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CHILE: Probe of European Defense Firms Linked to Pinochet

European defense companies deposited millions of dollars into bank accounts for front companies of former dictator Augusto Pinochet, a source close to a Chilean court probe into the accounts told Reuters.

by Fiona OrtizReuters
September 15th, 2005

SANTIAGO, Chile (Reuters) - European defense companies deposited millions of dollars into bank accounts for front companies of former dictator Augusto Pinochet, a source close to a Chilean court probe into the accounts told Reuters.

The source, who asked not to be identified, confirmed a report in Chile's La Tercera newspaper that said the judge investigating Pinochet has obtained banking records that show defense firms, including Britain's BAE Systems (BA.L: Quote, Profile, Research), deposited almost $8 million into accounts of Pinochet companies or accounts of his former legal executor Oscar Aitken.

Reuters has not seen the banking records in question but Britain's Guardian newspaper published a front page story it said was based on official Chilean documents it had obtained.

The Guardian said the documents recorded large payments by BAE as recently as last year.

Chilean Judge Sergio Munoz is probing Pinochet, who ruled Chile from 1973 to 1990, for tax evasion and embezzlement related to $27 million he held in offshore accounts.

BAE subsidiaries deposited more than $1.9 million into Pinochet-linked accounts between 1997 and 2004, La Tercera said, citing the banking records in the hands of the judge.

"The report in La Tercera is true except for a few small details," the source close to the investigation told Reuters.

When asked about the reports of deposits to Pinochet accounts, a spokeswoman for BAE said in an e-mail: "We at BAE Systems have clear and rigorous policies which govern the conduct of our relationships with third parties. We require all our employees to adhere to these policies and comply with the law."

Pinochet spokesman Guillermo Garin did not answer his telephone on Wednesday evening.

La Tercera said that an attorney for Aitken said one of the deposits by BAE was for advisory work by Aitken for BAE.

Pinochet stepped down as president in 1990 but continued as head of Chile's armed forces in the 1990s when the army spent more than $50 million on a project, that was later abandoned, to acquire a rocket system that was to be co-produced by a BAE subsidiary.

BACK TAXES

Earlier this year Pinochet paid about $2 million in back taxes on his accounts, which came to light last year in a U.S. Senate investigation into possible money laundering at U.S. banks.

After the Senate investigation, Washington, D.C.-based Riggs Bank, pleaded guilty to violating an anti-money-laundering law, and agreed to pay $16 million for failing to report suspicious activity in accounts held by Pinochet. Riggs was later acquired by another bank.

Pinochet's defense team has said the money in all of the accounts comes from legitimate sources.

Clara Szczaranski, head of Chile's Government Defense Council, which is assisting Judge Munoz in investigating the Pinochet accounts, told reporters last month that the council is investigating whether there were illegal commissions for arms deals deposited into the accounts.

Szczaranski's spokeswoman said on Wednesday she was not available for comment on the probe.

Pinochet's wife and youngest son were indicted in August as accomplices in helping Pinochet to hide the money in the accounts from tax authorities and were briefly jailed and let out on bail.

Pinochet has not been indicted because the Supreme Court has to decide whether he can be stripped of immunity from prosecution.

Pinochet has also been under investigation for five years in dozens of human rights cases involving torture and killings during the military regime in Chile. He has not been convicted because so far the Supreme Court has ruled he is too ill to face charges.

Pinochet is 89, mostly irrelevant in Chilean politics, and has diabetes, a pacemaker, and mild dementia caused by frequent mini strokes.

(additional reporting by Jason Neely in London)





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