Santiago Municipality Faces Asset Seizure in $9.3 Billion clinic Dispute
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The Municipality of Santiago is facing a meaningful financial and legal crisis after a court ordered the seizure of its assets due to a failure to pay Inmobiliaria San Valentino SpA for the 2023 purchase of the former Sierra Bella Clinic. The escalating dispute, stemming from a stalled $8.2 billion deal, has drawn scrutiny from legal experts and raised questions about the municipality’s financial management.
Mayor’s Order Halts Payment, Igniting Legal Battle
The conflict began in January 2023, when the purchase agreement for the Sierra bella Clinic was signed before the 41st Notary Office of Santiago. However, despite the agreement, the municipality, under the direction of Mayor Mario Desbordes Jiménez, subsequently issued an order blocking payment on a voucher presented by Inmobiliaria San Valentino. “the Municipality of Santiago, thru a direct order from the mayor, after more than ten years, issued an order for non-payment of said voucher,” a Santander representative stated, confirming the municipality’s direct involvement in blocking the transaction.
The initial debt has since ballooned to over $9.3 billion,compounded by accruing default interest. Inmobiliaria San Valentino responded by initiating an executive trial and filing a complaint with the Financial Market Commission (CMF), seeking clarification on the bank’s actions and the legality of the municipality’s non-payment order. The court’s subsequent order for asset seizure, notified on October 21, underscores the severity of the situation.
Santander Cites Irregularities, Faces Scrutiny
Banco Santander initially justified its withholding of the funds by citing alleged irregularities with the voucher’s endorsement. The bank claimed the document lacked proper authorization,with only one signature appearing instead of the joint portrayal typically required for municipal transactions.
“It was found that it was not properly endorsed, since only one person appears signing the endorsement,” the bank explained in a statement.”Therefore, considering the above and the extraordinary nature of the request, the bank decided not to proceed with the immediate payment.”
However, this clarification has been met with skepticism from legal professionals and the CMF, who suggest the bank’s actions may have violated Article 31 of Law No. 18,092, which outlines the obligations of a bill of exchange payer. According to the law, payers are not obligated to verify endorsements but must confirm the identity of the presenter and the continuity of endorsements.
Following criticism, Santander issued a revised statement downplaying the mayor’s influence and reiterating its commitment to regulatory compliance. The bank asserted the payment was withheld solely due to the endorsement issue,stating,”The payment was not made as the document was not correctly endorsed.” Moreover, Santander claimed that internal communications revealed a proposal to collect the voucher “in cash” for internal transfer, suggesting the transaction was not inherently irregular.
Legal Battles and Accusations of Bad Faith
Inmobiliaria San Valentino has strongly condemned the municipality’s actions, accusing Mayor Desbordes of acting in “bad faith” and deliberately obstructing the payment process. The company alleges that repeated attempts to address the issue with municipal authorities were met with silence and refusal.
“this persistent refusal and administrative silence reflect the arrogant and reckless attitude of Mayor Mario Desbordes Jiménez, who, instead of honoring the contracts…has chosen to ignore deliberately the obligations assumed by the Municipality,” a statement from San Valentino real Estate declared.
The company has filed a claim of illegality against the mayor and is considering pursuing criminal charges for potential administrative prevarication. The Municipality of Santiago,though,maintains its position,asserting it is indeed pursuing legal avenues to either cancel the purchase or negotiate a “fair” price for the clinic.
The case echoes a similar situation in Las Condes, were the municipality was sentenced to pay $10 billion in damages after halting construction on a property. In that instance, the mayor opted to make the payment to avoid further asset seizure, a stark contrast to the current approach in Santiago. According to experts in administrative law, Santiago’s refusal to pay could result in sanctions from the Comptroller General of the Republic for violating principles of efficiency and timeliness.
The legal saga continues, with the future of the Sierra Bella Clinic and the financial stability of the Municipality of Santiago hanging in the balance.
