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Corporate Compliance Insights
Home FCPA

How Chile’s Recent Political Scandals Led to Reforms

by Matteson Ellis
December 7, 2016
in FCPA, Featured
anti-corruption reform in chile

with co-author Quinnie Lin, a Law Clerk at Miller & Chevalier

This article was republished with permission from FCPAméricas Blog, for which Matteson Ellis is founder, editor and regular contributor.

On March 10, 2015, Chile’s President Michelle Bachelet established the Presidential Advisory Council against Corruption, Influence-Peddling and Conflicts of Interest (“Consejo Asesor Presidencial contra los Conflictos de Interés, el Tráfico de Influencias y la Corrupción”) (the Council). The impetus for founding the Council was a series of political scandals in recent years that resulted in plummeting public confidence in the Chilean government.

In January of 2015, authorities investigated Andrés Velasco, the Finance Minister during Bachelet’s first term, for alleged illegal financing of his 2013 political campaign from the business group, Penta. In February of 2015, a whistleblower disclosed that SQM, a chemical production company headed by Julio Ponce Lerou, the ex-son-in-law of Chile’s former dictator Augusto Pinochet, allegedly obtained tax reductions fraudulently. Other scandals, including one involving Bachelet’s son and daughter-in-law, shook the public’s trust in a country that has historically prided itself as a model for political transparency in Latin America. Chile has consistently ranked in the 20s out of 168 countries on Transparency International’s Corruption Perceptions Index in recent years. However, a survey showed that public confidence in the government, the National Congress of Chile (Congress) and political parties fell 19 percent, 10.5 percent and 5.5 percent respectively between 2012 and 2015, according to the Research Center of Public Studies (CEP) national opinion survey.

The Council consisted of 16 professionals of diverse backgrounds, including a former president of the Central Bank of Chile and a former Pinochet cabinet member. The head of the Council was Eduardo Engel, an economics professor at the University of Chile who holds two doctorate degrees from MIT and Stanford. According to Engel, who spoke at Washington D.C.’s Woodrow Wilson Center’s Latin America Program on September 7, 2016, no political leaders or business leaders were allowed on the Council because of the fear that they would influence the proposed reforms. After 45 days of deliberation, the Council released a report in Spanish that put forth 236 proposals, 92 percent of which had the unanimous support of the Council members.

The report covered five main areas:

  • preventing corruption;
  • regulating conflicts of interest;
  • financing politics to strengthen democracy, market confidence and integrity;
  • ethics; and
  • citizen rights.

In May and June of 2016, 21 of the legal initiatives from the report were proposed in Congress. Since keeping track of the numerous legislative proposals would be difficult for ordinary citizens, two nonprofits, Espacio Publico and Ciudadano Inteligente, launched the Anticorruption Observatory, a website to evaluate the progress of the legislative proposals. On the website, the proposed laws were rated on the extent to which they captured what the Council proposed.

To date, the Chilean Congress has successfully passed laws in the areas of disclosing interest and private assets, civic and ethics education and campaign finance. The areas where legislative proposals are making progress include reform of the civil service, prevention of corruption in land use, empowering regulators, reforming regulation bodies and strengthening the corporate governance of firms. Areas with little or no progress include revolving door regulations, municipality reform, reform of public procurement and defense spending and the creation of the Office of Ombudsman. Engel credited the success of the Council’s proposals to the role that Chilean civil society and media have played in reporting on the political scandals and supporting the work of the Council.

The work of the Council appears to be contributing to a restoration of some of the public’s trust in the Chilean government. In a May 2016 survey, 60 percent of the respondents answered “yes” to the question, “Do you think that Congress passing most of the measures proposed by the [Council] will restore public confidence in politics?” The success of the Council’s proposals led Engel to conclude, “[Political] scandals are opportunities if you approach them correctly.”

The opinions expressed in this post are those of the author in his or her individual capacity and do not necessarily represent the views of anyone else, including the entities with which the author is affiliated, the author`s employers, other contributors, FCPAméricas or its advertisers. The information in the FCPAméricas blog is intended for public discussion and educational purposes only. It is not intended to provide legal advice to its readers and does not create an attorney-client relationship. It does not seek to describe or convey the quality of legal services. FCPAméricas encourages readers to seek qualified legal counsel regarding anti-corruption laws or any other legal issue. FCPAméricas gives permission to link, post, distribute or reference this article for any lawful purpose, provided attribution is made to the author and to FCPAméricas LLC.


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Matteson Ellis

Matteson Ellis serves as Special Counsel to the FCPA and International Anti-Corruption practice group of Miller & Chevalier Chartered in Washington, DC.  He is also founder and principal of Matteson Ellis Law PLLC, a law firm focusing on FCPA compliance and enforcement. He has extensive experience in a broad range of international anti-corruption areas. Previously, he worked with the anti-corruption and anti-fraud investigations and sanctions proceedings unit at The World Bank.

Mr. Ellis has helped build compliance programs associated with some of the largest FCPA settlements to date; performed internal investigations in more than 20 countries throughout the Americas, Asia, Europe and Africa considered “high corruption risk” by international monitoring organizations; investigated fraud and corruption and supported administrative sanctions and debarment proceedings for The World Bank and The Inter-American Development Bank; and is fluent in Spanish and Portuguese.

Mr. Ellis focuses particularly on the Americas, having spent several years in the region working for a Fortune 50 multinational corporation and a government ethics watchdog group. He regularly speaks on corruption matters throughout the region and is editor of the FCPAméricas Blog.

He has worked with every facet of FCPA enforcement and compliance, including legal analysis, internal investigations, third party due diligence, transactional due diligence, anti-corruption policy drafting, compliance training, compliance audits, corruption risk assessments, voluntary disclosures to the U.S. government and resolutions with the U.S. government. He has conducted anti-corruption enforcement and compliance work in the following sectors: agriculture, construction, defense, energy/oil and gas, engineering, financial services, medical devices, mining, pharmaceuticals, gaming, roads/infrastructure and technology.

Mr. Ellis received his law degree, cum laude, from Georgetown University Law Center, his masters in foreign affairs from Georgetown’s School of Foreign Service, and his B.A. from Dartmouth College. He co-founded and serves as chairman of the board of The School for Ethics and Global Leadership in Washington, D.C. He is a member of the District of Columbia, Texas, New York, and New Jersey bar associations.

Mr. Ellis is also author of The FCPA in Latin America: Common Corruption Risks and Effective Compliance Strategies for the Region.

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