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Jorge and Kenney: Argentina considers bill to enable corporate bribery prosecutions

Argentina’s National Congress will soon consider a bill that would finally enable prosecutors to bring criminal charges against corporations that engage in bribery and other corrupt acts.

Argentina’s legal system currently makes it impossible to punish businesses for corruption; only those individuals who actually break the law can be prosecuted. Someone who offers a bribe may be investigated, for example, but the business they work for will not face any consequences.

The new bill — set for consideration by Congress in the coming months — incentivizes corporations to crack down on corruption by expanding criminal liability to cover businesses as a whole. Businesses that profit from bribes — even if corporate leadership is not involved — will be legally responsible and open to prosecution.

Corporations would be able to avoid sanctions if they can show they had mechanisms in place designed to prevent corruption.

(Co-author Guillermo Jorge was one of the drafters of this legislation.)

The pending bill is one of multiple anti-corruption initiatives the Argentinian government is currently promoting. The National Congress is also discussing the introduction of a civil forfeiture regime — allowing state authorities to forfeit assets strongly presumed to have an illicit origin, without the need of a criminal judgment — as well as a bill allowing settlement agreements with cooperators in the criminal investigations of corruption.

Argentina has about 44 million people and the second biggest economy in South America, behind Brazil. Its technology sector is particularly vibrant. It also has rich natural resources with a diversified industrial base, and is deservedly famous for its exports of great food and wine. In terms of GDP, Argentina ranks 26th in the world.

It is a member of the G-15 and G-20 major economies. It was a founding member of the United Nations, World Bank, and the World Trade Organization.

Unfortunately, industrial growth has stalled and is now ranked 164th in the world. About 30 percent of Argentines live below the poverty line. Inflation last year was about 27 percent, among the world’s worst.

There are obvious detrimental effects of corruption, such as money being lost to the pockets of dishonest individuals that should have formed part of the profitability of the deal being thrashed out. This reduction in profits stunts the growth of the businesses affected, thereby limiting their potential and the possibility of creating new jobs.

Corruption also makes a mockery of any state tendering procedures, effectively rendering the process pointless if one of the companies bidding is effectively guaranteed to win.

Actions such as these undermine investor confidence and as a result the country as a whole suffers from this lack of international investment, as the economy lurches from one underhanded tendering process to another.

The existing Argentine law which prevents corporate prosecutions clearly falls short of the sort of anti-corruption laws governing most developed and developing nations. By making companies liable, the new law would ensure that directors who once turned a blind eye in favor of profit would be accountable if one of their employees resorts to bribery.

Assuming the bill becomes law, the threat of sanctions will deter some corrupt practices. But it will also take meaningful prosecutions and weighty fines to discourage others who consider themselves above the law and untouchable.

Robust enforcement will also reassure the international business community that Argentina is finally serious about fighting corruption on all levels.


Guillermo Jorge is the founding partner of Governance Latam in Argentina, representing victims of fraud and corruption. He has served as an expert on several Working Groups at the United Nations and at the World Bank and is Global Adjunct Professor of New York University (USA) and Senior researcher at the Center for Anticorruption Studies at San Andrés University (Argentina) 

Martin Kenney is Managing Partner of Martin Kenney & Co., Solicitors, a specialist investigative and asset recovery practice based in the BVI and focused on multi-jurisdictional fraud and grand corruption cases |@MKSolicitors

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1 Comment

  1. Correct this it? "Assuming the bill becomes law, the threat of sanctions will deter some corrupt practices"

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