Sebastian Davalos, the son of Chilean President Michelle Bachelet, has resigned as the head of a government charity.

The resignation, which came on Friday, happened after Davalos and his wife Natalia Compagnon were accused by an opposing party of using their clout to get a $10 million bank loan. The money was supposedly used to purchase land for Compagnon's company. She runs and partially owns the company.

According to estimates by local newspaper La Tercera, as reported in Reuters, Compagnon's company sold the land in question earlier this week at a profit of about 2.5 billion pesos, a figure that amounts $4.04 million.

Compagnon secured the loan during the 2013 election campaign after meeting with Banco de Chile vice president Andronico Luksic. Her husband was also present at the gathering.

Luksic, a member of the family that controls the bank in question, is considered one of Chile's wealthiest men.

Although he admits to no wrongdoing, Davalos, as reported in Reuters, addressed the situation from the Moneda presidential palace saying, "I'm aware of the discontent this situation has generated, and I assume that (this) has damaged the presidency and Chile's government.

"For this reason," he said, "I've decided to step aside and resign."

Despite Chile's national bank regulator clearing Davalos of any wrongdoing, the issue has became a political scandal.

The scandal, which has been called "daughter-in-law gate," could negative affect Bachelet's popularity. Bachelet is the first female president for Chile.

Davalos apologized for any harm he potentially brought on to his mother and the government, and according to the BBC, he lamented what he described as "this bitter moment."

President Bachelet returned to the presidency for a second term in March after a four-year break from office. While she was away, she served as the first executive director of the United Nations Entity for Gender Equality and the Empowerment of Women.

At the present time the president is on vacation during the parliamentary summer recess and has not commented on any aspect of the scandal.

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