Tue, Jun 15, 2010 page7

• FEATURE : Conflict-of-interest charges dog Chile government’s reconstruction efforts

  ‘CRONYISM’ The president gave top businessmen and firms a prominent role in redevelopment, even though some were behind new buildings that fell in the quake

  • AP
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  Before February’s devastating earthquake, Fernando Echeverria ran a major construction company and led Chile’s powerful chamber of builders, which successfully lobbied against government inspections that would have made companies like his more accountable for faulty structures.

  Now, despite the failure of three of his newer buildings in the magnitude 8.8 temblor, Echeverria leads the reconstruction of Chile’s urban Santiago region as the governor appointed by Chilean President Sebastian Pinera.

  It’s one of numerous potential conflicts the conservative president has created in his zeal to run the reconstruction like the private ventures that made him a billionaire.

  Pinera also gave US$15 million in no-bid contracts to three giant building-supply companies formerly run or represented by Cabinet members and another political appointee — cutting out local vendors who desperately needed the sales after the quake. And he’s given private construction firms a leading role in designing new master plans for destroyed cities.

  “It’s a betrayal, I would say,” said Pedro Poblete, who leads a group of neighborhood associations in the Maule region, where the quake crumbled the capital of Talca and released a tsunami that destroyed 80 percent of the heart of coastal Constitucion.

  Pinera all but dismissed the potential for conflicts of interest from his appointees — nearly all from top corporate ranks — who now make decisions that could affect the bottom lines of their former companies. By sidestepping bureaucracy and demanding quick results, he delivered shelters and schools ahead of schedule after the Feb. 27 quake, which killed 521 people, left more than 200,000 homeless and caused US$30 billion in damage.

  “In life one always faces conflicts of interest — only the dead and the saints are removed from this situation,” he told a reporter for Argentina’s Clarin newspaper. “The important thing is to know how to resolve it correctly.”

  His government has responded to the criticisms in part by adding transparency to a new tax law designed to encourage corporate donations for reconstruction, and by offering thousands of small cash subsidies to people in shelters.

  However, Chileans accustomed to 20 straight years of center-left rule remain suspicious of the heavy corporate role. Political power is already highly concentrated in Chile, where the president appoints not only Cabinet ministers and agency leaders but governors as well.

  Now Chile’s economic and political powers are combined in a way not seen since the 1973 to 1990 dictatorship of General Augusto Pinochet, who was supported by the same right-wing parties Pinera returned to the executive branch.

  Under Pinochet, builders persuaded authorities to eliminate government construction-site inspections, and cities lost their capacity to enforce the codes.

  It took 15 years of democracy to restore some protections as part of Chile’s much-vaunted magnitude 9 earthquake standard adopted in 2005. But lobbying by the builders chamber, led by Echeverria from 2002 to 2004, contributed to some gaping holes: Companies pay for private site studies by third-party engineers, who aren’t clearly held responsible for their results, and cities are ill-equipped to ensure buildings were built according to the plans.

  Most modern construction withstood the quake, but about 40 recently built multistory buildings failed, killing eight and leaving hundreds homeless. Two of Echeverria’s apartment buildings were left uninhabitable and a third has to be demolished.

  Even Pinera’s Housing and Urban Development Minister Magdalena Matte says the quake exposed the need for stronger regulations.

  “The most important thing we have to do as a ministry is to set new standards so this never happens again,” Matte said. “Because right now, no one is responsible.”

  Echeverria, who like all Pinera appointees resigned from his private positions to take the government job, has refused to address residents who fear he won’t take responsibility for the damage.

  He said through a government spokesman that he won’t comment on his private-sector past — even though he just left his job in March.

  “He has removed himself from the businesses and sold his stock,” spokesman Rodrigo Miranda said. “He will not make any comments about his previous participation in construction.”
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