Sunday, January 24, 2010

Piñera's inauspicious start

Sebastián Piñera is already facing probes because of his refusal to sell off shares of his companies before the election, as there has been a speculative frenzy:

The rally, which pushed Axxion’s price-to-earnings ratio to 41 through yesterday, almost double that of Chile’s Ipsa stock index, led the exchange to temporarily halt the shares Jan. 19 and the securities regulator to announce an investigation of trading last night.

Overall, last week the Chilean stock exchange asked the company three separate times for explanations.  That's not exactly the sort of news a president-elect wants.  Meanwhile, he talks about shifting control of his holdings to independent foundations, but he doesn't want to allow public access to their records.  The Centro de Investigación e Información Periodística (CIPER--if you are interested in Chilean politics, their blog is very worthwhile for its investigative journalism) is trying to get access to one of them, the Fundación Futuro.

One problem of not being in power is that you get accustomed to doing whatever you want.   But presidents can't without some political consequence, at least not in a democratic setting.  So Piñera will keep getting slapped until he arranges his finances in a transparent manner.  It will be a distraction he doesn't need until he does.


mike a,  10:01 AM  

The criticism is politically motivated and nothing more. The holding company is a PUBLIC company that trades on the Chilean stock market - you can't get more transparent than that. As for the speculators who have sent the stock price up, Pinera has no control over that either. Anyone is free to speculate on any stock, including this one.

Greg Weeks 10:31 AM  

Read the CIPER article regarding public companies and the law. Your definition of transparency is, to say the least, highly unusual.

Anonymous,  10:47 AM  


From what I see your post is mixing unrelated topics together.

On the increase in Axxion's share price, as mike points out, it's a public company and Piñera has no control over why the market decided to rally. As far as I know in the US we don't demand that candidates sell their holdings until after the election, so Chile appears to be no different.

The public access to the fundaciones is a separate issue. It may be that Piñera wil need to allow more access, But compared to any other Latin nation (and even most developed ones) Chile already has great transparency.

Greg Weeks 10:58 AM  

All of these issues are interrelated, as they are financial issues that can cause him political problems. It is irrelevant whether it happens in other countries or not.

Anonymous,  11:06 AM  

They are interrelated just because his political enemies try to make it so. it doesn't mean they are analytically interrelated. And in fact, they don't appear to be.

It's relevant what happens in other countries because it gives you something to compare to. To say that things could be better in Chile is true but not very enlightening. That's also true of every country in the world.

But once you realize that Chile's transparency is among the best in the world it becomes easier to put all this in perspective.

The interesting point, for those that follow Latin America, is why so much of the region refuses to see in Chile an example to follow, particularly when Chile is doing so much better.

Laura 2:19 PM  

"But once you realize that Chile's transparency is among the best in the world it becomes easier to put all this in perspective."

But that's the problem-Chile is very transparent and Mr. Pinera tends to use the US style of holding companies owning each other in a confusing tangle that no one can figure out. And he holds positions in both the US and Chile. You can't really believe he's stayed a billionaire for the past 6 years-his LAN stock alone is worth more than that-before the recent surge. What a cozy deal. "Under a controlling shareholder pact, Pinera must first offer his stake to Chile's Cueto family group, which has the second-biggest investment in LAN, at 25.5 percent."

Or read this document-how many companies involved and many times do you see the name Pinera?

Laura 2:32 PM  

I found this bit of information about Axxion: "Axxion’s main objective is to develop and offer services in a variety of industries, including agriculture, farming, fishing, mining, communications, transport and real estate, according to a regulatory filing dated Nov. 2."

"Its main shareholder, with a 99.9 percent stake, is Pinera’s Inversiones Santa Cecilia SA, according to a regulatory filing."

Bloomberg - James Attwood and Eduardo Thomson
To contact the reporters on this story: James Attwood in Santiago at; Eduardo Thomson in Santiago at

MMF 12:25 PM  

The Fundación Futuro issue is relevant. One of the reasons why the Fundación refused to accept that their financial records (which must be handed over anyway to the Justice Ministry)is because the information would be used to hurt Piñera's chances as a candidate.

The argument is absurd. If Fundación Futuro carries out its purposes in accordance with its deed of incorporation, there should be nothing there that could've hurt Piñera. If, OTOH, the Fundación has veered from its purposes, carrying out activities not included in the deed, then of course it would hurt Piñera, but that would only be the reasonable outcome of proper investigative journalism

Randy Paul 12:58 PM  

Chile's vaunted transparency notwithstanding, Augusto Pinochet, who, to my knowledge, never held a private sector job in his life, managed to amass a fortune in the tens of millions and to this day no one knows exactly how.

  © Blogger templates The Professional Template by 2008

Back to TOP