Court ruling on connection between Highway fraud and Hotesur-Los Sauces money laundering operations

The confirmed corruption conviction against Cristina Kirchner and Lázaro Báez in the Highways case established what were called "promiscuous ties" between the businessman and the administration of the then president. Highway contracts riddled with irregularities, cost overruns, contract manipulation, and tailor-made payment structures allowed the owner of Grupo Austral to obtain 86% of the contracts.

But there was another instance: some 20 highly varied commercial agreements with the Kirchner family. In its ruling, the Supreme Court addressed the ties between Vialidad and Hotesur - Los Sauces and the former vice president's lack of explanations.

Cristina Kirchner presented what she described as an arbitrary decision to the Supreme Court : that the Court, in its sentencing, took into account what she believes to be facts and evidence that should not have been considered . She spoke of her personal and business relationships with Lázaro Báez, the implications surrounding the issuance and effects of Decree 54/2009, the warnings issued by legal services regarding its issuance, and her assessment of the content of the messages extracted from José López's cell phone , among other matters.

The ruling that upheld the corruption sentence and that leads to the former vice president serving six years in prison, plus a confiscation of $85 billion, and the perpetual disqualification from holding public office, was decisive when responding to the claim of Cristina's lawyer, Carlos Beraldi: "These are complaints that are outside the extraordinary appealed jurisdiction of this Supreme Court , such as the context within which the maneuver that was judged was executed."

The trial court that convicted her found the former vice president guilty of fraudulent administration and argued in the grounds for the conviction that she had a vested interest in benefiting the owner of Austral Construcciones. The benefits she received from the company enabled "the increase in her assets" thanks to overpriced routes and contracts signed with the holding company's owner, which included the real estate company Los Sauces SA and the company Hotesur.

Court Justices Horacio Rosatti, Carlos Rosenkrantz, and Ricardo Lorenzetti emphasized: "He alluded to the fact that Lázaro Báez, through companies he controlled, executed leasing and management contracts with companies owned by the Kirchner family that operated hotels, in addition to having conducted other real estate transactions."

These relationships, however, the Supreme Court stated , "were not questioned by the defense in any way, beyond claiming that the commercial acts described were ' completely lawful and carried out at market prices,' which undermines any effectiveness of its argument."

When the Federal Court of Cassation upheld the conviction last November, it reviewed the links between Lázaro Báez and Cristina Kirchner based on evidence from the Vialidad case and the Hotesur and Los Sauces investigations.

It was explained that the criterion adopted by the Court of Cassation in considering this evidence was to demonstrate "relevant circumstances of the corruption scheme being judged" in the Vialidad case.

The substance of its study, the Supreme Court explained, "was the determination and verification of the strong personal and business ties between Báez and Fernández de Kirchner, built on the basis of multiple private businesses, and which also explains the motivations behind the actions of the individuals tried here, which resulted in undue profit."

The link between Vialidad and Hotesur - Los Sauces is unavoidable and the Supreme Court has exposed it.

Last year, the Supreme Court ordered the reopening of the Hotesur-Los Sauces case and the holding of the oral trial. The charges against Cristina Kirchner are for money laundering, a scheme that links her (within the framework of that investigation) to Lázaro Báez.

The connection of two important cases

In the Vialidad case, it was held that all the money invested in what the courts described as "sham contracts" stemmed solely from irregularities in road works. This bridged the gap between the schemes corroborated in the Vialidad case, which focused on the irregularities that ultimately benefited Báez, and how, in a second phase, a portion of those funds ended up in simulated commercial transactions through the Kirchner family's companies.

Based on this argument, a central theme was established: Cristina Kirchner and the owner of Grupo Austral maintained a close business relationship while he was a supplier to the state through public road works. This bridges the gap between the facts of the Vialidad case and the investigation into Hotesur - Los Sauces.

The scheme was confirmed by the Supreme Criminal Court in November 2024, creating a decisive scenario regarding this cycle of events that refers to a "recycling" scheme, a transfer of irregularly granted money that returned to the Kirchner family's assets.

The judges who handed down the first corruption ruling against the former vice president indicated that the relationship primarily involved the public treasury: they spoke of "promiscuous ties" that failed to distinguish between public and private interests. The Court exposed them and endorsed the concept of a business relationship, a relationship of knowledge that was never refuted or explained by Cristina Kirchner's defense team.

“In 2007, Cristina Elisabet Fernández de Kirchner assumed the Presidency of the Nation. In 2011, she was reelected until 2015. During that period, she and Lázaro Báez engaged in numerous private business ventures that resulted in constant profits for the former President,” stated the judges who convicted the vice president of fraudulent administration. The damage caused to the State was estimated at 85 billion euros.

How does this connect with the Hotesur - Los Sauces case?

The corroborated scheme operated as follows: Báez irregularly collected millions of dollars from the national government, not only in the amounts stated in the bidding documents, but also through various modifications to deadlines and amounts that were defined as overcharges by the trial prosecutors.

That money, the court explained, was "intended for private transactions with the former President of the Nation, who permitted and facilitated the disbursement of that money, guided by a clear personal interest."

According to the court's argument, Cristina Kirchner provided "the economic benefit to the Báez Group companies, which were contracted to carry out public road works." "Or, in other words, to the companies headed by the individual with whom the former President herself and her family conducted real estate and hotel deals while, at the same time, the fraud scheme was being carried out, to the detriment of the national public funds allocated for said public works."

The final destination of that money was "in part, the former President's family businesses." The reference is to Hotesur—the company that owns the Alto Calafate hotel—and Los Sauces SA—the real estate company.

Between 2008 and 2009, Néstor Kirchner and his companies Hotesur and Los Sauces entrusted the management of the Alto Calafate, Las Dunas, and La Aldea hotels in El Chaltén to Lázaro Báez's Valle Mitre company. In his argument, Cristina's lawyer, Carlos Beraldi, had simplified everything: "Some rented, others paid." But the judges rejected that explanation.

These rentals were "agreed upon for truly significant amounts, collectively exceeding one hundred thousand dollars per month, and for final amounts in the millions of pesos." This, they added, "not only allowed the owners to neutralize all risks inherent to the sector (tourism) but, above all, ensured they would maintain a steady income without any potential contingencies."

The transaction began on November 10, 2008. Hotesur SA negotiated with Valle Mitre SRL (owned by Lázaro Báez) the lease of the Alto Calafate Hotel for a period of one year and agreed to receive USD 80,000 per month for this lease. That same day, another contract was signed, by which Hotesur SA assigned Valle Mitre SRL the commercial exploitation and use of its assets for a monthly fee of USD 40,000.

That is, on that date, a total of USD 120,000 per month was guaranteed. Despite the fact that Báez's company was always making a loss, he never stopped paying the Kirchner family the monthly fee.

From the survey and cross-referencing of all invoices issued by Hotesur SA between 2008 and 2013 with the payments made by Valle Mitre SA and the date of registration in the Hotesur SA journal, it appears that Valle Mitre SA paid Hotesur SA, between 2008 and 2013, the sum of $28,597,624.

Furthermore, these payments, by virtue of the nature of the contract and the agreed terms, were made regardless of the accommodation's occupancy rate and the fluctuations of the tourist season. In other words, all risk was neutralized for the landlords, to the point that between March 2009 and May 2013, inclusive, all invoices issued by Hotesur SA were issued to Valle Mitre SA.

It was confirmed that Valle Mitre's financial capacity was "extremely limited to undertake a contract of the magnitude of the one entered into with Hotesur SA for the Alto Calafate hotel," as revealed by Clarín and stated in an accounting expert report.

While the operation "generated lavish and unprecedented profits for the former President, Báez's company reported losses. Another operation that demonstrates how important it was for Fernández de Kirchner to secure Báez's profits from government contracts is the agreement regarding the "Las Dunas" inn, also located in the province of Santa Cruz."

The data is even more overwhelming: Hostería Las Dunas allowed Néstor Kirchner first, and then his successors, to receive at least the sum of $5,846,676 issued by Valle Mitre SA to the "Néstor Kirchner Estate"; while the billing for the 2010-2013 period shows the existence of payments from Valle Mitre SRL/SA in the form of leases or rentals to the "Néstor Kirchner Estate" totaling $6,007,944.

The records reviewed by the case's experts highlighted that the relationship continued "until May 2013, the date on which the last payment was received" and that the hotel business shared by Báez and Fernández de Kirchner "is also linked, once again, to Los Sauces SA, this time in relation to the La Aldea del Chaltén hotel, acquired by the former presidents' firm on April 13, 2009."

Specifically, "it was possible to identify in the accounts of the management of the Fernández de Kirchner hotels the income of, at least, $70,949,170.95 from Austral Construcciones SA, $786,227.75 transferred by Kank Costilla and $481,773.60 De Loscalzo Del Curto SRL, in addition to credits from other firms in the group such as Badial, La Estación, Don Francisco, Alucom, La Aldea Chaltén, Diagonal Sur, which ultimately amounted to a total of $73,053,584.80 for the period 2008 to 2015.

There is another direct consequence of these fund movements: Valle Mitre SRL, which paid the former President's rent, grew thanks to the constant contributions from Austral Construcciones, which had a single source of income and client: the National Government. "Practically all of the money Valle Mitre SA had in its accounts in 2008 (95.7%) was contributed by Austral Construcciones SA—an amount that would be higher if all the surveyed revenues were taken into account—which at the time was enjoying a boom in contracts with the National Government."

By then, Lázaro Báez had already won 39 bids. "Companies began submitting bids closer to the official budget, even slightly below it in many cases, and suddenly they began to adjust to the budget. The same companies that had quoted almost 20% above the official budget all simultaneously adjusted their bids, even going so far as to quote below the budget."