down to the offices of Federal Judge Claudio Bonadio and Prosecutor Carlos Stornelli day after day.
Regarding the former officials from the Kirchner administration camp, it was the turn of former Planning Minister Julio De Vido, who was transferred from prison, where he’s been since last October as a result of his alleged involvement in other corruption cases. And on the private side of the counter, high-ranking Techint official Luis Betnaza and former head of the Construction Chamber Carlos Wagner were scheduled to appear before the court.
But we’ll get back to that later, because the wide-reaching impact of the investigation has opened yet another battlefront for the Macri administration in the economic landscape: attempting to appease the apprehension of international private investors over the fact that many of the largest companies operating in Argentina – such as Techint, Iecsa, Grupo Roggio, Isolux, Industrias Pescarmona and Albanesi – are included in the notebooks, and the possibility of this negatively affecting the public works they are carrying out.
This uncertainty is illustrated by the increase of Argentine bonds’ interest rates, which fluctuate according to Argentina’s country risk score. Infobae Journalist Pablo Wende reported that yesterday, a large sale of Argentine bonds resulted in a 4.5 percent increase in the score, clocking in at 637 points. “It’s a level that had not been seen since 2015, when there was still reigning uncertainty over who would govern Argentina, [Mauricio] Macri or [Daniel] Scioli,” Wende indicated.
Private companies involved are doing even worse. Bloomberg reported that “Albanesi bonds due 2023 yield 14.90 percent, up 4.37 points since the case began.” “Clisa, controlled by Grupo Roggio is the worst performer, with its 2023 bond yielding 19.25 percent,” the article adds.
Government officials have started to address the issue publicly, in an attempt to convey peace of mind to the markets. Transportation Minister Guillermo Dietrich assured that “no public works will be halted as a result of the ‘notebooks’ scandal.” In a TV interview, Production Minister Dante Sica argued that “the international financial system is overreacting” to the news and said that “after these days, the real impact on the economy will not be that strong.”
The Minister went on to indicate that investors’ fear of the case turning into an Argentine equivalent of the Lava Jato case in Brazil, and causing a deep recession as a result of the fall of the country’s largest companies as well as the political establishment, is unfounded.
“In Brazil, the neutron bomb fell on Petrobras, the country’s largest company. Besides, it involved construction companies that had business in other sectors and, facing the crisis, had to liquidate assets that affected other sectors of the country’s economy. But overall, it affected politicians or officials who were part of the government. Here, we are seeing a bribery, embezzlement, and corruption scheme that does not taint the government,” he added.
However, the impact on Argentine’s daily economy could already be felt today, as the peso depreciated sharply against the dollar, with the exchange rate reaching AR $30 in some banks. The rate was below AR $28 earlier this week.
So far, no government officials have been directly reached by the scandal. The piece of shrapnel that has passed closest to the Macri administration is named Ángelo Calcaterra: the construction company formerly owned by the President’s cousin, Iecsa, is in the notebooks and both Calcaterra and his right hand-man, Javier Sánchez Caballero, were two of the first three business leaders to take plea deals.
They said that in reality, they only gave money because they were coerced by officials from the Kirchner administration to “contribute to electoral campaigns.” But it will be up to the courts to decide whether this is true, or if they were actually kickbacks paid in exchange for being awarded public works.
However, it will be up to the government to make this distinction clear, and use the case’s impact in its favor. In an interview with Infobae, economist Carlos Rodríguez said that investors “were already losing their patience” with the government and the scandal was the straw that broke the camel’s back. Therefore, he said, “it is necessary for President Macri to come out and explain the situation to the markets.”
“The President can’t let the market go crazy due to lack of political information. There is confusion in the interpretation of the case and there are some thinking that the situation will weaken the administration and strengthen the Kirchnerite party,” he added.
At the moment, the political scenario is diametrically opposed. Taking out the economic impact out of the equation, the government is the actor that has benefited the most from the shock waves sent by the investigation. It moves the spotlight away from the dire state of the economy and could severely the electoral aspirations of former President Cristina Fernández de Kirchner.
As the government deals with this worsening front, officials from the former administration from Cristina Kirchner down are seeing the water they are in heating up too. In fact, the former President got bad legal news yesterday. After former Federal Judge Norberto Oyarbide confessed he was coerced to acquit both Néstor and Cristina Kirchner in an illicit enrichment case from 2008 in record time, the Financial Information Unit (UIF), an organization under the sphere of the Attorney General’s Office tasked with investigating financial crimes, requested the ruling be overturned and the case reopened.
“If Oyarbide says he closed a case as a result of coercion, he could be admitting to fraud. In that case, we would have to first investigate the judge’s attitude. If that is confirmed, then we could review the rulings that were issued under that fraudulent scheme,” judicial sources told La Nación. Federal Judge Marcelo Martínez de Giorgi will be in charge of dealing with the request.
The confession sent shock waves in the judicial landscape, and prompted Federal Prosecutor Federico Delgado to publicly criticize Oyarbide. In a TV interview, he said the former judge’s performance was extremely poor but “he knew lasted in his post because he knew how to administer this weakness by being loyal to the powerful.” “That’s why we are in the situation we are,” he said.
Lower down the political food chain the temperature is also high. La Nación reported that yesterday, police seized USB drives from the house of Martín Larraburu, secretary of former Cabinet Chief and current Senator Juan Manuel Abal Medina, with information that could be related to the corruption scheme the involved claim was aimed at raising money for the 2013 midterms campaign. Judicial officials are seeking to determine if this money was effectively used with this purpose or if the sums were actually kickbacks to be embezzled, as it would influence the seriousness of the crime.
Yesterday, Abal Medina admitted to having received money from business leaders, but assured he was certain they were voluntary and that they were all destined to finance the campaign.
More information is set to surface as the accused continue to make their way to the courts. Monday will be particularly relevant, as it will be the turn of the former President. Stay tuned, the case will continue to grow and its outcome will have a large influence on the stability of the Argentine political and economic landscapes.