PINOCHET GOLD DOESN'T PAN OUT, UNDER HOUSE ARREST

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