Amid much publicity, in 1975 the Clarín company was officially confiscated without compensation, under a decree designed to liquidate all properties owned by political parties and labor unions. The military’s actions at that time, intended to discredit Pey as a tool of the Marxist president, have provided–in yet another bit of irony–some of the strongest evidence in Pey’s favor in his struggle with the current government. To justify the confiscation, a Pinochet government official announced that the ownership papers for Clarín had been discovered in the private office of Victor Pey. The papers, the official said in a written statement, showed that Pey, not Darío Sainte-Marie and the three other men whose names still appeared in the registry of the Superintendent of Corporations, was the real owner of Clarín. The papers, found in a strongbox, had the signatures of Sainte-Marie and the others, and showed that the four men had signed over their titles to all Clarín stock, in effect, to Pey, the possessor of the documents. ”Based on this evidence… the result is that it was Victor Pey who bought… the Empresa Periodística Clarín, making payments of U.S. $780,000 [and] $500,000,”the official declared.

That’s where the matter stood in 1990. With a democratic government in power, Pey moved to recover Clarín. At first all went well. A court order returned to him the ownership papers that had been preserved by the military government. With the papers in hand, he began the process–which he initially thought would be friendly–of claiming restitution. It should be simple, he said at the time: ”They took it away from me by decree; they can restore it to me by decree.”

Pey vowed that he had no intention of keeping the money for himself. ”I have said that the minute I have sufficient resources I am going to publish the newspaper Clarín, which will defend interests that coincide in some ways with the interests of the current Concertación government.”As a guarantee of his intentions, Pey donated 90 percent of the Clarín property to the President Allende Foundation, a nonprofit human rights organization founded in Spain.

Pey’s partner in the effort to recover Clarín is a story in his own right. He is Joan Garcés, the Spanish lawyer who devised the legal strategy that resulted in the arrest of Pinochet in London in 1998. Garcés served as a political adviser to Allende until the coup, and is the president and co-founder of the President Allende Foundation.

After several years went by with no progress on Pey’s claim in Chile, he and Garcés tried another tack. In November 1997, Pey, a Spanish citizen, and the foundation filed their claim against the government of Chile in the International Centre for Settlement of Investment Disputes (ICSID), an arbitration center at the World Bank in Washington, D.C.

The filing put the Chilean government in a double bind. On the one hand, it could not refuse the arbitration, to which it was committed by treaty with Spain, without sending a negative signal to foreign investors interested in Chile’s booming economy. In cases of confiscation the arbitration process allowed for restitution not only of the property itself but also of unrealized profits. Thus Pey’s claim was initially set at a stratospheric $517 million, although the three arbitration judges appointed to the case will establish any final settlement.

On the other hand, the government did not feel free to negotiate a lesser settlement through direct talks with Pey for fear of the wrath of Chile’s powerful rightist parties and their ally, El Mercurio. Alarm bells went off inside the Concertación. According to a former official directly involved, Concertación leaders warned President Ricardo Lagos that if the government did not put up a fierce fight, employing the best lawyers, it could be accused of ”some sort of connivance with the Allende Foundation.”Such accusations did in fact soon materialize, not only from the right but from the Christian Democrats, the large centrist party that is a mainstay of the Concertación coalition. El Mercurio’s writers pounded on the story, citing ”rumors”that the money for Clarín was actually going to end up in the treasury of the Socialist Party.

The warnings set in motion a counter-strategy to avoid settling with Pey and the foundation. The strategy amounted to paying a lesser amount to other claimants in Chile, on the legal theory that once the case had been administratively resolved in Chile, the World Bank arbitration process would be closed.

John Dinges is the co-founder of the investigative journalism center CIPERchile.cl in Santiago, Chile. He has written three books about military dictatorships and human rights in Latin America. The most recent is The Condor Years: How Pinochet and his Allies Brought Terrorism to Three Continents. He is a professor of journalism at Columbia University.