Chile court orders president's embattled daughter-in-law to stay in country

The courts are investigating allegations that Natalia Compagnon issued false tax declarations, misrepresented her income, and issued fraudulent invoices relating to a real estate concern she half-owns.

Intense media coverage of the case in CHILE (CHILE.CHL)(CHILE.CHL)(CHILE.84)has weakened Bachelet's political standing and raised questions about her judgement at a time when she is struggling to push broad social and economic reforms through a fractious congress.

Bodyguards fended off raucous protestors and press at the courthouse in Rancagua, 50 miles south of capital Santiago, as Compagnon left the building shortly after the decision was handed down. The restrictions she faces are less severe than preventative jail time, a legal option that courts have used during recent high-profile fraud cases.

The investigation of her tax affairs grew out of revelations that Sebastian Davalos, Compagnon's husband and Bachelet's son, used his political connections to get his spouse access to a $10 million dollar loan that she used to turn a quick profit on a land deal.

When the original scandal broke in February 2015, Chile's bank regulator said the loan appeared legal. But claims of influence peddling caused waves in Chile, casting legal scrutiny upon Compagnon and bringing scorn upon Bachelet.

In the immediate wake of Friday's decision, many Chileans took to social media to denounce the measures against Compagnon as too soft.

El Mostrador an investigative newspaper posted on Twitter that "she got off easy."

(Reporting by Gram Slattery, Editing by Rosalba O'Brien and David Gregorio)