Why Kirchner’s Comeback Goes Through Argentine Court

(Bloomberg) -- Former Argentine President Cristina Fernandez de Kirchner, who returned to the public eye after winning a seat to the Senate in 2017, is running for vice-president while standing trial for alleged corruption charges stemming from her presidency and that of her late husband, Nestor Kirchner. The unexpected results of primaries on Aug. 11 boosted the chances that Argentina will see a return to Kirchner’s populist and protectionist policies. With several other prosecutions pending, the notoriously slow nature of the nation’s judicial system makes a resolution highly unlikely before voters return to the polls on Oct. 27.

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 election?

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 leads the presidential ticket on which Kirchner appears. 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.

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?

Now that President Mauricio Macri has been handed a stunning rebuke in primary voting, the trial seems like it matters little if at all to voters. Argentina is in a recession, and Macri has failed to deliver on pledges to reduce inflation and attract foreign investment. Macri had tried to navigate the national discussion toward issues such as corruption and crime. But 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 underscores that. In polls leading up to the Aug. 11 primary election, among voters who described themselves as undecided, more said they would never vote for Kirchner than would never vote for Macri. In the primary, Kirchner’s coalition took 48% of the vote, with Macri’s winning 32%. (The primaries were originally intended to whittle down candidates within each party ahead of the Oct. 27 election. But because the parties each fielded a single ticket, the ballot ended up working as a broad measure of voter sentiment.)

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.

The Reference Shelf

• A QuickTake explainer on Argentina’s economic struggles.
• Investors were spooked by how well the Fernandez-Kirchner did in the primary election.
• A look at Macri’s economic gamble as he girds for a re-election battle.

To contact the reporters on this story: Jorgelina do Rosario in Buenos Aires at jdorosario@bloomberg.net;Patrick Gillespie in Buenos Aires at pgillespie29@bloomberg.net

To contact the editors responsible for this story: Juan Pablo Spinetto at jspinetto@bloomberg.net, Laurence Arnold, Carolina Millan

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