This country-specific Q&A provides an overview to bribery and corruption laws and regulations that may occur in Argentina.
This Q&A is part of the global guide to Bribery & Corruption. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/practice-areas/bribery-and-corruption-second-edition/
What is the legal framework (legislation/regulations) governing bribery and corruption in your jurisdiction?
Bribery and corruption are criminalized for individual persons in the Argentine Criminal Code (“ACC”), Title XI (“Crimes against the public administration”).
Legal persons’ criminal liability of for bribery and corruption offenses is established in Law 27,401, which entered into force in March, 2018.
Which authorities have jurisdiction to investigate and prosecute bribery in your jurisdiction?
The main enforcement authorities are the Public Prosecutor’s Office (Public Ministry of the Prosecution; or “MPF” for its acronym in Spanish), as well as investigative magistrates, in charge of the investigation stage of the criminal procedure, and criminal courts, responsible for adjudication. Besides, both the Prosecutor’s Office of Administrative Investigations (“Procuraduría de Investigaciones Administrativas”, or “PIA”, for its acronym in Spanish) within the MPF, and the Anti-Corruption Office (“Oficina Anticorrupción”, or “OA”, for its acronym in Spanish), an administrative agency within the Ministry of Justice and Human Rights of the Executive Branch, are empowered to investigate and participate in the prosecution of bribery and corruption offenses.
Argentina is a federal country. The federal government co-exists with 24 districts, comprised of 23 provinces and the autonomous city of Buenos Aires. By constitutional design, the provincial governments keep authority over criminal procedure law, so the procedural model varies across the country. Federal offences (including bribery and corruption offenses, among other economic crimes) are subject to federal jurisdiction, whereas criminal investigation is still in charge of an investigative magistrate, who has the power to delegate this task to a prosecutor –an inquisitorial-oriented procedural model. A new Federal Criminal Procedure Code establishing an adversarial model, in which prosecutors investigate under a judge’s control and adjudication, was approved by Congress in 2018. However, its implementation will be gradual –it has recently entered into force in two provinces (Salta, and Jujuy), and will be enforced in the remaining provinces according to a 5-to7-years calendar. In these guidelines, when we refer to criminal procedure law we always refer to federal criminal procedure law.
How is bribery defined?
The ACC defines active bribery as giving or offering any gift to a public official, either personally or through an intermediary, in order for him/her to do, delay or omit to do certain actions relating to his/her public duties or activities (art. 256).
The ACC also punishes active trading in influence, defined as giving a gift or anything of value to any person in order for him or her to make an unlawful use of his/her influence before a public official with the purpose of having such official acting, delaying or refraining from acting in relation to his or her duties (art. 258).
Passive bribery and passive trading in influence are committed by the public official receiving or accepting, directly or indirectly, money or any other gift or thing of value in any of the aforementioned circumstances. (ACC, arts. 256, 256 bis and 257).
The Argentine Criminal Code also considers an offense (different from bribery) to give or offer a gift to a public official in consideration to his/her office. To commit this “mere gift giving/offering” offense (“dádivas”), no specific quid pro quo is required -the sole giving or offering in consideration to the public post is enough for the offense to be completed (ACC, art. 259). The public officer who receives gifts in consideration for his/her public position is also criminalized (gift receiving).
Finally, the ACC also punishes active transnational bribery, defined as improperly giving, offering or promising, personally or through an intermediary, for own benefit or that of a third person, any gift to a public officer from a different state (understood as any person appointed or elected to perform a public function in any of the state’s levels or territorial divisions of government, or in any class of an body, agency or public company where said State exerts a direct or indirect influence) or international organization in order for him/her to act or delay an action in relation to his or her duties, or in order to use his/her influence in a commercial operation (art. 258 bis, ACC).
Does the law distinguish between bribery of a public official and bribery of private persons? If so, how is ‘public official’ defined? Are there different definitions for bribery of a public official and bribery of a private person?
The ACC does not prohibit private bribery, except for the case of financial passive bribery –Article 312 prohibits employees or staff members of financial institutions, or institutions which operate in the stock market, from receiving money or any other economic advantage as a condition to engage in loans, financial or stock capitalization transactions.
However, certain private bribery cases could be construed as fraudulent mismanagement, if a private bribe taker has management functions, and the company suffers economic loss due to the bribe (ACC Art. 173.7).
A new Criminal Code Project Bill, which is starting to be debated by Congress in 2019, does criminalize both active and passive private bribery.
The ACC defines public official as any person who takes part, incidentally or permanently, in the exercise of public functions whether by popular vote or by appointment of the competent authority (art 77). According to the Public Ethics Law, public function means “every activity, permanent or temporary, paid or honorary, performed by a person in the name or service of the State or any of its entities, at any hierarchical level” (Law 25188, art. 1).
What are the civil consequences of bribery in your jurisdiction?
Broadly speaking, the Argentine Civil and Commercial Code (ACCC) establishes a duty to avoid causing an unjustified harm (ACCC art. 1710). The breach of this duty creates an obligation to compensate the generated torts (ACCC art. 1716). Besides, the Antitrust Law No. 27442 establishes a tort action against those who violate the free competition regime. Although there is no case law, it could be argued that in the context of a bidding process, a bribe paid in order to win a contract rises a right to compensation for the excluded competitors of such procedure.
On the other hand, if anti-bribery clauses were in place in a contract, a plaintiff (an investor, business partner, competitor in a procurement process, etc.) may take the non-compliant party to trial for damages.
Also, Decree No.1023/2011 establishes in its article 10 that public contracts tainted with corruption will be terminated.
Additionally, the Argentine Government has recently issued the Emergency Decree 62/2019 which sets a Procedural Regime for Civil Action that will apply to non-conviction based asset forfeiture. The Decree establishes a civil action in favour of the Federal Government which will apply to the goods or titles that are allegedly the result of certain crimes, including bribery. This civil proceeding is autonomous from any conviction issued by a criminal court. The final judgment will be res judicata regarding the goods or rights involved, regardless of the outcome of any other judicial action. However, the final judgment of dismissal or acquittal issued at the criminal court, based on the inexistence of the fact under investigation or in which said fact does not fit into a legal figure, will oblige the Federal Government to restore the property or right (or, when that’s impossible, an equivalent value in money) to its previous owner.
What are the criminal consequences of bribery in your jurisdiction?
For individuals, criminal consequences might be:
- between 1 and 6 years for basic bribery and trading in influence, and transnational bribery,
- between 4 and 12 years when bribery and trading in influence are aggravated for involving a magistrate of the Judiciary or the Public Ministry (for him/her to issue, decree, delay or refrain from issuing any resolution, decision or judgment concerning a matter under his/her jurisdiction).
- between 1 month and 2 years for mere gift receiving
- between 1 month and 1 year for mere gift giving.
- Fine of between 2 to 5 times the amount of the illicit benefit;
- Disqualification from public service (life disqualification in the cases of passive bribery, trading in influence, and active transnational bribery);
For legal entities, criminal consequences might be:
- Fines between 2 and 5 times the amount of the illicit benefit;
- Debarment from government contracting and disqualification from professional practice/suspension of licence up to ten years;
- Partial or total suspension of activities up to ten years;
- Suspension from participating in state tenders of public works or services or in any other activity linked to the state, up to ten years;
- Dissolution or liquidation of the business when it has been created for the sole purpose of the commission of the offence, or when those acts constitute its main activity;
- Loss or suspension of state benefits;
- Publication of an excerpt of the conviction sentence;
Sanctions are only applicable by courts under a final judgement. Nevertheless, courts may order precautionary measures against defendants, including seizing and freezing of assets (embargo) to guarantee an eventual confiscation, and preventative detention in the case of individual defendants.
Does the law place any restrictions on hospitality, travel and entertainment expenses? Are there specific regulations restricting such expenses for foreign public officials?
There is a general regime that regulates gifts giving to public officials (including hospitality and entertainment expenses) and a specific framework regulating travel and lodging.
Public Ethics Act, No. 25188 establishes a general prohibition for public officials to accept gifts given in relation to their public functions, unless they were given out of courtesy or diplomatic custom.
Article 2 of said Act establishes that all persons performing public functions at all levels and hierarchies, permanently or temporarily, by election, direct appointment, competition or any other legal means, including all state magistrates, officials and employees must refuse any improper personal benefit derived of the realization, delay or abstention from an act inherent to his/her functions, or imposing special conditions deriving on a benefit.
Furthermore, Article 18 of the Act provides that public officials may not receive presents, gifts, or donations, whether of things, services or assets, in return for performance of their duties or in the course thereof. Should the gifts be given out of courtesy or diplomatic custom, the enforcement authority shall draw up rules on their registration and on the cases and manner in which they should become the property of the State, in order to be allocated for use in the areas of health, welfare, and education, or to be made part of the country's historical and cultural heritage, as appropriate.
Executive Decree 1179/2016 regulates the implementation of Article 18 of the Public Ethics Act. It reiterates the general prohibition for public officials from receiving any gifts, with the exception of those given for reasons of courtesy or diplomatic custom. Courtesy is defined as “demonstrations or acts which manifest the attention, respect or affection that one person has in regard to another on the occasion of events in which it is habitual to give [gifts]”. Diplomatic custom signifies, “protocol recognitions received from governments, international organisms or non-profit entities, under the conditions in which the Law or the official custom admit these benefits.”
The acceptance of any gift, even those given out of courtesy or diplomatic custom, is banned when they come from a forbidden source. Forbidden sources are:
a. Any person or entity carrying out activities regulated or controlled by the State agency or entity in which the public official is acting;
b. Any person or entity managing or exploiting concessions, authorizations, privileges or customs duty exemptions granted by the agency or entity in which the public official is acting;
c. Any person or entity who is a contractor or supplier of works, goods or services to the agency or entity in which the public official is acting;
d. Any person or entity requesting a decision or action from the agency or entity in which the public official is acting;
e. Any person or entity that has interests which could be significantly affected by a decision, action, delay or omission of the agency or entity in which the public official is acting (Decree 1179/2016, Article 4).
There is only one scenario in which gifts given out of courtesy or diplomatic custom by a forbidden source are allowed -when they are given “during an official visit, event or public activity, a situation the reasonableness of which shall be assessed in light of the competence, powers and responsibilities of each public official.” (Decree 1179/2016, article 4, last paragraph).
Decree 1179/2016 also regulates travel and lodging expenses. Public officials may only accept the payment of travel expenses by third parties in order to participate in conferences, courses or academic activities; only when the financing originates from governments, entities, natural or legal persons that are not forbidden sources; and only when doing so is not incompatible with their public functions.
All permissible gifts and travel must be registered in the Registry of Gifts to Public Officials (including things, donations, benefits, or rewards). The Anticorruption Office’s Resolution 18 E/2017 regulated the Gifts and Travel Registry. The public official receiving the gift must file an electronic form describing the gift´s characteristics (e.g. the exception—either courtesy or diplomatic custom—allowing it, its type, and its value),the details of the public officer receiving it (e.g. name, jurisdiction, hierarchy, function, etc.), the destination that the gift will have (e.g. education, public health, etc.), the circumstances in which the gift was given (e.g. official activity, public officer’s office) and information about the person or company making the gift. In the case of public officials’ travels paid by third parties, the public official must inform the dates and destination of the travel, who is paying for the trip, details of the event to which he/she is invited, and his/her role during the event (e.g. attendee, teacher, speaker, etc.). The Gifts and Travel Registry is available here: https://www.argentina.gob.ar/anticorrupcion/obsequiosyviajes
Finally, Decree 1179/2016 also establishes that all gifts that surpass a certain value threshold, currently set in 6,400 Argentine pesos (around USD 140, at the May 2019 official exchange rate) must be incorporated by the public official that received them to the State’s property, unless they are edible. Gifts received out of diplomatic custom that do not exceed this value must as well be incorporated to State property when they possess institutional value.
Are political contributions regulated?
Law No. 27.504, of Political Parties Financing, which entered into force in June 6, 2019, establishes a mixed model by which political parties will obtain their resources through public and private financing for the development of their ordinary operations and activities.
The following contributions are not allowed:
- Anonymous contributions;
- Contributions from companies that have contracts with Federal, Provincial or local authorities;
- Contributions from casinos and any other form of gambling businesses;
- Contributions from foreign governments, or institutions, or companies that are not incorporated in the country;
- Contributions from individuals or legal entities that have been indicted or sued for tax evasion;
Contributions per person (either individuals or legal entities) may not exceed a limit that will be established by the National Electoral Chamber every year;
Money contributions should only be made by bank transfer, bank deposit accrediting identity, electronic means, check, credit or debit card, or digital platforms and applications provided that they allow the adequate identification of the donor and traceability of the funds.
Whoever makes a contribution to a political group in any instance must issue a sworn affidavit representing that he/she/it does not fall under any of the prohibitions foreseen in the law.
Companies and individuals that breach the provisions of the law may be fined with 1 to 10 times the value of the illicit contribution.
Are facilitation payments regulated? If not, what is the general approach to such payments?
There is no defence for, or special regulation of facilitation payments in Argentine law. Any payment made to a public official in order for him/her to do anything related to his or her public function will trigger liability for bribery, or, in lack of a quid pro quo for mere gift giving. There are no value thresholds, or legal limits applicable in consideration of the amount of the payment -although case law and the legal doctrine have taken the approach that “small gifts,” meaning presents that lack in economic or pecuniary value, are out of the scope of the offense.
Are there any defences available?
There are no bribery-specific defences for individuals, although those who are able to prove that the payment was a consequence of an extortive demand, or a deception from a public official, could claim that instead of being committing the offense of active bribery they had been victims of an “illegal exactions” offence (“exacciones ilegales”) under the ACC, article 266. This offense is committed by a public officer which, by abusing his or her office, requests, demands, asks or forces to pay an illegitimate contribution or higher rights than those that correspond.
Legal persons will be exempted from penalty and administrative liability under Law 27,401 when three (3) circumstances concur simultaneously:
- the legal person must spontaneously self-report the offense as a consequence of internal detection and investigation;
- the legal person must have established, before the facts under investigation occurred, a proper control and supervision system (i.e. compliance program, called “integrity program” by Argentine law), which must have required an effort from wrongdoers to breach it; and
- the legal person must have returned the undue benefit obtained through the crime (disgorgement).
Are compliance programs a mitigating factor to reduce/eliminate liability for bribery offences in your jurisdiction? Please identify any guidance indicating what features a compliance program should have in order to provide an effective defence/mitigation.
Having a compliance program in place is not enough by itself to exempt a legal person from liability, although concurring with the other 2 conditions described in the previous answer, it may be considered by courts to except legal persons from punishment.
Besides, according to Section 8 of Law 27401, to graduate the penalty, courts will take into account the internal proceedings of the legal entity, the omission of vigilance over the activity of the authors and participants, and if a company spontaneously reported irregularities revealed by an internal investigation.
Under Sections 22 and 23 of Law 27401, to be considered adequate, a compliance programme must:
- Be appropriate to the specific risks of the activities, size, and economic capacity of the legal entity;
- Include a Code of Ethics, and internal policies to prevent crimes in any interactions with the public sector, and
- Lay out periodic training on the Compliance Programme to directors, administrators and employees.
Additionally, the programme may contain the following elements:
- A periodical analysis of risks and consequent adaptation of the compliance program;
- Visible and unequivocal support to the compliance program from the senior management (tone at the top);
- Internal channels to report irregularities, open to third parties and adequately publicized;
- A policy to protect whistle-blowers against retaliation;
- An internal investigations system that respects the rights of the investigated and imposes effective sanctions for breaches of the Code of Ethics;
- Procedures which attest the integrity and track record of third parties or business partners, including suppliers, distributors, service providers, agents and intermediaries, on the moment of contracting their services and during the commercial relationship;
- Due diligence during the process of corporate transformations and acquisitions, for the verification of irregularities, illicit conducts or the existence of vulnerabilities in the involved corporations;
- Monitoring and continuous evaluation of the Compliance Programme’s effectiveness;
- An internal authority in charge of the development, coordination and supervision of the compliance program (compliance officer); and
- Compliance with the statutory demands over compliance programmes that were issued by the authorities of the national, provincial, municipal, or communal levels of Government.
Who may be held liable for bribery? Only individuals, or also corporate entities?
As explained before, Law 27401 establishes criminal corporate liability for private legal persons, as defined in the Argentine Civil Code, including:
- Companies incorporated under any legal form (LLCs, PLCs, partnerships, etc.) whether of national or foreign capital and including private legal persons in which the State is a shareholder;
- Civil associations, foundations, mutual associations, cooperatives;
- Churches, confessions, religious communities or entities, and;
- Horizontal property regimes.
Notably, labour unions and their healthcare associations (“obras sociales sindicales”), professional associations and political parties are not considered “private legal persons” under Argentine law. Therefore, these entities are out of the statute's reach.
Private legal persons are liable for the corruption offenses committed, directly or indirectly, with their intervention or in their name, interest or benefit. The individual offenders may be employees or third parties -- even unauthorized third parties, provided that the legal person ratified the act, even tacitly.
The statute also establishes successor liability in cases of merger, acquisition or other forms of corporate transformation.
Has the government published any guidance advising how to comply with anti-corruption and bribery laws in your jurisdiction? If so, what are the elements of an effective corporate compliance program?
The Anticorruption Office issued “Integrity Guidelines to better comply with articles 22 and 23 of Law 27401 of Criminal Liability for legal entities”. This Guidelines explain further the main elements of integrity programs which are listed in Law 27,401 as described in answer to question No. 11.
An adequate compliance program must be tailored to each legal entity taking into consideration its own needs, characteristics and culture, as well as the context in which it operates and its associated risks.
Does the law provide protection to whistle-blowers?
A National Witness Protection Program is in place in Argentina since 2003. Even though the program’s resources are limited and protective measures have been considered weak, in recent years it offered effective protection to witnesses and whistle-blowers of grand corruption cases. The program sets forth several protection measures, including personal or domiciliary custody; temporary accommodation in reserved places; change of address; provision of economic means for lodging, transportation, food, communication, health care, moving, labour reintegration, and other essential expenses (although not for more than six months).
Anonymous reporting lines have been opened in recent years by the Special Office for Economic Crime and Money Laundering (“Procuraduría de Criminalidad Económica y Lavado de Activos” or “PROCELAC”), and the PIA, at the MPF, and by the Anti-Corruption Office at the Executive. Other administrative agencies have also opened anonymous reporting lines, such as the Tax Administration (“AFIP”, for its acronym in Spanish) and the Agri-Food Sanitary Agency (Senasa, for its acronym in Spanish).
When it comes to corporate internal whistle-blowers, Law 27401 encourages companies to establish a procedure for internal reporting so that employees and third parties file reports under confidentiality or anonymously and without fear of retaliation.
Besides, complementing the protective-oriented measures, positive incentives to whistle-blowers have also been established by Law. On the one hand, Law 27304 on co-operators (“Ley del Arrepentido”, or “Repentant Law”), foresees that persons investigated for corruption and other complex crimes (except high rank State officials) may obtain a reduction of their punishment and the avoidance of prison during the process in exchange for the disclosure of precise, useful and verifiable data relating to other participants in the offense that occupied a higher hierarchical role in the criminal organization. This law has been effectively applied, and provided great visibility to the anticorruption agenda especially in the context of the “Notebook’s Scandal” case, where multiple businessmen and former public officials reached cooperation agreements, boosting the investigations. Law 27,304 makes the Witness Protection Program applicable to whistle-blowers under this law.
On the other hand, Law No. 27319 allows for the application of special investigative techniques in complex criminal investigations, including the possibility of offering economic awards to whistle-blowers.
In addition, and according to Emergency Decree 62/2019, which sets a Procedural Regime for Civil Action, the MPF may develop collaboration programs with the persons who provide relevant information for asset recovery proceedings. The collaborating persons may be awarded with up to 10% of the goods obtained as a consequence of the information they provided.
How common are government authority investigations into allegations of bribery?
After decades of weak enforcement of anticorruption laws, under Macri’s administration anticorruption enforcement increased. Government authorities have been relevant actors in the investigation of past corruption. In particular, the Financial Intelligence Unit (Argentine FIU, or “UIF”, for its acronym in Spanish), and the Anti-Corruption Office leaded several investigations against former government authorities for corruption and money laundering, and both act as a private prosecutor (“querellante”) in criminal proceedings against former public officials that were part of the Nestor Kirchner and Cristina Fernandez administrations (during 2003-2015).
What are the recent trends in investigations and enforcement in your jurisdiction?
Investigations and enforcement of anticorruption laws have been boosted by the so called “Repentant Law” (Law 27304), which allows defendants to reach leniency agreements in exchange of cooperation in the investigation.
The main exemplar of current trends is the so called Notebooks Scandal case (“Causa de los Cuadernos”). It began in August 2018, when the notes of a driver of a high-ranking official in the Ministry of Planning came to light. The driver meticulously detailed each trip where his boss picked up bags of cash from government contractors and left them at different destinations, including the House of Government and former Argentine presidents Néstor and Cristina Kirchner’s personal apartment. Copies of the notes were obtained by a journalist and presented to a federal court.
The corrupt scheme was allegedly established during Néstor Kirchner’s presidency, from 2003 to 2007, and allegedly continued during Cristina Kirchner’s two terms in office, from 2007 to 2015. To obtain federal public works and road concessions, member companies of a cartel organised within Argentina’s national construction business association allegedly agreed to pay kickbacks of between 10 and 20 per cent of the total cost of each project. Major businesses in the construction industry have been implicated and similar allegations in Argentina’s energy and transport industries are currently being investigated. The notebooks themselves document at least US$35.6 million in payments, although Argentinian prosecutors estimate that the true figure may be closer to US$200 million.
Since the scandal broke, an aggressive investigation has been conducted. Prosecutors have benefited in particular from the Repentant Law. So far, around 30 executives have cooperated, resulting in the summoning of controlling shareholders and executives of 75 construction and infrastructure companies, including several of the most prominent business persons in the country.
The Repentant Law has some limitations (i.e. the ‘repenter’ cannot receive immunity but only a reduction of the punishment; and the agreement on the reduced sentence will only be applied by a tribunal that didn’t take part of the negotiations after an oral trial that the defendant cannot avoid). However, it has been successfully applied, mainly because it allows investigative magistrates to decide on the freedom of the accused during the proceeding on the basis of his/her cooperation. Because of this, criticism has been made to the law in that it benefits from an extortion, actually inverting the principle of freedom during the process –defendants face the dilemma whether to cooperate with the investigation or face the whole criminal proceeding behind bars.
Besides the Notebooks Scandal, multiple corruption cases are being effectively processed by federal criminal courts, in timeframes which have been much shorter than past average corruption cases. In example, in a separate case former President and current National Senator, Cristina Fernandez de Kirchner, is facing her first oral trial, as she is accused of being the head of a conspiracy ("asociación ilícita”) and having defrauded the State to favour a crony contractor, who received 52 contracts for public works for 46,000 million AR pesos during her administration. Additionally, former high ranks officers are currently convicted in different cases, such as the former Vice President and the former Minister of Federal Planning.
Is there a process of judicial review for challenging government authority action and decisions?
Yes, there is judicial review in Argentina by which pieces of legislation and Government’s regulation and acts can be declared unconstitutional, mirroring the US’s system.
Are there any planned developments or reforms of bribery and anti-corruption laws in your jurisdiction?
The current Administration has recently sent to Congress a new Criminal Code Project Bill, which introduces multiple reforms, such as criminalizing commercial bribery, both for individuals and legal persons, expanding the corporate criminal liability regime established by Law 27,401 to all corruption, economic, fraud, and competition offenses, raising the penalties for corruption offenses, and expanding non-conviction based forfeiture.
To which international anti-corruption conventions is your country party?
Argentina is a party to the Inter-American Convention against Corruption, the United Nations Convention against Corruption, and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
Do you have a concept of legal privilege in your jurisdiction which applies to lawyer-led investigations? If so, please provide details on the extent of that protection.
Attorney-client privilege in Argentina derives from the constitutional rights to defence and against self-incrimination (article 18, National Constitution). The Criminal Procedure Code establishes attorney client privilege by forbidding lawyers from testifying in court regarding secret information received from the client –unless client’s waiver (article 244), impeding courts from ordering the submission of witnesses or documents in violation of professional secrecy among other reasons (article 232), impeding the seizure of documents sent or delivered to defence attorneys for the performance of their duties (article 237), and excluding lawyers from being cited as expert witnesses in criminal proceedings in violation of privilege (article 255). Similarly, article 444 of the National Civil and Commercial Procedural Code allows witnesses to refuse answering questions when doing so would infringe professional secrecy.
Complementing these procedural rules, infringing attorney-client privilege is criminalized by article 156 of the ACC.
Besides, Law 23,187, which regulates lawyers’ practice in the City of Buenos Aires (each province of Argentina has its own bar association and regulations, although most of them have similar provisions), establishes that preserving attorney-client privilege is both a professional obligation, unless it is waived by the client (article 6.f), and a right (article 7.c). Additionally, it states that lawyers have the right to the inviolability of the law firm, safeguarding the constitutional right of defence (article 7.e).
Argentina’s legal framework does not distinguish between external or in-house lawyers’ privilege. Although legal privilege’s scope and standards are underdeveloped in case-law, it is expected that new precedents will emerge as a consequence of the entering into force of Law No. 27,401, which foresees internal investigations as an element of compliance programs.
How much importance does your government place on tackling bribery and corruption? How do you think your jurisdiction’s approach to anti-bribery and corruption compares on an international scale?
The current Administration has set tackling bribery and corruption as a priority.
Core anticorruption legislation has been drafted and approved under the current Government, such as the aforementioned Law 27304 (“Repentant Law”), Law 27319, allowing for special investigative techniques, including economic awards to whistle-blowers, Law 27401 (establishing criminal corporate liability), and the Emergency Decree 62/2019, implementing a civil procedure for asset recovery. Besides, a Transparency and Freedom of Information Law was passed (Law 27275), and specific regulations on gifts to public officials (Decree 1179/2016), and administration of conflicts of interests in public procurement (Decree 202/2017) were also approved. In 2019, the Government also sent to Congress a Project Bill reforming the Law on Public Ethics.
Under this administration anticorruption enforcement was strengthened, and Government agencies such as the Anticorruption Office and the Financial Intelligence Unit participated as private prosecutors (“querellantes”) in several corruption investigations involving high rank officials of the former administration.
The Government also focused in corporate governance reform of state owned enterprises (SOEs), with emphasis in strengthening transparency and integrity measures. Taking into account how relevant these businesses are in the sectors of the economy in which they act, such reforms have the potential to achieve a wide cross sectoral impact.
Finally, integrity in public procurement was also strengthened by different measures beyond Decree 202/2017, like widening the use of online bid specifications, new integrity conditions introduced to the public procurement regulations (Decree 1168/2018) and the mandatory implementation of compliance programs as a condition for grand state contractors as established by article 24 of Law 27401, of Legal Persons Criminal Liability for Corruption Offenses.
Generally how serious are organisations in your country about preventing bribery and corruption?
Until the entering into force of Law 27401, on Legal Persons Liability for Corruption Offenses, compliance programs were implemented mainly by the local subsidiaries of multinational companies, which amount to around 25% of Argentina’s GDP.
The convergence of heightened enforcement of anticorruption law at the local level against not only public officials but also local business people (specially at the construction and energy sectors; e.g. with the Notebooks Scandal) –which is quite unprecedented, and the entering into force of Law 27401 on corporate criminal liability for corruption, have wakened the local business groups’ interest in adopting compliance programs as well (integrity programs, as referred to by Law 27401).
Grand state contractors are requested to implement compliance programs following Law 27401, and the new compliance programs adopted by national SOEs impacts their value chain, generating the need for a vast universe of SMEs that are SOEs suppliers to implement integrity programs in turn.
Thus far, in lack of corporate enforcement actions in application of Law 27401, paper-based compliance programs represent an important proportion of the market. In any case, the emergence of compliance as a new discipline, and an actual business need in Argentina was hard to predict a few years ago, and constituters a major step forward in the creation of a corporate culture of corruption prevention.
What are the biggest challenges enforcement agencies/regulators face when investigating and prosecuting cases of bribery and corruption in your jurisdiction?
In Argentina, anticorruption enforcement was historically weak, partly because of the enforcement authorities’ lack of appropriate legal resources/tools and capabilities. A new anticorruption framework has strengthened enforcement authorities capacities, giving place to investigations and enforcement actions which are unprecedented in effectiveness (e.g. more than 30 leniency agreements in the Notebooks scandal case), reach (both public officials and prominent business people indicted, some of them suffering preventative detention) and time frame (e.g. a complex investigation in the notebooks scandal was sent to oral trial in less than a year, when average duration of prior corruption investigations was around 12 years). Current challenges relate to the need to apply the new legal tools in respect of constitutional rights and defendants’ procedural guarantees, avoiding an extortive use of preventative detention, and achieving legitimacy against allegations of politically-biased investigations.
What do you consider will be the most significant corruption-related challenges posed to businesses in your jurisdiction over the next 18 months?
The enforcement of Law 27401, thus far unenforced, will necessarily test current business compliance practices, promoting debates about e.g. corporate governance, or the role of the compliance officer, and gradually answering multiple interpretive questions that the legal text opens up. A new practice will need to grow on cooperation agreements, which will be greatly challenging taking into account our historical public-private distrust.
In Argentina, were corruption is widely extended in many economic sectors, compliance programs may face limitations that could be overcome by collective action strategies.
Corruption enforcement has had a big impact in investment and business access to credit, especially in the economic sectors “tainted” by the Notebooks scandal, e.g. construction, public works, and energy, contributing to the economic recession that the country has recently suffered. Compliance practices and integrity measures throughout industries’ value chains should play a role in avoiding the freezing of economic activity by facilitating corporate change and faster remediation in line with global investors’ demands.
Political uncertainty adds ambiguity to this scenario in the context of the 2019 electoral calendar, in which provincial governors, and national legislators are elected, and where President Macri’s re-election is challenged by former President (and defendant in multiple corruption probes) Cristina Fernandez de Kirchner.
How would you improve the legal framework and process for preventing, investigating and prosecuting cases of bribery and corruption?
Important improvements were introduced in recent years to the anticorruption framework. They should be accompanied by the strengthening of the Judiciary’s legitimacy, which will depend on prosecutors’, magistrates’, and courts’ public perception of impartiality, professional capacity, and effectiveness.
The enforcement of Law 27401 will help clarifying many legal ambiguities or vagueness in relation to corporate liability for corruption offenses and legally incentivized compliance practices.
The enforcement of administrative regulations on integrity in public procurement, together with SOEs transparency and integrity policies implementation will promote corruption prevention where it is more needed.
Finally, a legal solution could be promoted to allow businesses cooperating with State’s investigations to reach joint agreements over all different proceedings against them, either criminal, civil, or administrative. Otherwise, incentives to reach cooperation agreements under Law 27401 will never be complete –because a company agreeing before criminal prosecutors won’t get rid of related administrative actions, e.g. on competition law, tax matters, or civil liability against competitors.