Sunday, December 27, 2015
Scandal Threatens to Break Military's Secretive Acquisitions System
Chile's Army finds itself in a tight spot after a former officer and three noncommissioned officers were found to have illegally paid themselves out of defense funds. A congressional commission is investigating the fraud, which has punctured a hole in the armed forces' most precious source of funding, the so-called copper law. For decades, the national copper company, Codelco, has been obligated to pass on 10% of foreign sales to the military, providing Chile with a warchest estimated at more than $17 billion since 1995. The law also makes is possible for the military to make purchases without public disclosure, which may have contributed to the fraud. Now, Secretary of Defense Jose Antonio Gomez is taking advantage of the scandal to bring down the copper law. He plans to submit a proposal in 2016 to replace the law with medium- and long-term funding programs. This is not exactly new. The two previous presidential administrations submitted similar proposals, but neither got far. Gomez acknowledges that some secrecy will still be needed in the procurement process, but he's made it clear that the goal is to increase transparency. While military purchases under the copper law are not revealed to the public, it doesn't mean there's no government oversight. The Ministry of Finance has to sign off on all disbursements. Update: CNN Chile broadcast a special report on the scandal.