Fortune Shines On Chile's Billionaire Prez-Elect

By: Federico Quilodran - AP Writer
By: Federico Quilodran - AP Writer

SANTIAGO, Chile (AP) - Shares in Chile's leading airline have more than doubled since a major shareholder was elected president, prompting a regulatory investigation and reviving concerns about conflicts of interest.

President-elect Sebastian Pinera resisted pressure to divest holdings before Sunday's election and since then has seen his 26 percent stake in LAN Airlines SA surge in value to between $1.5 billion and $1.6 billion.

LAN shares closed Thursday at 31.5 pesos ($0.06) a share, up 137 percent from 12.9 pesos at the pre-election closing.

That increase prompted halts this week in the sale of LAN shares and an automatic investigation by stock market regulators that happens whenever share prices increases by more than 20 percent during one day's trading.

Outgoing Finance Minister Andres Velasco criticized Pinera for not divesting before the vote, and outgoing President Michelle Bachelet cited Pinera's holdings in pushing for a new transparency law in Chile.

"It would have been better for the then-candidate to have divested all of his shares at the time, before and not after (the vote) - this would have been vastly preferable," Finance Minister Andres Velasco said.

Fernando Barros, president of Axxion de Pinera, the investment company that controls most of the president-elect's LAN shares, said Pinera is following through on campaign commitments to sell investments to avoid conflicts as president.

"The promise was to start this process as soon as he was elected," he said.

Investments "will be invested in very liquid instruments, very broadly, in Chile and beyond, without touching any area that would create a conflict of interest with his position or his actions as president of the republic," Barros said.

He ruled out calls by political opponents to put profits in a blind trust, although Pinera last year put about $500 million in investments inside Chile in blind trusts.

Axxion's manager Ana Maria Delano informed stock regulators that the company would resolve the process of selling its shares in a February meeting with the Cueto family, which controls 30 percent of LAN shares, and that the Cuetos would have right of first refusal according to a long-standing agreement.

The pending LAN sale presents an image problem for a president-elect who promised zero tolerance for corruption.

Nevertheless, Pinera's coalition has pulled together a narrow majority in Congress, after two small parties broke with the dominant center-left coalition.

"This is worse than having lost the presidential election on Sunday," said congressman Pablo Lorenzini, whose ally Eduardo Frei lost to Pinera on Sunday by a 4 percent margin.

The center-left Concertacion coalition holds a narrow majority in the Senate.


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