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Argentina cracks down on corporate corruption

David Gurfinkel, Allende & Brea


The backlash against corruption sweeping across Latin America has gained support in Argentina, which looks set to pass a new anticorruption bill. This follows the change in government in December 2015 after 12 years under the Kirchner family.

Former president Cristina Fernández de Kirchner and former vice-president Amado Boudou face investigations for corruption. Cases include alleged bribery, embezzlement, and money laundering ­— episodes that fueled the call for change. Another call came from the Organisation for Economic Co-operation and Development (OECD). Although a non-OECD member, Argentina is party to the OECD’s Anti-bribery Convention, which sets standards to criminalize bribery of foreign public officials in international business deals.

Yet as it stands, the Argentine legal system neither investigates nor prosecutes companies for corruption, leaving them to act with impunity, but at a cost. In 2015, Argentina ranked 107th out of 168 countries/territories in Transparency International’s Corruption Perceptions Index, below neighboring Uruguay, ranked 21st; Chile, ranked 23rd; Brazil, ranked 76th; and Bolivia, ranked 99th.

If enacted, the law would expand criminal liability from people to companies. We expect Congress to approve the bill during the first semester of 2017, which promises changes in Argentina.

Compliance matters

Local companies will need a compliance program, and foreign corporations familiar with compliance will need a more detailed due diligence process than in the past. Under the law, if you acquire a company that later gets caught up in a corruption scandal, you might be liable as one for any sanctions. You would also become responsible for the criminal offenses of third parties that work with the acquired company.

You must satisfy yourself that your due diligence is sound enough to uncover corruption and that your compliance program can withstand scrutiny under both local and cross-border investigations.

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