Former Health Ministry Chief Convicted for Fraud During Pandemic Emergency

Original article: Condenan a exjefe del Minsal de Piñera por fraude al fisco en plena pandemia

The former head of the Primary Care Division at the Health Ministry, Orlando Durán Ponce, was found guilty of favoring his inner circle through multi-million dollar contracts during the Covid-19 emergency.

The Fourth Oral Criminal Court of Santiago has sentenced Orlando Durán Ponce, who served as the head of the Primary Care Division (Divap) within the Health Ministry during Sebastián Piñera‘s administration, to 900 days in prison, along with an accessory penalty of three years and one day of temporary absolute disqualification from public positions, and to pay a fine totaling $102,793,152 for crimes of fraud against the treasury and incompatible negotiation related to contracts awarded for setting up sanitary residences during the 2020 health emergency.

The case arose during the midst of the Covid-19 pandemic, when the Undersecretariat of Health Networks approved a contract worth $205 million with the company Hotel Clínico SpA, designated to provide 40 rooms for isolating infected patients. The agreement was signed in May of that year by then Undersecretary Arturo Zúñiga.

It was later revealed that the company had been established just months before the contract was signed, with its sole partner being Alexandra Andrea González Silva, Durán’s partner. Additionally, the commercial address of Hotel Clínico matched that of Smart Apart, a hotel company directly linked to the former Divap chief, responsible for coordinating the sanitary residences.

Following these disclosures, former Undersecretary Zúñiga filed a criminal complaint, initiating a judicial process that extended over five years. According to Fast Check, during the trial, the court established that Durán acted intentionally to benefit individuals within his close circle, violating his duties as a public official.

Moreover, multiple irregularities were documented in the management of the sanitary residences. Among these were the presentation of lists with 145 supposed patients, of whom 88% were never referred by health authorities, along with records of over 50 foreign guests who had already left the country prior to the dates listed for their stays.

Sentence for Orlando Durán

In a unanimous judgment (case role 357-2025), the court, comprised of judges Andrea Acevedo Muñoz (president), Patricia Bründl Riumalló, and Pedro Aravena Bouyer (reporting judge), sentenced Durán Ponce to an additional 900 days of imprisonment, along with a three-year and one-day accessory disqualification from public positions, and a fine of $2,400,000 for committing the completed crime of fraud against the treasury. This crime was perpetrated in Santiago in April and May 2020.

“Since the requirements established in Article 15 bis of Law 18.216 are met, the custodial penalties imposed on the convicted Durán Ponce will be replaced by intensive supervised release for the duration of the sentences. He must report to the Social Reinsertion Center of the Chilean Gendarmerie corresponding to his address within five days of the execution of this sentence and comply during the control period with the individual intervention plan approved at that time, as well as with the legal conditions set forth in letters (a), (b), and (c) of Article 17 of the said law. Moreover, he will have to fulfill the condition set forth in letter (d) of Article 17 ter of this regulation, that is, the obligation to attend educational programs in areas related to labor or cultural subjects, which will be determined with the respective delegate in charge of his individual intervention plan,” the ruling states.

“For compliance purposes, the convicted person must report to the nearest Gendarmerie Social Reinsertion Center to his domicile within five days from the time this sentence is executed, under the warning that a detention order will be issued against him,” it adds.

The ruling also mandated that “according to the provisions of Article 16, second paragraph of the aforementioned law, the delegate designated for the control of these penalties shall propose to the corresponding court the individual intervention plan mentioned by the specified norm, establishing a hearing for the approval of said plan on the forty-fifth day from which this sentence becomes final and executory. If said day is not a court operating day, the referred hearing will take place the next day. The Gendarmerie of Chile will be notified for such purposes at the appropriate time.”

The capital court acknowledged the mitigating factor of substantial collaboration in clarifying the facts, agreed upon against the dissenting vote of judge Aravena Bouyer, who was in favor of condemning him “for fact No. 1, to a single penalty of four years of lower imprisonment at its maximum degree, and for fact No. 2, a penalty of three years and one day of lower imprisonment at its maximum degree, sharing the majority’s view with respect to the penalties of fines and accessories imposed in the final paragraph of Article 239. Consequently, considering the extent of said penalties and since the requirements of Law No. 18.216 were not met, the dissenter believed that the custodial penalties should be served by the accused effectively.”

Civil Claim by the CDE

In civil matters, the court accepted, with costs, the claim filed by the plaintiff, the State Defense Council (CDE), and ordered the former head of Piñera’s Health Ministry to pay the sum of $2,400,000 to the treasury for damages incurred in canceling fees in April and May 2020 to his partner Alexandra González Silva for services not rendered, who was sentenced in summary proceedings to 61 and 541 days of imprisonment for committing the crimes of incompatible negotiation and fraud against the treasury, respectively. Compliance replaced by intensive supervised release for a period of 4 years.

Direct Dealing and Family Network

The court confirmed, beyond a reasonable doubt, the context and mechanisms used to commit the crime. According to the ruling, “as a result of the global coronavirus pandemic, on February 5, 2020, the Ministry of Health declared a health alert across the Republic for one year, granting extraordinary powers to certain authorities, including the Undersecretariat of Health Networks (hereinafter SRA), which was relieved from the obligation of the bidding procedure established in Article 8 letter (c) of Law 19.886, allowing it to directly acquire necessary goods, services or equipment to face the urgency posed by the Covid-19 virus.

The judicial document explains that the central authority defined as one of its health policies aimed at controlling the disease’s spread a hiring program via direct dealing for sanitary residences, in accordance with official letter Ord. C51 N°871 dated April 2, 2020. These residences were meant to provide rooms for patients diagnosed with COVID but asymptomatic and who did not require hospitalization, as well as for individuals suspected of contagion who lacked safe isolation conditions in their homes.

The contracting of these services was delegated to decentralized regional health services; however, some located in the Metropolitan Region were decided at the central level, that is, by the Undersecretariat of Health Networks through the Primary Care Division of the Health Ministry (DIVAP), established as capable of executing the Sanitary Residences strategy.

“At the referenced date, the head of such division was the accused Mr. Orlando Andrés Durán Ponce, and as such, it was his function to define the technical conditions for the goods and services acquired by the Undersecretariat and to carry out and execute the respective contracts,” the ruling states.

According to the court, the accused, in his role as head of DIVAP, directly intervened in the awarding process of the provider Hotel Clínico SpA. “In fact, its hiring was conducted at the accused’s request, which was recorded in memorandum C5 N°42 dated April 30, 2020, and also in the purchase requests for goods and services N°44, 45, and 46 dated April 2, 2020, directed to the Division of Finance and Internal Administration in which he requested to manage by direct dealing the rental of that hotel. He also conducted the analysis of the approval resolution corresponding to Exempt Resolution N°276 dated May 22, 2020.”

The concerned company, Hotel Clínico SpA, RUT: 77.140.976-8, had been formed on March 24, 2020, at which time its legal representative, Ms. Alexandra González Silva, electronically managed to register with the Business and Company Registry of the Ministry of Economy, Promotion, and Tourism. The incorporation document does not specify the company address but indicates that it would be in the Santiago commune, without prejudice to establishing agencies, branches, or establishments elsewhere in the country or abroad. Its capital was set at $80,000,000. The document further indicates that the company would commence operations on that same date and that its purpose would be Clinical Hotel and leasing furnished property.

Before the Undersecretariat of Health Networks, the accused herself represents the company in the prior hiring procedures and subscribes to the service provision agreement for sanitary residence between the Health Ministry represented by then Undersecretary Arturo Zúñiga Jory and Hotel Clínico SpA, executed on May 1, 2020. “On that occasion, the accused indicated her own domicile and that of the company as corresponding to 552 Mosqueto Street, Santiago, a property corresponding to an apartment building.”

The agreement stipulates that the services provided by the supplier involved individual rooms for each guest, independent with a private bathroom, food service in the guest’s room, water, daily cleaning service, laundry, and others. It also indicated that such services began on March 27, 2020, just three days after the company was formed, and that the total duration of these would expire on June 30 of the same year. However, as of June 2020, there was no formal record of the persons admitted to Hotel Clínico SPA. The total price for the service contracted for 40 rooms from March to June amounted to $205,586,304, including VAT.

The agreement also specified that payment would be authorized by the order of the Undersecretary of Health Networks, after the issuance of compliance certification by the head of DIVAP, which in turn was based on compliance certification issued by the coordinator of the Community Care Office, which belongs to the aforementioned Division as the Ministerial Technical Counterpart, according to what’s established in Exempt Resolution RA N°881/140/2020. It was stated in the agreement that this technical ministerial counterpart had to ensure the proper execution of the supplier’s obligations, being responsible for carrying out validations and approvals of the services specified in the contract, could summon meetings to evaluate service quality, provide the supplier with available information and assistance required, issue compliance reports, among other functions.

Simultaneously, it pointed out that communications between the supplier and the Ministry would preferably take place via email addressed to [email protected]. This in-box belonged to the accused Mr. Dangelo Iasalvatore Silva, condemned in summary proceedings, who worked in DIVAP as the coordinator of the Community Care Office under the direct supervision of the accused Orlando Durán Ponce and who, moreover, is a maternal cousin of Alexandra González Silva.

Guarantee Bond Funded by the Head of the DIVAP

The aforementioned hiring required the provision of a guarantee bond by the supplying company, which in this case was taken by the accused González Silva at Banco Santander N°0111029, in favor of the SRA, dated April 15, 2020, for an amount of $10,279,314 and valid until July 1, 2020. On April 14 and 15, 2020, González received from co-defendant Orlando Durán Ponce four successive money transfers to her account at Banco Santander N°75627238 for a total of $10,600,000, from two checking accounts that Durán Ponce maintained in Banco de Chile and Santander. “Thus, with money from the very head of DIVAP, who was supposed to oversee the hiring process, a guarantee bond was secured, a fundamental requirement needed to finalize the agreement with the Undersecretariat,” the ruling stated.

Real Estate Network

Furthermore, as stated in the ruling, Orlando Durán Ponce was the owner of apartment No. 501 located at 552 Mosqueto Street, Santiago, and was also a tenant of apartments 303, 401, 402, 502, 601, 701, 702, 801, 804, 904, 1001, 1003, 1004, 1201, 1203, 1204, 1304, 1404, and 1504, among others, all located in the same building. These apartments, prior to the creation of the Hotel Clínico SpA, were subleased by Durán through the platform Booking.com under the name ‘Smart Apart.’ The respective rental contracts were signed directly by him or by Ms. Paulina Alejandra Mora Soto, his spouse, with him signing as her guarantor.

The company Hotel Clínico SpA, created as described by the accused to provide sanitary residence services to the Health Ministry, utilized the same apartments that had been leased by the accused Orlando Durán Ponce. The accused’s connection to the aforementioned building is so direct that in the sworn declaration issued based on the requirements of Article 55 of Law 18.575 on General Bases of Public Administration and Article 12, letter (e) of DFL 29/05, which sets forth the consolidated, coordinated, and systematized text of Law 18.834 on Administrative Statute, he stated his domicile as being at 552 Mosqueto Street and registered it with the Human Resources Information System of the Department of Management and Development of People of the Minsal.

The resolution emphasizes severe omissions in the procedures and states that “the referred property was neither inspected nor assessed prior to the contract by the ministerial technical counterpart, and there were no instruments available that would account for the organization and internal functioning of the residence, meaning DIVAP could not verify the existence of the 40 rooms with private bathrooms stated in the agreement, nor ascertain that the facilities ensured the necessary isolation conditions, and thus could not determine that it was in a residential building that shared access, concierge, and elevators with other residents, completely contrary to the need for a secure confinement to mitigate the spread of the pandemic.”

Hotel Clínico SpA also lacked health authorization granted by SEREMI de Salud de la Región Metropolitana.

“Consequently, the contract by the Health Ministry for the sanitary residence Hotel Clínico SpA could only occur because a public official, the accused Durán, who was supposed to intervene operationally due to his position, had a direct interest in it, supported by the active collaboration of the accused González and Iasalvatore, as previously described,” it concluded.

False Lists and Guests Who Had Left the Country

Regardless of the ongoing coordination between Minsal officials and the accused or any other worker from the service provider for the reception of specific patients, during the course of the contract and at the request of Minsal employee María Fernanda Hernández, Alexandra González Silva sent lists via email on June 5 and 15 under the subject “User Registration List,” containing consolidated information of patients who supposedly had been received at Hotel Clínico SpA during March, April, and May, as clear evidence of the services rendered and the record of patients actually attended were necessary for the approval of payments.

The information included a record of 145 individuals, which were identified as having supposedly checked into the Hotel Clínico, but 88.27% of these guests had unknown origins, as they had not been referred by health authorities as cases requiring sanitary isolation. The same list identified 94 foreign guests, of whom 56 had left the country before the period in which they were reported as having used the residence.

The ruling provides an extensive list of these cases, including: «1.- Armando Cortés Arias, Argentine, who left national territory on February 26, 2020; 2.- Semrad Eva and Semrad Jiri, both Czech, who exited the national territory on February 21 of that same year; 3.- Veltencir de Souza Marquesine, Brazilian, who had left the country on August 13, 2019; 4.- Patricio Leonel Puntriano Ylazaca, Peruvian, who departed national territory on August 8, 2019; 5.- Pamela Victoria Sardi Olivos, Peruvian, with a departure record dated August 8, 2019; 6.- Alejandro Medina Soto, Mexican, who emigrated on March 11, 2020; 7.- Amanda Donohe, Irish, who left the country on August 13, 2019; 8.- Carla Derimais Anconetani, Argentine, who exited on March 15, 2020; 9.- Daiane Dos Santos Teles, Brazilian, with departure on August 18, 2019; 10.- Edileuda Souza Gouveia, Brazilian, with an exit on August 17, 2019; 11.- Génesis Marisol Bernal Burgos, Ecuadorian, with departure on August 13, 2019; 12.- Flavio Ezequiel Michellop, Argentine, who left on August 29, 2019; 13.- Eduardo Pérez, Argentine, who exited on March 11, 2020; 14.- José Luis Figueroa Imari, Spanish, with departure on August 25, 2019; 15.- José Girón Moreno and Ingrid Pérez Goncalves, both Brazilian, who left national territory on August 20, 2019; 16.- Balidia Rodríguez Silva, Peruvian, exited on August 14, 2019; 17.- Walter Ramos de Araujo, Brazilian, with departure on August 26, 2019; 18.- Adjar Oliveira de Souza, Brazilian, who left on August 25, 2019; 19.- Yanina Danice Ayala, Argentine, with exit on August 21, 2019; and 20.- Sun Haigang.”

The court asserts that this compilation of false information was provided by Alexandra González Silva as a representative of Hotel Clínico SPA, with the collusion of her cousin Dangelo Iasalvatore Silva, who, as mentioned, was the ministerial technical counterpart of this contract and responsible for verifying that the agreed-upon services had indeed been fulfilled by the provider, «which evidently did not occur in this instance.”

Durán’s Intervention to Expedite Fraudulent Payments

For his part, Orlando Durán Ponce, in his capacity as Head of DIVAP, responded to a request for Certificates of Compliance made by the Department of Administration and Institutional Development of the Undersecretariat of Health Networks on June 9, 2020, which required signatures from the technical counterpart of the contract and the head of DIVAP, that is, Iasalvatore and Durán himself, and which expressly referred to the supplier having provided every service contracted satisfactorily. He urged on that same day that suppliers should not be asked to create an annex report to the invoice to avoid potential delays in payment and citing various other arguments, stating generically but explicitly that the supplier’s services had been satisfactory since March.

“In the manner described above, the accused went to considerable lengths to defraud the treasury out of $205,586,304, which was the amount agreed upon in the contract made between the parties, which was ultimately thwarted when the officials managing the payment realized that the user information was false, that the service condition parameters were never standardized, and that the aforementioned connection existed between all the accused,” the ruling explained.

Fees Paid for Services Not Rendered

The second established fact involves Alexandra González Silva, who signed a fee agreement on April 1, 2019, with the Metropolitan Occidente Health Service. Despite graduating in December 2018 and recently obtaining her veterinary medicine degree in 2020, Orlando Durán, in his capacity as the substitute head of DIVAP, certified that she possessed expertise in specific areas concerning responsible pet ownership, vector control, and prevention of zoonoses, thus being well-equipped to develop projects, programs, and work in those areas. With the backing of this certification, she was hired as an expert in the field.

The roles she was to fulfill according to the agreement were: “Coordinate meetings in territories with social, functional, and territorial organizations; visit the advisory councils of the health services; organize training activities across all areas of the network: management of domestic animals (pets), handling of vectors, hygiene and zoonoses; and relations of people’s health linked to animals and other insects, etc.”.

Additionally, she was to maintain a workload of 44 hours per week, which she recorded on a handwritten sheet submitted periodically to the service along with the respective fee invoice and the report of tasks performed.

According to the case evidence, she was not assigned a workplace within the health service facilities, nor was she provided with a government-issued phone or computer. She did not receive an institutional email account either.

The total fees agreed upon until December 31, 2019, were $10,800,000 payable in 9 installments of $1,200,000 for each month worked. On April 15, 2020, Exempt Resolution N°116395/148/2020 approved a new sum-fee agreement between the accused and the Occidente Health Service for the term from January 1 to December 31, 2020. The functions to be performed remained the same as specified in the previous agreement. The total fees amounted to $14,400,000, payable in 12 installments of $1,200,000 each, to be paid monthly.

Phantom Transfer to DIVAP and False Reports

Since this service relationship began, reports from Alexandra González indicated her participation in activities such as “the creation of Project Prevention and Promotion Bases for competitions alongside the DIVAP Team”.

The fee agreement had been signed with the Metropolitan Occidente Health Service, a decentralized entity, yet the reports indicated she was performing tasks for the central division supervised by co-accused Orlando Durán Ponce.

On an undetermined date but already after the pandemic declaration, the same accused requested her direct supervisor at the service, the interim deputy director of the Primary Care Division, Ms. María Paz Iturriaga Lisbona, to transfer Alexandra González to perform functions at DIVAP. In her activity reports for April and May 2020, during which she had already created Hotel Clínico SpA with Orlando Durán Ponce’s assistance, the accused reported supporting DIVAP in community strategies for Covid-19 prevention in April and aiding municipal teams in implementing Covid-19 strategies in May.

However, these claims were false as the accused never served functions at DIVAP during those months, and there is no record of any activities she carried out within that division, making her unknown to the staff there. Even emails dated June 5 and 15, 2020, in which she sent information on users who were allegedly guests at the Hotel Clínico, were dispatched at 11:52 and 10:09 hours, respectively, while she was supposedly engaged in services for the Metropolitan Occidente Service.

“In the manner outlined, and for at least the months of April and May 2020, Alexandra González Silva, with the backing of co-accused Orlando Durán Ponce, defrauded the treasury by presenting false activity reports that detailed tasks not performed in the Division directed by Durán, thus securing payment for fees totaling $2,400,000,” concluded the Fourth Oral Criminal Court of Santiago.

View First Instance Ruling