Business Corruption

Although the legal framework for dealing with corruption in public procurement and contracting is largely in place, companies have identified corruption in procurement as a major impediment to trade and investment in Argentina. According to the World Bank & IFC Enterprise Surveys 2006, more than one-fourth of the companies surveyed reported that they expected to give gifts in order to secure a government contract. Companies intending to bid on procurement contracts in Argentina should be aware that tender procedures in the provinces have been identified as vulnerable to bribery and nepotism, as reported in Global Integrity Report 2004. Companies are recommended to use a specialised due diligence public procurement tool in order to mitigate the corruption risks related to public procurement in Argentina.

According to Global Integrity 2008, unsuccessful bidders can challenge procurement decisions in courts; however, companies should take note that Argentinean courts are frequently cited as suffering from high levels of corruption and politicisation, as reported by the Bertelsmann Foundation 2010. Provisions for the blacklisting of violators of procurement regulations are outlined in Decrees No. 1023/01 and No. 436/00 (both in Spanish). According to Global Integrity 2008, in practice only small-sized companies are subjected to these laws since many larger companies routinely circumvent blacklisting by changing their financial statements in order to be allowed to participate in future procurement bids. This makes it very difficult to carry out an effective mechanism to prohibit those companies from participating in future procurement bids.

See more on public procurement under the section on 'Public Anti-Corruption Initiatives'.

Political Corruption

According to the US Department of State 2009, an investigation by the Ministry of Justice's Anti-Corruption Office (ACO) revealed that 75% of the public purchases made by the government of Argentina between 2002 and 2005 were done via direct contracts and not via public tenders, which raised concern over the facilitation of corruption and access to fair competition among providers. Government officials circumvented procurement rules by disaggregating contract components so that no part exceeded the legally-mandated ARS 10,000 limit for sole sourcing, by writing contracts specifications so that only one provider could meet the requirement or by not advertising tenders.

According to the same source, in December 2008, Siemens AG, a German company, acknowledged that its employees paid government officials in several countries. One of the confessions was that Siemens' Argentina had bribed government officials in order to obtain a contract for a USD 1 billion national identity card project. More information on the Siemens Argentina case can be accessed here.

According to a 2009 news article by Reuters, former President Carlos Menem was charged with fraud. He was accused of taking bribes from a French company, in return for granting a contract to the company in the 1990s. The case is currently under investigation.

See more on public procurement under the section on 'Public Anti-Corruption Initiatives'.

Frequency

World Economic Forum: The Global Competitiveness Report 2010-2011:
- Business executives give the diversion of public funds to companies, individuals, or groups due to corruption a score of 2.1 on a 7-point scale (1 being 'very common' and 7 'never occurs').

- Business executives give Argentinean government officials' favouritism towards well-connected companies and individuals when deciding upon policies and contracts a score of 1.9 (1 being 'always show favouritism' and 7 being 'never show favouritism').

The World Bank & IFC: Enterprise Surveys 2006:
- Nearly 26% of companies expect to give gifts in order to secure a government contract.

- The expected value of a gift for securing a government contract is 2.5% of the value of the contract.