Corruption in Argentina

The culprits of ten years of bribery on a grand scale in Argentina have finally been charged by prosecutors in the USA.

The accused, all former executives of Siemens AG who reside in Germany, Switzerland and Argentina, are reported to have paid over $US100 million in bribes to Argentine officials between 1996 and 2007 in an effort to win a one billion dollar contract to produce national identity cards in Argentina.

The executives, who include Uriel Sharaf, the first ever former board member of a Fortune Global 50 company to be indicted under the U.S. Foreign Corrupt Practices Act, will face criminal charges for offences including conspiracy to violate the aforementioned act, as well as wire fraud and money laundering.

The intended recipients of the bribes apparently include two former presidents of Argentina as well as a handful of ministers.

Back in 2008 Siemens pleaded guilty to the same incident and paid $US449 million in fines. Their offices on Julio Roca Street on the corner of Plaza de Mayo in Buenos Aires were searched and new security practices were put in place to control employees leaving the building with their laptops.

U.S. Assistant Attorney General, Lanny Breuer has said that the execs tried all measures to hide the bribes. They used offshore shell companies, fake consulting contracts and made large cash payments which were carried across borders.

It is well know that corruption is rife in Argentina and everyone accepts that slipping the odd banknote filled envelope to the right official is a sure way of getting things done. But it appears foreign diplomats have been feeling increasingly uneasy about the current situation.

In 2007 U.S. Ambassador Earl Anthony Wayne joked that “when Argentine officials argue ‘there’s money to be done in Argentina’, maybe the true message is that yes, there’s money to be done as long as you know how and with whom you can really make business deals”.

Ambassador Wayne also stated that the legal system in Argentina was inefficient and made it virtually impossible to investigate sensitive and politically complex corruption cases.   

And released Wikileaks cables have shown that Wayne is not the only one concerned.  Several other foreign diplomats have expressed their worry at the level of corruption during the recent years in Argentina.

Everyone knows that when there is corruption at the top then there will be corruption at every level of society all the way down to the bottom, and the so the poorest Argentines cannot be blamed for cheating the system to get the most they can when the county’s leaders have been doing it for years.

The current President Cristina Kirchner and her deceased husband, former President Nestor Kirchner, have long been the subject of investigations into the preferential sale of large properties in their home province of Santa Cruz. 

The case focuses on property purchases made by the Kirchners and fifty other administration officials during the final years of the tenure of Nestor Mendez, Mayor of El Calafate from 1995 to 2007. It is reported that Nestor Kirchner sold two hectares of land to a Chilean investment group for two million dollars; forty times what he paid for the land less than two years earlier.

These reported antics have not gone down well with the Wall Street Journal/Heritage Foundation’s Index of Economic Freedom. The levels of corruption are in part to blame for Argentina’s sliding down to 135th place in the rankings of 179 countries; making it by far the lowest ranked G-20 nation.

On freedom from corruption, one of the ten indicators on the index, the report says the follwing:

The entire political economy of Argentina is blighted by the Kirchners’ brand of “crony capitalism”—one of the most corrosive and hardest-to-eradicate forms of corruption. Foreign investors complain about widespread government and private-sector corruption as well as pervasive demands by government officials for bribes. Money laundering, trafficking in narcotics and contraband, and tax evasion plague the financial system. Furthermore, the U.S. State Department’s 2009 Investment Climate Statement for Argentina notes that the corruption is so endemic and deep-rooted that U.S. businesses (which are subject to the U.S. Foreign Corrupt Practices Act) frequently complain that “their adherence to the letter of the tax and regulatory codes at times places them at a competitive disadvantage.

The culture of corruption in Argentina, perhaps inherited from Italy, is so strong that everyone knows it’s happening but most will just shrug their shoulders in typical Argentina fashion and say ‘what are you gonna do? It’s understood that it’s either get involved or go nowhere.

Siemen's old office on Plaza de Mayo

An ex diputado (congressman) once told me that in the nineties a colleague of his, who was the leader of a block in the House of Diputados, was making millions per year from bribes and recently the Pullitzer Prize winning US journalist Charles Krauthammer, MD summed the country up nicely when he said that Argentina is “a chronically unstable, endemically corrupt polity with a rich history of dictatorship, economic mismanagement and the occasional political lunacy.”

His words do not leave us with much hope that things will ever change in Argentina but it seems for now at least, the guilty executives of Siemens will get their comeuppance.