Amidst a tumultuous week marked by political, economic, and financial challenges in Argentina, President Javier Milei is now confronted with a new corruption scandal involving a senior government official. Milei dismissed Diego Spagnuolo, the director of Argentina’s ANDIS disability agency, on Wednesday following the release of leaked audio messages by local media. These messages reportedly discuss bribery within his organization, which Spagnuolo associates with the president’s sister, Karina Milei. Judicial authorities confiscated two phones and a cash counting machine from Spagnuolo’s home on Friday, as reported by La Nación newspaper. A judge has ordered a total of 15 raids to gather additional evidence.
The scandal poses a threat to the libertarian president’s approval rating, which has remained unexpectedly strong in the face of his aggressive spending cuts. The situation may also diminish some of the momentum he aims to maintain as he approaches two significant electoral challenges. “It’s very hard to imagine this won’t affect Milei’s approval rating,” remarked Lucas Romero, director of Synopsis, a political consultancy firm. “This episode strikes at the core of his public image, that of an outsider who came to correct the corrupt practices of politics.”
On September 7, residents of Buenos Aires Province, accounting for nearly 40 percent of Argentina’s population and historically aligned with Milei’s Peronist rivals, will cast their votes to elect new local councils and provincial legislators. The upcoming vote is poised to serve as a crucial indicator for investors regarding the future landscape in Argentina. This event precedes the nationwide elections in late October, where citizens will cast their ballots to renew half of the lower house of Congress and a third of the Senate. This week, opposition lawmakers successfully rallied sufficient support to overturn Milei’s veto concerning an increase in financial aid for the disabled. However, the president managed to avoid a similar outcome regarding a significantly more costly bill aimed at raising pensions. In a significant move, senators approved two measures that pose a challenge to the libertarian’s austerity agenda: an emergency health-care bill and a proposal aimed at increasing funding for public universities.
In August, consumer confidence experienced a significant decline, while economic activity saw a contraction for the second consecutive month in June. This week, financial markets experienced a liquidity squeeze that caused interest rates to soar to record highs. As the government took measures to support the peso, the outlook for a swift return to economic growth became increasingly uncertain. The controversy surrounding the chief of the disability agency is not the first incident to tarnish Milei’s presidency. In February, the president took to his social media account to promote a memecoin, which subsequently experienced a rapid collapse, resulting in losses amounting to US$250 million for investors. In April, it was revealed that he and his sister organized paid dinners before his campaign for the nation’s highest office, which earned them up to US$20,000 in cash.
Milei’s popularity has, however, remained strong. In July, his approval rating rose to 45.1 percent, as reported by the latest LatAm Pulse survey conducted by AtlasIntel. Meanwhile, 47.8 percent of respondents expressed disapproval. In audio messages that have surfaced, initially reported on Wednesday by local news outlet Data Clave, Spagnuolo purportedly claims that the bribery scheme generates between US$500,000 and US$800,000 each month. He links the operations to Karina Milei and her close associate Eduardo ‘Lule’ Menem. Reports suggest that the audios contain a conversation in which he informed “Javier” about the issue. The veracity of the audios remains unverified.
The presidential press office announced on X in the early hours of Thursday that the government’s Health Ministry will take control of the agency. This measure was set to go into effect later that day in the national gazette. Milei, present in Rosario on Friday for an event at the local stock exchange, has not addressed the allegations. “In light of the publicly known events and the evident political use by the opposition in an election year, the President of the Nation has decided, as a preventive measure, to remove Diego Spagnuolo from his position as Executive Director of the National Disability Agency,” the press office wrote.