MercoPress. South Atlantic News Agency

Another major financial scandal in Chile

Chile is in the midst of another major financial scandal involving government officials, private agents and a possible loss of over a hundred and ten million US dollars.

The scam was simple and direct. An unfaithful official from the Production Promotion Corporation, Corfo, handed the equivalent of 110 million bonds from the institution to one of Santiago's largest private brokerage houses, Inverlink, that readily sold them in the local market.

The Corfo employee plus the four directors of Inverlink have been arrested and Chilean President Ricardo Lagos underlined that "a private group has committed a fraud, since they knew they were trading with stolen financial documents".

The intervening judge ordered the sequestration of the documents. However a controversy has erupted since banks that in good faith purchased the documents claim they are valid, while government insists that they must be endorsed before traded and the person who stole them was not entitled to perform that action.

To make things worse, the brokerage house Inverlink was recently involved in another illegal action by operating with privileged information extracted from the country's Central Bank through the most trusted secretary of the president's bank.

The secretary was having a torrid affair with one of Inverlink's brokers and handed highly classified information in the Central Bank's president personal computer to her lover.

Both scandals have sent shock waves to Chile's financial system severely curtailing confidence in the local market and government's controls.

Judge Jorge Colvin has now both cases.