Argentinian president accused of conflict of interest after canceling company debt | Argentina

Argentinian President Mauricio Macri has been charged in court with a conflict of interest after his government canceled a $296 million debt owed by the family business.

The case concerns the Macri family company, Socma, which in 1997 took over Argentina’s privatized postal service under the liberal government of former President Carlos Menem.

The Correo Argentino postal service was renationalized in 2003 after alleged mismanagement by the Macri company and for failing to pay the concession fee for several consecutive years. At the time, Socma claimed that the investments it had made in the postal service compensated for the non-payment of the agreed fee.

The Macri family’s original debt to the state was 296 million Argentine pesos when the legal dispute began in 2001, two years before the renationalization of the postal service. This was equivalent to $296 million at the time due to the one-to-one convertibility law then in effect, with the exact size of the debt today after 16 years of inflation and multiple peso devaluations at the center of the disputes.

The long-running debt lawsuit was settled without any public announcement last year, when a government legal representative accepted a proposal under which Socma would repay the debt in installments over 15 years with payments of interest well below market rates.

According to charges presented by prosecutor Juan Pedro Zoni on Tuesday, the reduced interest rate – and a payment plan under which the majority
of debt will be paid towards the end of the 15 year period – means that the company will end up repaying only around 1.18% of the total debt.

Macri, his family and Socma denied any wrongdoing and on Tuesday his government defended the deal.

“After 12 years of neglect and no resolution from the authorities of the previous government, the Ministry of Communications has worked on the outline of an agreement to end a discussion which was clearly harmful to the state because it did not was not resolved,” said the Macri firm. leader, Marcos Peña, told the press.

Peña attributed the outraged reaction to the debt deal in the upcoming midterm legislative elections this year. “In an election year, these discussions will always become political,” the chief of staff said.

Last year’s settlement came to light last week when another prosecutor, Gabriela Boquín, appealed against it, saying it was “ruinous” and “inadmissible” to the Argentine state.

In Tuesday’s indictment against Macri and Communications Secretary Oscar Aguad, Zoni said the settlement caused “pecuniary harm to
the state coffers” and asked federal judge Ariel Lijo to launch an investigation to determine whether Macri interfered in the decision that benefited his family.

The Socma company was originally owned by the president’s father, Francisco Macri, who sold it to three of his children, including Mauricio Macri, in 2007.

Mauricio Macri in turn sold his shares to three of his own children in several stages between 2008 and 2014. He was elected president in 2015.

• This article was amended on February 15, 2017 to clarify the amount of debt the Macris owed in 2001, given the exchange rate at the time.