Why Kirchner’s Comeback Goes Through Argentine Court

May 30 2019, 11:00 AMMay 30 2019, 6:03 PMMay 30 2019, 11:00 AMMay 30 2019, 6:03 PM

(Bloomberg) -- Former Argentine President Cristina Fernandez de Kirchner, who returned to the public eye after winning a seat to the Senate in 2017, says she is running for vice-president in October elections. She’s also standing trial for alleged corruption charges stemming from her presidency and that of her late husband, Nestor Kirchner. With several other prosecutions pending, the notoriously slow nature of the nation’s judicial system makes a resolution highly unlikely before voters go to the polls, while investors fear what a return to Kirchner’s populist and protectionist policies would mean for Argentina.

1. What is Kirchner accused of?

In the trial that began on May 21, she’s accused of leading an "illicit association" with other government officials and businessman Lazaro Baez, whose companies received numerous public works contracts in the province of Santa Cruz while she was president, from 2007 to 2015. (The case also covers the presidency of her husband, from 2003 to 2007, who was governor of Santa Cruz for over a decade before taking on country’s top job.) Separate prosecutions that haven’t yet reached oral trial allege that Baez repaid the Kirchners’ with exorbitant amounts to stay at their family-owned hotels in Patagonia without actually using the rooms. The defense argues that there’s no way to prove that Kirchner explicitly doled out contracts to Baez in order to be paid back via hotel stays.

2. Will the outcome be known before the October elections?

Most likely not. A verdict isn’t expected for at least a year, and "the case could drag on for two to three years," says Natalia Volosin, an Argentine lawyer with a doctorate from Yale Law School. There are more than 150 witnesses due to testify, including Alberto Fernandez, who will lead the presidential ticket on which she will appear. Fernandez, who is seen as a more moderate candidate than the populist Kirchner, was cabinet chief under her husband and briefly under her, from 2003 to 2008. They have until June 22 to make their candidacies official.

3. What happens if Fernandez and Kirchner win the election?

That could diminish some of the enthusiasm to prosecute Kirchner, according to experts. A victory by Fernandez and Kirchner would make it "unlikely for the judiciary to push ahead with this case further and further," says Manuel Balan, a professor at McGill University and author of a book on corruption scandals in Argentina and Chile.

4. How might the trial affect the election?

It represents a much-needed point of contrast for President Mauricio Macri, who faces a challenging bid to win a second term. Argentina is in a recession, and Macri has failed to deliver on pledges to reduce inflation and attract foreign investment. Of late, Macri has tried to navigate the national discussion toward issues such as corruption and crime. The economy "remains the deciding factor in the vote," Daniel Kerner, Latin America analyst at Eurasia Group, wrote in a May 24 note.

5. What happens if Kirchner is elected, then convicted?

It’s unlikely she’d have to worry about going to jail for many years. If she is found guilty by the first court, the conviction would have to be upheld by a superior tribunal -- known as Casacion -- and then by the Supreme Court, a process that could take an extra two to three years. Moreover, Kirchner enjoys legal immunity as a sitting senator: Two-thirds of all senators would have to vote to remove her immunity, which rarely happens. She would have an even higher level of immunity as vice president because extra steps would be required in Congress to take away her legal privileges.

6. What do Argentines think about Kirchner’s comeback?

Argentina is a deeply polarized nation, and Kirchner’s candidacy only underscores that. In a hypothetical runoff against Macri (whether or not his current vice president, Gabriela Michetti, remains as his running mate), one recent poll shows the Fernandez-Kirchner ticket would win about 47.6% of votes, to 44.1% for Macri. However, among voters who describe themselves as undecided, more say they would never vote for Kirchner than would never vote for Macri.

7. Why such strong feelings about Kirchner?

Nestor Kirchner, elected in 2003, dug the nation out of the largest debt default in history by riding a commodity boom and restructuring most of the debt. Cristina Kirchner, elected in 2007, continued generous public spending and was re-elected in a landslide, after which the boom began to peter out. In 2012, she stunned foreign investors by seizing Argentina’s main energy company, YPF. Argentina’s 2014 debt default — its eighth — came after the country refused to comply with a U.S. court order to pay the full value of bonds bought by U.S. hedge funds. Macri won the presidency in November 2015 on a pledge to end a dozen years of protectionist policies and uncontrolled spending under the Kirchners.

8. What other allegations does Kirchner face?

In total, there are 11 probes of her, her family members and associates, including one that broke last August. That case, still in its early stages, involves hundreds of alleged bribes paid by construction companies, energy suppliers and electricity generators to members of the governments of both Kirchners from 2005 to 2015. Local newspaper La Nacion obtained notebooks belonging to Oscar Centeno, a driver for the former deputy secretary for planning, who had kept meticulous records of names, amounts, addresses and dates of alleged bribes -- some of which, the newspaper said, were delivered directly to Kirchner’s apartment in Buenos Aires and the official presidential residence, Quinta de Olivos.