Michele Bachelet and Hillary Clinton
Chilean President Michelle Bachelet (L) has been hit by a corruption scandal involving her son and daughter-in-law since being re-elected to office (Reuters)

The daughter-in-law of Chilean President Michelle Bachelet testified in court on 8 April for more than nine hours in the corruption allegations that are rocking the country.

Natalia Compagnon, a 50% owner of Caval, is being investigated after her company purchased land in the south of Chile with the aid of a $10m (£6.7m) loan her husband Sebastián Dávalos secured from Banco de Chile. The company later sold the Machalí land at a higher price following development plan changes, netting nearly $5m in profit.

The loan was initially denied but 24Horas reported Dávalos met with Chilean businessman Andrónico Luksic to negotiate it. Dávalos was forced to step down as head of Bachelet's charity as the scandal grew.

Compagnon was escorted out of the police station by three police officers after her testimony, after protesters and media surrounded the building, 24Horas reported.

The president's son was due to testify on 7 April but his meeting with authorities was postponed due to scheduling issues. However, El Mercurio reported Bachelet claimed her son had never been scheduled by the courts to testify.

The allegations have shaken Bachelet's return to La Moneda and even fuelled rumours the president would resign from office. Bachelet addressed those rumours during a meeting with foreign correspondents on 8 April, adamantly denying she would step down.

The Chilean leader also denied she ever met with Luksic or that she knew of her son's meeting with him, El Mercurio reported. "I never knew of that meeting, I had nothing to do with that meeting, I did not ask for that meeting, I never spoke to Luksic since I returned to Chile in March 2013," Bachelet claimed.

According to El Mercurio, Bachelet also noted her son was not a public dignitary and she was not president at the time of the loan negotiations.