Chile: The great scam against SMEs and the FTA with the European Union.

Chile: The great scam against SMEs and the FTA with the European Union.

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By Arnaldo Pérez Guerra

If an "investigation" were requested, or the European Union appointed a reviewer to document the fate of "the funds received by Chile since 1990", the scandal would risk the ratification of the Free Trade Agreement (FTA), which could even stand by (discontinued).

Since the return of "democracy", money and credits have entered Chile, through banks, to "help SMEs", small and medium enterprises. Only for the returnees - exiles who returned to our country - more than 300 million dollars were available from the Deutsche Augleichbank (German Compensation Bank), channeled through the State Bank, in an "agreement" between the Christian Democratic governments. from Germany and Chile. However, most of those monies were never delivered and when they reached the people, avoiding all the bureaucratic obstacles, they were not invested in the stipulated way.
The flow of money continues and also the irregularities suffered by SMEs. Today, credits and money are channeled through the EuroChile foundation, created in 1992. To date, and according to small businessmen linked to small and medium-sized enterprises, between 3,500 and 4,000 million dollars are 'impounded' in banks without the supposed "beneficiaries" being able to make use of them.

For the government, this means a real headache. Not a minor problem that can have serious consequences. If some "data" of this impasse reaches the hands of the Commission on Rights of the European Union (EU), in Brussels, Belgium, our country could go through a bad time. The Commission ensures compliance with the economic rules and rights that the countries of the European Economic Community must respect, but it also monitors compliance with these rules by the nations that do business with Europe.
If an "investigation" were requested, or the European Union appointed a reviewer to document the fate of "the funds received by Chile since 1990", the scandal would risk the ratification of the Free Trade Agreement (FTA), which could even stand by (discontinued). In addition, the EU could ask Chile - to ratify the agreement - to "clean up the money", that is, to effectively deliver the funds to the beneficiaries.

Ricardo Lagos indicates in his presidential message of May 21, as a priority, that extreme poverty will end, the persistent "hard poverty", which according to official figures reaches 5.7% of Chileans, something like 850 thousand people living in destitution. But, what happens to the middle class, while the money destined to small and medium enterprises "sleeps the sleep of the just?" If the government favored the effective delivery of 500 million dollars to SMEs, it could avoid possible sanctions if "someone happened to review" what happened to the money sent to Chile. "The government, the Concertación and the right wing, which receive money from the same external NGOs, need not only a stable country that is macro-economically healthy and without social outbursts, but also without 'international accusations', an operator of the banking.

How does the business work?

"The monies are administered through banks and finance companies, where they are 'impounded'. Those same institutions' create 'joint-stock companies (this way, the coffers are' empty 'and the monies' delivered'. Then, the institutions request a ' new 'foreign credit. The' beneficiaries' begin to 'pay the credits' and the money returns to the banks and / or finance companies. Thus, funds' overlap' and double or much more accumulates, "says an operator linked to the pymes.

But that's not the only problem. In the United States and Europe, a company that trades between five and 35 million dollars per year is considered an SME. What Chilean SME sells that? On the other hand, any "large company" in our country trades more than five million dollars a year, which is why it passes perfectly as an SME, according to "European criteria".

None of the so-called "Chilean SMEs" meets the "requirements" stipulated in the United States and Europe. But, finally, the necessary requirements to qualify for funds and credits "are studied by governments," explains the source. "If a loan is given here, for example, to an investment company or a construction company, which trades 34 million dollars a year, in the European Union that is considered 'money given to SMEs'. In this way, companies 'beneficiaries' are linked, in one way or another, to the institutions that deliver or handle the loans ".

Questions arise such as where does this money come from? And why isn't he accountable for them?
One of the answers is that the financing comes mainly from "tax evasion" in Europe and that, ultimately, they arrive in Africa or Latin America to swell the coffers of political parties, charitable organizations, foundations, NGOs, government projects, media and SMEs. And they are channeled there precisely to "evade taxes."

Once the mechanism is known, another concern arises: What would happen, now that Chile is going to trade "on an equal basis" with the EU, if the citizens of the old continent found out about these operations? What would happen if they knew that those monies, in addition to taxes and levies that they give to their states, are "misused" and channeled to the "partners" of their governments? What would they think if, in addition, they found out that "their money" is invested by large economic groups or screen companies created with the sole purpose of enriching those who need the least, and not to favor projects and / or businesses of true SMEs, drowned by the economic crisis and struggling not to disappear?

If the destination of the money from Europe were thoroughly investigated, Chile would look very bad. Even the inconvenience could mean the suspension for months of the ratification of the FTA. "Once the agreement between the European and Chilean parliaments is ratified, our country will receive 22,800 million dollars 'for SMEs' apart from other remittances for corporations, foundations, projects, etc. The government must facilitate the delivery of these 'impoverished' monies , unless you want to risk a scandal, "adds another operator.

Most Chilean SMEs trade less than $ 2,000 per year. In our territory, European SMEs would be considered "medium-sized companies", even "large companies" according to their traded values. The owner of a Chilean corporation that sells five million dollars a year has a non-negligible salary of 600,000 dollars a year, about 400 million pesos. In Chile he is a great businessman, in Europe an SME. A company that negotiates this in Chile does not need any financing through banks or credits: it can reinvest profits. That is the key.

In Germany, for example, the income tax is close to 50%. If the Germans knew that that percentage of their salaries, which for years they have given to their governments, goes through tax evasion and other mechanisms to countries where they are not even used to finance small companies, and they end up endorsed to large consortiums or the payer of elections, the scandal would be of proportions.
European citizens themselves would question an FTA with Chile or, at least, request an investigation into the destination of those monies in these 12 years.

Silver that come and go

It is no mystery to anyone that both the Concertación and the right receive funding from the same foreign NGOs. A few weeks ago, during the television program Sunday Interview on TVN, Pablo Longueira-president of the UDI-, when asked by a journalist about the "source of financing of the UDI for its campaigns," immediately responded: "From the same NGO that gives money to the Concertación and the Christian Democrats ". Unusually, the journalist turned to another topic and the matter was not discussed further. In addition, the UDI-government agreements, through the Minister of the Interior, José Miguel Insulza (PS), continue to attract attention.

The question is, what is behind it?

For European NGOs, which finance the Concertación and, especially, the DC, it is striking that a political party in opposition is the largest party in Chile. This gives the UDI a power that it did not have before, and today it is "eligible for silver." Another piece of information is that the UDI is trying strenuously to be accepted in the Christian Democratic International and to engender a Popular Party like the Spanish one.

Since the week of the announcement of the FTA with Europe, businessmen and government and opposition officials have traveled to the old continent, such as the mayor of Santiago Joaquín Lavín (UDI) and the president of the Christian Democracy, Adolfo Zaldívar; It is even commented in political circles that José Miguel Insulza traveled "secretly" and for 24 hours to Spain, a country that currently presides over the EU. Among the entrepreneurs, the "key" personero for the agreement is Vicente Caruz M., president of the Development Bank (BDD).

Switzerland of the 21st century

The question is where Chile is going with this agreement: what will we become? Or, what do they want to make us? Chile will be "the Switzerland of the XXI century", due to its "comparative advantages": exploitation of natural resources, macro-economic and banking management, "stability", "passageway" of drug trafficking, indices, investments, tax exemptions, cheap labor , "social control", electoral "binominalism", and so on.

After the Bahamas, Switzerland, the Virgin Islands, Bermuda, Paraguay and Panama, Chile is located: at present, the mining transnationals are practically tax free; the profits of the securities companies, of stock brokers, either; which helps the "laundering and laundering" of "dirty money".

One of the NGOs that participates in these negotiations and negotiations in Europe is ARIEL, which has close contact with EuroChile, where 50% the Chilean State and 50% the European Union are "shareholders". One of the representatives in Chile of EuroChile is Vicente Caruz.

Why is the Development Bank (BDD) of providential importance in the negotiations with the European Union ?: Vicente Caruz and Marco Silvio Pizzi -alternate director of the BDD and representative in Latin America of Banco San Paolo IMI-, are partners of the French bank Caisse Nacionale de Crèdit Agricole, one of the 10 largest banks in the world, which owns 18.5% of BDD, and Banco San Paolo IMI, which, in turn, owns 15.9% of BDD.
In this way, the Development Bank will have a lot to say about the money "for SMEs."

Box: Headache for the government Donations or credits?

The trips of BDD and government officials to Europe, mainly Spain and Germany, are due to the fact that an individual or a group of people of the more than 1,300 affected by the "scam" to SMEs with "German money", sent a report to the Deutsche Ausgleichbank requesting that said bank certify whether the money for the Chilean returnees were "donations" or indeed "credits", as mentioned by the Ricardo Lagos government in Law 19,740, published in 2001. They also included in their letter, a photocopy of the law.

Let us remember that the "cooperation agreement" between Germany and Chile, at the beginning of the 90s, became "effective" through the State Bank.

The report attaches a questionnaire asking if the money came "from the German government," "if they were donations," and "what were the requirements to be met by‘ returnees ’to receive them," among others. This has put the government in check because the law that has been passed effectively speaks of "credits." Those affected prepare "new reports" that will be sent, this time, to the German government, which will ultimately have to clarify what happened to the money.

* Degree in History from the University of Chile. Editor of La Insignia (Spain), Punto Final (Chile) and El Siglo (Chile). Contributor to Prensa Latina-Chile. [email protected]

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