SANTIAGO, Chile (AP) — One of Chile’s most powerful lawyers was ordered detained Tuesday pending trial on money laundering and tax fraud charges in a case that has rocked the country’s corporate and political elite.
After five days of hearings, a court in the capital accepted the prosecution’s request to transfer criminal lawyer Luis Hermosilla to state custody.
It was the latest development in a high-profile corruption scandal that blew up last November when leaked audio recordings appeared to show Hermosilla telling a former client about bribes he planned to pay officials at Chile’s two main market regulators.
Hermosilla has denied all charges, but he isn’t disputing the authenticity of the recording. His lawyer this week said he was “manipulated” into discussing the illicit payments.
The wider investigation has entangled judges, politicians and prominent businessmen, shocking a country consistently ranked among the least corrupt in the region and threatening to stain Chile’s long-standing reputation as a darling of international finance institutions.
Also on Tuesday, the court charged another Chilean lawyer, María Leonarda Villalobos, and her husband, Luis Angulo, with money laundering and tax crimes in the same case. Both deny the allegations.
The judge ordered Hermosilla and Villalobos to be held pending trial, citing “a serious and well-founded suspicion that the accused might obstruct the investigation.” Angulo was placed under nightly house arrest.
The audio recording was first revealed by the investigative news outlet Ciper Chile, which said it was made during a meeting earlier last year involving Hermosilla, Villalobos, then an unknown lawyer, and businessman Daniel Sauer. The latter’s brokerage firm was under investigation for fraud by Chile’s financial regulator.
The conversation focused on the possible payment of bribes to officials at Chile’s tax authority and financial regulator as a way to resolve Sauer’s legal problems.
“Here we are doing something stupid that is a crime,” Hermosilla can be heard saying at one point in the hourlong conversation.
Sauer, his brother and his business partner were charged with fraud earlier this year in the case. They have denied wrongdoing.
The snowballing scandal led to investigations into Chile’s tax authority and Treasury, resulting in the indictment of two officials on bribery charges last week for allegedly receiving payments from Villalobos.
The prosecution claims that Hermosilla, Villalobos and her husband, Angulo, benefited from their former client’s ill-gotten wealth, receiving millions of dollars from companies belonging to the Sauer brothers and their business partner. Prosecutors also accuse them of evading some $900,000 in taxes.
Until the scandal broke last year, Hermosilla, 68, was perhaps the country’s most influential lawyer, with several high-profile Chileans among his clients, including Miguel Crispi, chief adviser to current leftist President Gabriel Boric.
He also served as an adviser to Andrés Chadwick, an interior minister under former right-wing President Sebastián Piñera.
Transparency International, an anticorruption watchdog, ranks Chile as the second-least corrupt country in Latin America, just behind Uruguay. However, a string of high-profile graft cases involving powerful businessmen and officials in recent years has sapped public trust in Chile’s political establishment.
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