Corruption In Argentina Tried Under U.S. Law


New cases of corruption that occurred in Argentina were investigated and sanctioned under U.S. law.

On February 4 and 29, 2016, the Securities Exchange Commission ("SEC") and the Department of Justice ("DOJ") of the United States of America, respectively, decided in cases linked with corruption events in Argentina. Those investigated were punished with fines in accordance with U.S. law, including the 1977 Foreign Corrupt Practices Act ("FCPA").

The extraterritorial scope of the U.S. laws applied in these cases once again demonstrates that companies operating in Argentina should develop and adapt their anti-corruption programs in accordance with the requirements of foreign standards that may be applicable to their affiliated companies.

The case investigated by the SEC in the administrative proceedings conducted against the President and COO of an airline company led to a cease-and-desist order.

The case was initiated against a Chilean citizen who, at the time of the facts under investigation, was COO of a company whose headquarters were located in Santiago de Chile which provided passenger and cargo airline services throughout Latin America ("Airline Company"). According to the results of the administrative proceedings, during 2006 and 2007 the Airline Company's officer authorized the payment of consulting services in Argentina for the sum of US$ 1.15 million. The payment was made to an account in the consultant's name in the State of Virginia under a so-called consultancy agreement for the provision of services to the subsidiary of the Airline Company in Argentina ("Argentine Subsidiary"). The services were never rendered. In addition, such payment was incorrectly recorded in the books of an indirect subsidiary of the Airline Company, incorporated in Delaware and without connection to the business of the Argentine Subsidiary, thus eluding the company's internal accounting controls.

As a result of the proceedings it was established that the payments were linked with the intervention of the consultant in the conflict between the Argentine Subsidiary and its employees concerning wages and working conditions. The goal was to pay union officials for their unions to reduce the claimed amount of increase in wages and desist their claim to implement the rule according to which the employees had to comply with a single function within the company.

On February 4, 2016 the SEC issued an order so that the officer of the Airline Company ceased to breach...

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