For Chile’s Wealthy President-Elect, Victory Spells Huge PayoffFebruary 10, 2010
Chilean president-elect Sebastian Piñera, who narrowly won last Sunday’s runoff election against Sen. Eduardo Frei of the governing center-left Concertación coalition, has added new meaning to an old adage: to the victor go the spoils.
Piñera, a billionaire businessman and former senator from the center-right National Renovation (RN) party, beat Frei 51 percent to 48 percent to end the Concertación’s two-decade-long grip on power and become Chile’s first elected conservative president in more than half a century.
For Piñera, however, the win has more than just historical significance. It’s also meant a huge personal payoff for the mogul/politico, who has seen his extensive stock portfolio – which includes a controlling stake in Chilean airline leader LAN – balloon in recent days.
On Monday Jan. 18, the day after the election, the value of Piñera’s personal investment firm – Axxion – jumped some 12 percent. The holding company shot up another 21 percent Tuesday, forcing the Chilean market to actually suspend transactions of the stock. On Wednesday, however, trading on Axxion resumed, rising again to reach a three-day accumulative gain of 40 percent.
So far it’s not clear exactly how much money the president-elect has pocketed from the stock surge. Some news outlets put the figure at several hundred million dollars, a not unreasonable estimate given that even before the Axxion bonanza, which began in earnest following Piñera’s Dec. 13 victory in Chile’s first-round presidential election, the 19 percent stake in LAN controlled by the investment firm was valued at approximately US$1 billion.
Through another investment firm, Piñera owns an additional 7 percent of LAN, as well as a major television network and a substantial stake in the country’s most successful football team, Colo-Colo. In 2009 he figured on Forbes Magazine’s “The World’s Billionaires” list in a multi-way tie for the 701st position. The president-elect will almost certainly move higher up that list this year.
Conspicuously silent on the issue early in the wek, both Chile’s media and Piñera’s political opponents have finally begun drawing attention to matter. On Wednesday, the outgoing finance minister, Andes Velasco, said it would have been “much better” if Piñera had sold off his assets before, rather than after the election.
“My opinion as a citizen,” said Velasco, one of President Michelle Bachelet’s most widely respected cabinet officials, “is that I wish the then-candidate would have gotten rid of his stocks at the right time.”
Chile’s now-empowered conservatives shot back. Senator-elect Lily Perez, a member of Piñera’s RN, called on Bachelet to “shut up” her loose-lipped ministers. “Three days after the presidential election and the only thing Minsiter Velasco knows how to do is harshly criticize Sebastian Piñera, who is the president elect of Chile,” she said.
This is not the first time eyebrows have been raised over the mogul/politico’s conflicts of interest. In 2007 the country’s securities regulator, the Superintendencia de Valores y Seguros (SVS), fined Piñera more than US$600,000 after determining he had engaged in insider trading with LAN stock.
A group of congressmen from the Party for Democracy (PPD) and Socialist Party (PS) are asking that the SVS once again investigate Piñera’s business dealings. “Why did he refuse so flatly refuse to sell his stocks before being elected president?” questioned PPD Dep. Maria Antonieta Saa. “Because he’s a man that knows the financial market so well, we suspect the must have known that his stocks would rise when he was elected president.”
The president-elect himself had a different take on the matter. “I am already very disconnected (from the investments),” he told reporters Wednesday. “The truth is that I have not been following the stock market over the past few days.”
(This article originally appeared Jan. 20 on Upside Down World)