Argentina investigates alleged kickback scheme entangling President Milei’s inner circle

Argentine President Javier Milei, left, and his sister Karina Milei, the general secretary of the presidency, attend the opening ceremony of the Rural Society's annual exposition, in Buenos Aires, Argentina, July 26, 2025. (AP Photo/Gustavo Garello, File)

BUENOS AIRES, Argentina — Argentine police on Friday raided over a dozen luxury homes and offices including the headquarters of a national agency charged with providing disability benefits, an official said, escalating a corruption investigation that threatens to ensnarl the closest advisers of libertarian President Javier Milei, including his powerful sister Karina.

Ordered by federal judge Sebastián Casanello, the operation targeted 15 locations in and around Buenos Aires as fallout spread from audio recordings leaked to local media purporting to show Diego Spagnuolo, President Milei’s personal lawyer and the head of the country’s disability agency, describing a kickback scheme tied to government health contracts that funneled money to top officials.

An Argentine official with knowledge of the investigation, speaking on condition of anonymity because he was not authorized to discuss the case publicly, gave details of Friday’s raids to The Associated Press.

It’s not the first time Milei’s inner circle has been accused of taking bribes. The first big scandal of his presidency erupted earlier this year after he promoted an unknown cryptocurrency token called $LIBRA that shot up in value after his endorsement then cratered, prompting dozens of criminal complaints alleging fraud from Buenos Aires to New York City.

This latest firestorm saw Milei’s government dismiss Spagnuolo from his post Thursday over the released recordings in which he can be heard complaining about how pharmaceutical companies pay bribes to Karina Milei, the president’s chief of staff and top adviser, to secure government drug purchases for disabled people.

The date and location of the audio, recorded in secret, remain unclear. Only Spagnuolo’s voice can be heard over the low clatter of cutlery and coffee cups, suggesting the conversation was captured in a cafe or some other public place. The other interlocutors cannot be identified.

The government has not confirmed nor denied the authenticity of the recordings.

In the audio, Spagnuolo can be heard calling out the major pharmaceutical company Suizo Argentina as offering bribes to Karina Milei through her close confidant, Eduardo “Lule” Menem.

“They’re embezzling my agency. They’ve assigned a guy who handles everything related to my coffers,” the alleged voice of Spagnuolo says. “They’re going to ask people for money, the providers.”

At one point he appears to explain that the highest rungs of Argentina’s government have demanded 8 per cent kickbacks from pharmaceutical companies.

“I estimate that Karina gets 3 per cent,” Spagnuolo can be heard saying. “One percent goes to operations, another 1 per cent goes to me. ... Probably something like that and they’re screwing you big time.”

In firing Spagnuolo on Thursday, Milei’s administration said nothing about the alleged bribery scheme but blamed the government’s political opponents for trying to dig up dirt to hurt Milei’s campaign with just weeks to go before Argentina’s crucial midterm elections widely seen as a key test of support for the radical libertarian’s harsh belt-tightening campaign.

“In light of the facts that are public knowledge and the opposition’s obvious political exploitation in an election year, the president has decided, as a preventive measure, to remove Diego Spagnuolo from his position,” Milei’s spokesperson Manuel Adorni said.

The case was prompted by Gregorio Dalbón, the attorney representing former president and opposition leader Cristina Fernández de Kirchner, who was banned from politics for life and placed under house arrest in June after the Supreme Court upheld a six-year sentence for corruption. She is also fighting corruption charges in three other ongoing cases.

Dalbón asked the court to investigate Spagnuolo, Karina Milei, Menem and executives of Suizo Argentina for alleged fraud, bribery and conflict-of-interest negotiations.

During Friday’s raids, investigators seized accounting records, cell phones, computers and boxes of files. Police found Spagnuolo at a well-heeled country club outside Buenos Aires and confiscated his cell phone.

The scandal splattered across local media this week as the lower house of the opposition-controlled Congress moved to overturn Milei’s veto of a spending bill that would increase payments and benefits to people with disabilities. The government is negotiating with the opposition to prevent such a two-thirds majority from overriding his veto in the Senate as well.

A boost in social spending, Mileil warns, would threaten his flagship pledge to balance Argentina’s budget.

Débora Rey, The Associated Press

Associated Press writer Isabel DeBre in Buenos Aires, Argentina, contributed to this report.