Identifier
Created
Classification
Origin
06SANTIAGO2277
2006-10-31 11:59:00
UNCLASSIFIED
Embassy Santiago
Cable title:  

PINOCHET GOLD DOESN'T PAN OUT, UNDER HOUSE ARREST

Tags:  PGOV PINR KCRM CI 
pdf how-to read a cable
VZCZCXYZ0005
PP RUEHWEB

DE RUEHSG #2277 3041159
ZNR UUUUU ZZH
P 311159Z OCT 06
FM AMEMBASSY SANTIAGO
TO RUEHC/SECSTATE WASHDC PRIORITY 0283
INFO RHEFDIA/DIA WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
UNCLAS SANTIAGO 002277 

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: PGOV PINR KCRM CI
SUBJECT: PINOCHET GOLD DOESN'T PAN OUT, UNDER HOUSE ARREST
FOR VILLA GRIMALDI


UNCLAS SANTIAGO 002277

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: PGOV PINR KCRM CI
SUBJECT: PINOCHET GOLD DOESN'T PAN OUT, UNDER HOUSE ARREST
FOR VILLA GRIMALDI



1. Summary: Chinese bank HSBC declared October 26 that
documents showing former Chilean dictator Augusto Pinochet
held deposits of 9629 kilograms of gold (worth an estimated
160 million dollars) were fake. The declaration capped a
week of media speculation and public debate in Chile,
including accusations the Foreign Ministry had delayed
transmission of the documents. The HSBC declaration is
consistent with a finding by Chile's Attorney General that
the documents were not backed by actual deposits with the
alleged holding company, Schell Security GmbH, or with HSBC.
End Summary.

Kilos of Karats or Tons?
--------------


2. From the start, newspaper reports of the purported
deposits were confused. "El Mercurio," a generally reliable
and centrist Chilean daily, reported that Pinochet held
deposits of 9629 kilograms of gold, at 160 million dollars --
seven times greater than the value of all the hidden Pinochet
accounts detected to date. Another story on the same page
reported holdings of 9629 tons of gold, which would be a
fortune almost four times greater than Bill Gates! Although
the charges that Pinochet held gold deposits making him by
far the richest man on the planet seemed implausible,
confidence in Pinochet's fiscal probity has been so deeply
shaken by revelations of his other hidden accounts that many
Chileans at least considered it.

Smokescreen or Smear Job?
--------------


3. The opposition has criticized every aspect of the
government's handling of the documents. It claimed both that
the Foreign Ministry delayed ten days before releasing the
documents to the courts and CDE, yet should not have released
them without first verifying their authenticity. The
Presidents of the two opposition parties, Carlos Larrain of
National Renovation and Hernan Larrain (no relation) of the
Independent Democratic Union have publicly accused the GOC of
leaking the Pinochet-gold documents to distract attention
from a burgeoning financial scandal with ChileDeportes, the
national amateur sports program (septel). Meanwhile,
Pinochet's family has complained the revelations are an
attempt to smear their patriarch right before his birthday.


4. In a rare media appearance on October 26, Director General
of the MFA Carlos Portales defended the MFA's management of
the documents. Portales claimed the MFA moved expeditiously
in translating and communicating the documents to the courts
and CDE, given the bureaucratic process of registering
correspondence and two intervening weekends. While Foreign
Minister Foxley had said earlier in the week that "these
documents come from a trustworthy source" and the allegations
"must be taken seriously," Portales noted it was not within
the purview of the MFA to evaluate evidence in an ongoing
legal proceeding. According to Portales, the MFA was not
responsible for leaking the documents to the press.


5. A timeline released by the MFA on October 27 shows the
Chilean Consulate in Los Angeles received the questionable
documents on October 13. The MFA notified the Presidency on
October 17 and transmitted copies on October 18 to Riggs Bank
(Pinochet's hidden finances) case judge and the Attorney
General (CDE),both of whom acknowledged receipt of the
documents on October 23. On October 25, the CDE reported the
documents did not appear to be valid, and HSBC bank issued a
statement saying it held no gold deposits in Pinochet's name.
On October 26, HSBC issued a definitive statement saying the
deposit documents were fakes.

Pinochet Placed Under House Arrest
--------------


6. In an unrelated case concerning human rights abuses at
Villa Grimaldi during Pinochet's dictatorship, Judge
Alejandro Solis filed formal charges October 27 against
Pinochet for 36 kidnappings, 23 cases of torture, and one
homicide. Solis issued an order placing Pinochet under house
arrest, which will be served Monday October 30. Solis had
earlier rejected an appeal by Pinochet's defense to close the
case based on Pinochet's incapacity to defend himself at
trial. Solis rejected the plea, saying based on recent
medical and psychological tests and his own questioning of
Pinochet, that Pinochet appeared competent to stand trial.
KELLY