Chile's Pinera vows punishment for credit scandal

Reuters News
Posted: Jun 18, 2011 11:18 PM
Chile's Pinera vows punishment for credit scandal

SANTIAGO (Reuters) - Chilean President Sebastian Pinera vowed on Saturday to track down and punish those responsible for customer credit irregularities at retailer La Polar that shook the stock market this week.

The credit scandal is the worst to hit Chile's financial sector in recent years and has exposed signs of strains in the country's demand-driven economic boom.

Echoing comments by Finance Minister Felipe Larrain, who said on Thursday a criminal probe would be launched, Pinera pledged his government would seek tough legal action.

"We're going to go after the people behind this to make sure they're held responsible and face the penalties they deserve," Pinera said in a speech, saying he would seek fair compensation for consumers affected by the debacle.

"It's clear that La Polar has been abusing and failing to respect the rights of customers and debtors," he added.

La Polar, which has estimated it will need to set aside an extra $890 million to cover potential losses, has said it will reduce interest payments and fines for customers whose debt was restructured without their consent.

The retailer's stock plunged about 40 percent before regulators halted trading last week.

(Reporting by Moises Avila; Writing by Helen Popper; Editing by Peter Cooney)