updated 10/26/2007 7:18:07 PM ET 2007-10-26T23:18:07

A Chilean appeals court on Friday dropped corruption charges against former dictator Gen. Augusto Pinochet’s widow and four of his children, who had been accused of embezzling state money in multimillion-dollar overseas bank accounts.

The Santiago Court of Appeals also dropped charges against 10 of the late dictator’s former associates and aides, court President Juan Eduardo Fuentes said.

The court said the indictments were fundamentally flawed because the investigative judge failed to question the Pinochet family and former associates before charging them with corruption. It also ruled that the Pinochet family could not be charged with misuse of state funds because none of them was a government employee.

The indictments against two Pinochet associates were upheld, Fuentes said. Pinochet’s eldest son, Augusto, 62, also remains under indictment because he did not file an appeal.

Pinochet’s family and associates were indicted Oct. 4 as part of Judge Carlos Cerda’s investigation into the former dictator’s bank accounts in the United States and elsewhere. Pinochet himself was under indictment in the case when he died in December at age 91.

The dictator’s widow, Lucia Hiriart, two sons and three daughters, were arrested after the indictments were handed down. The children — the youngest is 49 years old — spent two days in jail before being released on bail, while Hiriart had to be hospitalized for a bout of high blood pressure.

The appeals court on Friday dropped the charges against Hiriart and four of the children — Lucia, Veronica, Marco Antonio and Jacqueline. Also cleared of charges were four retired army generals, including Pinochet’s longtime spokesman Guillermo Garin and active-duty Col. Mortimer Jofre.

“The rule of law has been restored,” Hugo Ortiz, a lawyer for Lucia Pinochet, said after the ruling was announced.

Prosecutors can appeal the decision to the Supreme Court, but there was no immediate word on whether they planned to do so.

Relatives denied wrongdoing
The relatives of the late dictator have repeatedly denied any wrongdoing and called the indictments politically motivated. They said Pinochet’s funds were legitimate, resulting from savings, investment and donations he received.

They also claimed Cerda was biased and noted the judge flew to the United States immediately after issuing the indictments to receive an award for his work on behalf of human rights.

Cerda is now under investigation by his peers to determine whether he broke internal rules by criticizing Chile’s judiciary while in the United States. He said Chile’s Supreme Court has failed to update the law on human rights issues.

A separate probe is under way at the Corrections Service to determine who leaked the prison mug shots of Pinochet’s widow and five children, which surfaced on the Internet and local media after their arrests.

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