The exorbitant fiscal expenditure on Armed Forces pensions: $3.8 trillion between 2011 and 2015

2016 marked a milestone for Codelco. It was not one of those that draws applause. For the first time in its history, and as a result of the sustained drop in the price of copper, the main state-owned company had to go into debt to meet its financial commitments.

One of these is the delivery of US$707 million to the Armed Forces—an amount recorded as of September 2016—by virtue of the Copper Law (which is no longer classified).

The milestone did nothing more than illustrate the extent to which the Copper Law has become a straitjacket for Codelco. By forcing the copper company to hand over 10% of its sales to the Armed Forces, the State is stripped of a significant flow of funds for public policy.

One only needs to look at the figures to quantify the legal diversion of resources that was imposed under the dictatorship (when 10% of profits were changed to 10% of copper sales): in 2015, some US$858 million went to the Armed Forces (see El Mercurio note).

In addition to the slice the Armed Forces take from the State via the Copper Law, there is the other capital flight that the Treasury suffers because the uniformed personnel were the only sector to maintain the privilege of the old pension system when the AFP (Pension Fund Administrators) came into effect in 1980.

According to information provided by Cristián Rojas, executive vice president of the National Defense Pension Fund (Capredena), to the Chamber of Deputies commission investigating irregularities in the pensions of the Armed Forces and Order, in 2015 Capredena distributed $911 billion in pensions. 94% of that figure is a fiscal contribution, and only the remaining 6% corresponds to the contributions of the uniformed personnel.

Between 2011-2015, the State has disbursed a total of nearly $3.8 trillion (millions of millions of pesos) to support the Capredena retirement fund. The figure is equivalent to 119 Teletón fundraisers (based on 2016 collections) or the cost of building 42 hospitals with state-of-the-art equipment, such as the one inaugurated in Rancagua in April 2016 ($90 billion).

With the money of all Chileans, a system is financed that serves almost 107,000 former officials of the Armed Forces (and their families through pensions and survivor benefits). All of them enjoy privileges that expose the shortcomings of the individual capitalization system that governs the rest of the population, where as of November of this year, the average old-age pension does not exceed $192,000, according to the Superintendence of Pensions (see here).

CIPER had access to the payroll of former officers of the Army, the Navy, and the Air Force (FACH) who retired in the 2006-2016 period and who receive pensions from Capredena. There are 3,090 cases that represent 13%—the highest echelon—of the beneficiaries of this system.

The average pension for Armed Forces officers nears $2.3 million. In the list of retired officers from Capredena, 17 former members of the Armed Forces stand out with pensions of over $4 million. The highest corresponds to that of the former FACH brigadier general Patricio Franjola Buigley, who retired in July 2012 with a pension of $5.9 million.

Because Capredena pensions are by regulation adjusted 100% according to the variation of the Consumer Price Index (CPI), what Franjola receives today, four and a half years after his retirement, is $6.8 million.

The amount of the pensions of the Armed Forces officers, in contrast to those of the civilian world, is not the only thing that stands out from the payroll of more than three thousand former officers reviewed by CIPER.

The massive resources that the State injects to sustain that pension system—0.9% of the national GDP in 2012, according to the Bravo Commission—are also used to cover millionaire pensions for former uniformed personnel convicted of or currently being prosecuted for human rights violations and various types of fraud.

The average monthly pension received by this group of 38 retired uniformed personnel amounts to $2.7 million.

In the more than three thousand cases reviewed, there appear, for example, high-ranking officers convicted of homicide and aggravated kidnapping at the Pisagua Prisoner Camp; a lieutenant colonel subjected to a double trial for the aggravated homicide of five MIR leaders on Janequeo and Fuente Ovejuna streets; a colonel involved in the disappearance of 14 peasants in Paine, another in the assassination of singer-songwriter Víctor Jara, and a third in the brutal attack against Rodrigo Rojas de Negri and Carmen Gloria Quintana (“Caso Quemados”).

Also appearing is a doctor and colonel—subjected to prosecution in 2002—accused of overseeing torture and drugging prisoners whose whereabouts remain unknown; private secretaries of Pinochet convicted of embezzlement of public funds in the “Riggs Case”; a dozen uniformed personnel involved in acts of corruption such as the “Frigates Case,” the “Mirage Case,” or “Milicogate”; and even a captain who became one of the biggest drug trafficking kingpins in Chile.

According to CIPER's calculations, the annual amount of the pensions that Capredena pays to these 38 uniformed personnel involved in illicit acts who retired between 2006 and 2016 amounts to more than $1.2 billion.

In the payroll of these pensioners, CIPER also identified more than 20 former agents of the National Intelligence Directorate (DINA) and the National Intelligence Center (CNI), repressive agencies of the Augusto Pinochet regime. Their pensions reach an average of $2.5 million. The serious matter is that some remain linked to the Armed Forces, mainly in educational roles in different Army units.

CIPER's investigation detected at least half a dozen former CNI and DINA agents who appear re-hired at the War Academy and also at the Military School as Contract Personnel (PAC) or Civilian Professors (PC). This means that all of them receive significant remuneration in addition to their pensions.

An internal Army document obtained by CIPER shows that a retired military officer with the rank of general can receive $2.5 million if he is re-hired to perform duties as a PAC in the institution. An amount that is added to that of his retirement, which for retired generals averages over $3.2 million.

PENSIONS AND HUMAN RIGHTS

Between the end of September 1973 and June 1974, 26 people were executed at the Pisagua Prisoner Camp (Tarapacá Region). Among them was the young conscript and PC militant, Miguel Nash Sáez, who opposed repressing the population and was riddled with bullets in the back. His body has still not been found.

In January 2009, retired Army Colonel Roberto Ampuero Alarcón was prosecuted as a co-author of the kidnapping and aggravated homicide of Nash and other Pisagua prisoners. Ampuero had retired 10 months earlier, in March 2008, with a pension of $2.6 million.

In August 2016, Ampuero was sentenced to 15 years and one day of major imprisonment in its maximum degree, as the author of the repeated crime of aggravated kidnapping of Nash, Jesús Cañas Cañas, and Juan Jiménez Vidal. Also as the author of the aggravated homicide of Marcelo Guzmán Fuentes, Juan Calderón Villalón, and Luis Alberto Lizardi Lizardi.

To date, Ampuero's adjusted pension nears $3.6 million.

Retired Colonel Gabriel Guerrero Reeve was also involved in those crimes; he retired in January 2010 with a pension of $2.1 million. Guerrero, also sentenced last August to 15 years and one day, receives a pension today of almost $2.6 million. On December 26, the case in which Ampuero and Guerrero are involved was elevated to the Santiago Court of Appeals for its review.

In August 2016, retired Army Colonel Pedro Collado Martí was sentenced as the author of the aggravated kidnapping of socialist militants Jorge Marín Rossel and Williams Millar Sanhueza, both detained in September 1973 in Iquique.

Collado, prosecuted in 2008 and sentenced to 10 years and one day, receives a pension of $2.6 million. Currently, the court is closing the process of notifying the convicted parties in this case of the ruling.

Retired Colonel Carlos Durán Low was sentenced in February 2016, along with five other former CNI agents, to 10 years and one day of major imprisonment in its medium degree for the aggravated homicide of the professor and MIR member, Federico Álvarez Santibáñez, in September 1979 in Santiago.

Durán retired in March 2007 and today receives a pension of $2.5 million. In April 2016, the ruling was appealed and the Court ordered new proceedings.

Retired General and former member of the Army Intelligence Battalion (BIE), Julio Cerda Carrasco, was sentenced to five years and one day as an accomplice to the aggravated kidnappings of five members of the Manuel Rodríguez Patriotic Front (FPMR) perpetrated in September 1987.

Cerda, prosecuted since May 2007, retired in March of that same year and today enjoys a pension of $3.1 million. The sentence in this case—in which 33 former CNI agents are involved—was ratified by the Court of Appeals in June 2015 and is currently at the highest court.

Retired Army Colonel Osvaldo Andrés Magaña Bau was subjected to prosecution in July 2015 for the aggravated kidnapping of 14 peasants from the Villa el Escorial settlement in Paine, all of whom were executed between September and October 1973 (Cuesta Chada).

The colonel retired in February 2007 and today has a pension of $2.6 million. A figure similar to the pension received by retired Army Colonel Jorge Smith Gumucio, accused in July 2015 of being one of the authors of the kidnapping and aggravated homicide of Víctor Jara and the former director of the Gendarmerie, Littré Quiroga.

It was in 2015 that the justice system prosecuted active-duty Colonel Julio Castañer González for his alleged responsibility in the death of photographer Rodrigo Rojas de Negri and for the serious injuries suffered by Carmen Gloria Quintana after they were burned alive in July 1986 in Santiago.

Castañer was accused by a former conscript of being the one who set fire to the bodies of De Negri and Quintana after they were doused with gasoline. The colonel retired in January 2016 with a pension of $2.8 million. In October 2016, the lawyers for the accused requested the dismissal of the case, which was denied. Furthermore, new proceedings were ordered.

The doctor and retired Aviation Colonel Alejandro Forero Álvarez has had a brilliant career as a cardiologist at the Indisa Clinic. His resume has a black mark. He is accused of being one of the doctors who provided services to the so-called “Joint Command,” supervising torture and drugging prisoners who are now forcibly disappeared.

Forero was subjected to prosecution in 2002 along with a score of members of that repressive agency for illicit association and the illegal detention of communist militant Víctor Vega Riquelme (January 1976).

In May 2002, the justice system revoked those prosecutions, but not because they were innocent, but because the crimes had reached the statute of limitations. Forero retired in August 2014 and today receives a pension of $2.5 million.

In the list of Capredena pensioners obtained by CIPER, there also appears retired Army General Víctor Lizárraga Arias, an important officer of the BIE. In 2010, he was convicted of being part of the illicit association that participated in the assassination of the colonel and then-head of acquisitions of the Army's Logistics Directorate, Gerardo Huber (1992).

On November 18, Lizárraga—who today receives a pension of $3.1 million—was sentenced to 205 days of effective imprisonment as the author of five repeated crimes of bribery in the so-called “Frigates Case.” Lizárraga was accused of bribing a Korean public official so that the arms brokerage company the officer represented would obtain commissions for sales of war devices to the Army.

The illicit acts were committed between 2007 and 2008, when the general was already being prosecuted for the Huber crime.

FROM THE MIRAGE CASE TO MILICOGATE

Retired FACH General Florencio Dublé Pizarro was prosecuted at the beginning of 2009 as an accomplice to the embezzlement of public funds in the controversial trial regarding bribes in the purchase of 25 Mirage aircraft.

The investigation by Minister Omar Astudillo determined that US$15 million had allegedly been allocated in the transaction for the payment of illicit commissions and that Dublé received at least one bank transfer for US$60,000. Florencio Dublé retired in December 2006 and today receives a pension of $3.1 million. The sentence for the case should be known in the coming days.

The name of retired Army Colonel Clovis Montero Barra came to the fore in March 2015 after the latest of the great scandals within the Army broke out: the fraud of almost $5.5 billion perpetrated by military personnel with Copper Law funds (“Milicogate”).

In February 2016, Montero was prosecuted by Minister Omar Astudillo as the author of the repeated crime of fraud against the State and document forgery. Montero is also being sued by the Internal Revenue Service (SII) for tax crimes.

The colonel—who retired in May 2015 and receives a pension of $2.5 million—is accused of obtaining more than 160 invoices from a supplier for nearly $980 million for non-existent services or acquisitions.

In this same case, retired Colonel Jorge Frez Ramírez is being prosecuted; he served as head of the Army Treasury's Finance Department. It was Montero himself who declared that Frez knew of the falsity of the documents, also accusing him of receiving money for the processing and payment of the false invoices.

Frez—who is imprisoned at the No. 1 Military Police Regiment in Peñalolén—retired in February 2015 with a pension of $2.5 million.

In the payroll to which CIPER had access, there also appear two high-ranking officers convicted in one of the branches of the “Riggs Case” (the ruling is under appeal). They are two of the officers who were private secretaries to Augusto Pinochet: retired Colonels Gabriel Vergara Cifuentes and Juan Mac-Lean Vergara, both sentenced in the first instance to four years of supervised release for embezzlement of public funds.

Mac-Lean retired in April 2009 and today receives a $2.9 million pension. Vergara, meanwhile, did so in July 2011 and his pension amounts to $2.6 million.

In July 2009, retired Frigate Captain Jesús Sáez Luna retired and today receives a pension of $2.1 million. Three years later, 150 kilos of cocaine and base paste were seized from Sáez at a residence in Valparaíso.

The Prosecutor's Office established that Sáez was the operational head of the gang: “He is the highest-ranking defendant we have managed to capture, because the subject was a true mafia boss,” noted the prosecutor in charge of the investigation.

Sáez's departure from the Navy was not with honors. Shortly before his retirement, he was accused of the theft of a hyperbaric chamber.

THE SHADOW OF THE DICTATORSHIP

In December 2006, Army General Ricardo Hargreaves Butrón was discharged from the institution. In the middle of that month, days after the death of Augusto Pinochet, in an interview with the Prensa Austral of Punta Arenas, Hargreaves (Commander-in-Chief of the V Division, Magallanes Region) referred to the dictator in the following terms: “I was a participant in Pinochet's cause and I continue to share it (...) we owe him many things, not only as an Army, but as a country.”

The Commander-in-Chief of the Army at the time, Óscar Izurieta, asked for his resignation. It was a clear signal of the new times that were running in the military institution, which was reinforced in 2009, when Izurieta terminated the fee-based contracts held by a group of former DINA and CNI agents involved in human rights trials. There was talk then of a cleanup within the institution.

But Hargreaves' discharge did not mean his exit from the Army. He remained linked to the institution as Corporate Affairs Manager of the Army of Chile's Factory and Arsenals, FAMAE, and also as a professor at the Military School.

According to the Capredena payroll, Hargreaves only retired in August 2014 and today receives a pension of $3.5 million. To that amount are added his fees for academic work. At least until November of last year, the retired general was president of the Military School Professors' Center.

UNDER THE SHELTER OF THE ACADEMY

The Army War Academy is also a refuge for many uniformed personnel who, once retired, remain linked to the institution as Contract Personnel (PAC) or Civilian Professor (PC). This allows them to add regular income to their pensions or even, after at least three years of service, to recalculate their pensions upward.

A confidential Army document to which CIPER had access indicates that a retired officer with the rank of colonel or general hired as a PAC can earn between $1.5 million and $2.5 million per month. For brigadier generals, the salary as a PAC, apart from the retirement they receive, reaches $2,526,910. That of a colonel, lieutenant colonel, or major reaches $1,458,112 (see document).

A former civilian Army official who requested anonymity defined the War Academy as a “pay-for-favors box” and as a “protection network” among former uniformed personnel.

“There are retired military personnel hired as PACs at the War Academy for administrative tasks who, in addition, teach classes and have contracts as civilian professors (PC) for up to 12 hours. It is impossible for them to fulfill the functions of both contracts.

The control system is a signature book that no one audits,” a former uniformed officer who knows how the War Academy operates told CIPER.

Another uniformed officer told CIPER that both at the War Academy and at the Military School, former officers linked to the dictatorship's repressive agencies still teach classes or perform administrative tasks (as PCs and PACs), several of whom enjoy succulent pensions. CIPER's investigation detected at least half a dozen former uniformed personnel in that situation on the official payrolls.

One of them is retired Colonel Rodolfo Ortega Prado, who was head of the CNI in Punta Arenas between 1985 and 1989 (he used the alias “Rodrigo”). On February 29, 2004, La Nación Domingo published a report titled “A CNI in Madrid.” There, Ortega appears involved in the 1988 death of the 23-year-old socialist Susana Ovando Coñué in Punta Arenas.

When the report appeared, in which it is said that at least 10 former CNI agents identified him as their boss in Punta Arenas the same year of Ovando's assassination, Ortega was Chile's military attaché at the embassy in Madrid. In March 2004, the retired colonel appeared before the justice system as a witness for this case.

This was the version that the colonel gave to La Nación about the death of Susana Ovando: “The CNI in Punta Arenas was a minimal office in charge of administrative matters, without operational capacity to detain. In the period that I was head of the CNI in Punta Arenas, no one was ever detained.”

Ortega retired in February 2007 and his pension amounts to almost $2.6 million. But the former head of the CNI in Punta Arenas has remained linked to the Army, receiving other high fees. He is the director of the Master's in Military History and Strategic Thought at the War Academy.

CIPER had access to the payroll of academics who will teach subjects at the War Academy in 2017. In that Excel spreadsheet, the names of the professors, the modules, and the academic hours contemplated for each course appear.

There, retired Colonel Ortega—who holds a doctorate from the Complutense University of Madrid—appears as a professor in the subjects of “JGS Execution (War Games)” and “Geostrategy,” which are taught in the modules “Command and Advisory II,” “Command and Advisory III,” and “Strategy II.”

Another former CNI agent who also appears on the list of professors at the War Academy for 2017 is the former Chief of the Army General Staff, General Guillermo Castro Muñoz: as a Civilian Professor (PC) in “research and publication” tasks. Castro is also president of the War Academy Graduates' Center.

General Castro belonged to the National Intelligence Center between 1979 and 1982. It was he himself who acknowledged it in a 2003 judicial statement (as a witness) in the trial for the massacre of 22 peasants in Paine (October 1973).

In January 2008, Castro gave a second statement in which he admitted that he was part of a rifle company at the “Cuartel Dos” of the San Bernardo Infantry School, used as a detention center (Cerro Chena), a unit that participated in the murders of the 22 peasants.

And he stated that he never saw detainees at that barracks and that he only found out some time later through the press that there were. General Castro has not been prosecuted by the justice system.

In June 2015, Colonel Carl Marowski Pilowsky retired; he appears on the payroll of CNI members that the Army sent to the current Supreme Court minister, Sergio Muñoz, when he was investigating the Tucapel Jiménez crime. There are several tasks that Marowski currently continues to fulfill in the Army and that allow him to inflate his $2.8 million pension.

Sources consulted by CIPER indicated that the retired colonel is allegedly hired as a PAC at the Army's Education and Doctrine Command (Education Division). Marowski also serves as an academic for the Diploma in Military Higher Education at the War Academy and appears on the 2017 payroll as a “Civilian Professor” (PC) with “research and publication” tasks.

In September 2016, Carl Marowski attended the Defense Commission of the Chamber of Deputies. He did so in his capacity as “secretary general of the War Academy.”

Another of the retired military personnel linked to the War Academy who belonged to Pinochet's escort group that gave rise to the DINA's Mulchén Brigade is retired General Eduardo Ludovico Aldunate Hermann.

On the 2017 professor spreadsheet, Aldunate—who retired in July 2009 and today receives a pension of $3 million—appears with fees for “strategic research” tasks. Aldunate was also head of the Chilean troops in Haiti before retiring.

Retired Colonel José Francisco Enberg Castro also belonged to the CNI. He retired in February 2014 and currently receives a pension of $2.8 million. On the spreadsheet of subjects to be taught by the War Academy in 2017, Enberg appears as a “Civilian Professor” (PC) in “teaching management.”

In June 2013, a payroll with 1,500 uniformed personnel and civilians who were former DINA agents was leaked to the press. In that list, the name of retired General Enrique Slater Escanilla appears, who retired in September 2010.

In a note published on the Military School's website in October 2015, Slater appears as a Civilian Professor (he has been teaching at the Military School for more than 10 years) and also as head of the institution's Academic Department.

Slater, whose pension is today $3.2 million, also appears as an advisor (between March and August 2016) to the Army's Education Division. His task: “to provide axiology advice for the drafting of the Ethos regulation of the Army of Chile.”

Source: ciperchile.cl, January 16, 2017