Argentine police raided over a dozen luxury properties on August 22, including the headquarters of the national disability benefits agency, as a corruption investigation threatens to engulf President Javier Milei's inner circle, including his sister and close advisor Karina.

This comes after it was reported that Milei and several government officials would face criminal charges relating to alleged bribery schemes in drug supply contracts through the National Disability Agency (Andis).

Federal Judge Sebastián Casanello ordered the operation targeting 15 locations in Buenos Aires following leaked audio recordings purportedly showing Diego Spagnuolo, Milei's personal lawyer and former disability agency head, describing a kickback scheme involving government health contracts.

In the recordings obtained by Reuters, Spagnuolo allegedly details how pharmaceutical companies pay bribes to Karina Milei, the president's chief of staff, to secure drug purchase contracts for disabled people. "I estimate that Karina gets 3%," the voice says, describing an apparent 8% kickback system from pharmaceutical companies.

The government dismissed Spagnuolo but blamed political opponents for exploiting the scandal ahead of crucial midterm elections. "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," spokesperson Manuel Adorni declared in a public statement.

During the raids, investigators seized accounting records, phones, computers, and files. The timing proves particularly damaging as Congress moves to overturn Milei's veto of increased disability spending.

The corruption scandal, which follows an earlier investigation into Milei's alleged role in promoting the $LIBRA cryptocurrency scam, is yet another significant threat to the libertarian leader's anti-establishment credentials and fiscal austerity agenda. But more crucially, it risks derailing his party’s election campaign with the October midterm vote looming.

“It’s very hard to imagine this won’t affect Milei’s approval rating,” Lucas Romero, director of political consultancy Synopsis, told Bloomberg Linea. “This episode strikes at the core of his public image, that of an outsider who came to correct the corrupt practices of politics.”

Before this scandal surfaced, it appeared that Milei’s La Libertad Avanza party was steaming into the lead, polling at 43.8% nationwide when pooled together with alliance partner PRO, while the Peronist-Kirchnerist coalition Fuerza Patria trailed by a notable 15.6 percentage points. It now appears uncertain whether the Milei-led alliance will hold its support base steady as this latest scandal rocks the nation.