Milei adds a corruption scandal to his mounting list of woes

Reeling from a week of political, economic and financial setbacks in Argentina, President Javier Milei now faces a fresh corruption scandal linked to a top government official.

Milei fired Diego Spagnuolo, director of Argentina’s ANDIS disability agency on Wednesday after local media published leaked audio messages allegedly discussing bribery in his organisation, which he links to the president’s sister, Karina Milei. On Friday, judicial authorities confiscated two phones from Spagnuolo’s home, as well as a cash counting machine, according to La Nación newspaper. In total, a judge ordered 15 raids to obtain more evidence.

The scandal risks denting the libertarian president’s approval rating, which has proved surprisingly resilient despite his aggressive spending cuts. It could also sap some of the momentum he’s trying to carry into two crucial electoral challenges.

“It’s very hard to imagine this won’t affect Milei’s approval rating,” said 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.”

Residents of Buenos Aires Province, who make up nearly 40 percent of Argentina’s population and have consistently voted for Milei’s Peronist rivals, elect new local councils and provincial legislators on September 7. That vote will be a key signal to investors of what’s to come in late October, when all of Argentina heads to the polls to renew half of the lower house of Congress and a third of the Senate.

This week, opposition lawmakers gathered enough support to reject Milei’s veto of a boost to financial aid for the disabled, though the president was spared a similar fate on a much more expensive bill to hike pensions. Senators also passed two measures that jeopardize the libertarian’s austerity drive: an emergency health-care bill and another to boost spending on public universities.

Consumer confidence, meanwhile, fell sharply in August and economic activity contracted for a second straight month in June. In financial markets, a liquidity squeeze sent interest rates soaring to record highs this week as the government worked to prop up the peso, clouding the prospects for a quick return to economic growth.

The scandal over the disability agency chief isn’t the first to mar Milei’s Presidency. The president promoted a memecoin on his social media account in February that quickly collapsed, leading to US$250 million in losses for investors. And in April, Bloomberg News reported on paid dinners he and his sister arranged prior to his run for the country’s top office that netted them as much as US$20,000 in cash. 

Milei’s popularity has nonetheless held up. His approval rating edged up to 45.1 percent in July, according to the latest LatAm Pulse survey conducted by AtlasIntel for Bloomberg News, with 47.8 percent of respondents saying they disapproved.

In the leaked audio messages, first published Wednesday by local news site Data Clave, Spagnuolo allegedly says the bribery scheme brings in between US$500,000 and US$800,000 per month. He attributes the operations to Karina Milei and her close ally Eduardo 'Lule' Menem. The audios also allegedly reveal he told “Javier” about the issue. The authenticity of the audios has yet to be confirmed.

The government’s Health Ministry will take control of the agency in the meantime, the presidential press office announced on X in the early hours of Thursday, before the measure went into effect in the national gazette later that day. Milei, who is in Rosario Friday for an event at its stock exchange, hasn’t commented on 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.