Corruption claims may deepen political crisis in Chile

Subject

The impact of recent corruption allegations.

Significance

An investigation into tax evasion at one of Chile's leading business groups, whose principal owners are currently on remand, has led to revelations of what may prove to be quite widespread illegal political financing. The revelations raise questions about the country's reputation for transparency, and have the potential to trigger the country's worst political crisis since the restoration of democracy in 1990.

Impacts

• The crisis of confidence may delay pending reforms and a recovery in growth and investment.
• The scandal is accentuating Chileans' with income inequality which, despite lower poverty, remains very high.
• As investigations proceed, political financing could dominate the public agenda into next year.