Chilean leader defiant as son's scandal swirls

Chilean President Michelle Bachelet scoffed Wednesday at speculation that she would resign over a financial scandal involving her son that has taken a heavy toll on her popularity.
As Bachelet's daughter-in-law appeared for questioning by prosecutors over allegations her family used its influence to get a $10-million bank loan, the Socialist leader told journalists she had no plans to step down one year into her second term.
"Just in case anyone was in doubt, I haven't resigned. I'm not thinking of (resigning). I don't even know how it would be done, constitutionally speaking," Bachelet told foreign correspondents.
Bachelet has seen her popularity plunge to 30 percent since revelations emerged that her eldest child, Sebastian Davalos, attended a November 2013 meeting between his wife, Natalia Compagnon, and Andronico Luksic, the vice president of Banco de Chile and one of the country's richest men.
The meeting ended with the bank granting a $10-million loan to Compagnon, whose application had been rejected by three other banks.
Her company used the money to buy land in central Chile that was then re-zoned for building construction, enabling the firm to sell it at a $5-million profit.
Since the revelations emerged, Davalos has denied wrongdoing, but resigned from his unpaid job as head of a government charity and from the Socialist party.
The scandal has been damaging for Bachelet, who, at the time the meeting occurred, was in the home stretch of a successful election campaign where she roundly condemned inequality and the privileges enjoyed by the Chilean elite.
Bachelet, who has shown reluctance to address the scandal in the press, said she could have managed her public relations better, but categorically denied any involvement in the loan deal.
"It may have been a mistake to stay silent, because it may have given a bad impression or a false impression," said the 63-year-old leader.
"The truth is that I had no link to any of this. Not with the meeting, nor with the deal," she added.
"Obviously I never knew about that meeting. I had nothing to do with that meeting. I didn't request the meeting, I never spoke with Luksic."
- Side-tracked reforms -
Bachelet, a single mother of three who served as Chile's first woman president from 2006 to 2010, surged back to power after sitting out the mandatory time between terms, winning 62 percent of the vote in the November 2013 election with promises to undertake ambitious social reforms.
But her efforts to overhaul the education system, pass new labor and tax laws, and change the constitution inherited from late dictator Augusto Pinochet have now taken a back seat.
Besides the scandal with her son, two others have emerged involving tax fraud and illegal campaign contributions by two of the country's largest companies, the Penta group and mining firm Soquimich.
The three cases have some Chileans worried that their nation, considered one of the most transparent in Latin America, is becoming a hotbed of corruption -- a perception Bachelet sought to counter.
"There may be corruption in Chile, but it's not generalized. Not everyone is corrupt in our country," she said.
Her comments came as Compagnon reported to the public prosecutors' office in the town of Rancagua to answer questions about the loan. She and her husband are being investigated for influence peddling and illegal use of privileged information.
Political analyst Max Colodro said the scandal has been particularly damaging because Bachelet, a former political prisoner who went into exile during Chile's dictatorship, had been perceived as "different from the traditional political class."
"The incident with her son threw her into the middle of what people criticize the most in the political class: abuse of power and influence peddling," he told AFP.
"I don't care about my popularity rating," answered the president. "What I'm worried about is Chile's future."