Global Investigations Review - The law and practice of international investigations

The Practitioner’s Guide to Global Investigations, Fourth Edition

Argentina

Marval O'Farrell & Mairal

General context, key principles and hot topics

1Identify the highest-profile corporate investigation under way in your country, describing and commenting on its most noteworthy aspects.

The Notebooks case is the highest-profile ongoing investigation for bribery-related crimes, at the time of writing. The investigation was initiated in early 2018 and involves various high-ranking current or former public officials and numerous businessmen.

The case is moving on to trial. It has triggered other parallel investigations, such as the investigation of the Antitrust Commission for cartelisation.

2Outline the legal framework for corporate liability in your country.

Currently there are several statutes that establish criminal sanctions for corporations in Argentina. The most notable is the Law No. 27,401 (on corporate criminal liability), which entered into force on March 2018. Corporations can also incur liability for economic crimes as prescribed in section XIII of the Federal Criminal Code, or by virtue of a breach of any of the following statutes:

  • Customs Code Law No. 22,415;
  • Foreign Exchange Criminal Law No. 19,359;
  • Tax Criminal Law No. 27,430;
  • Competition Law No. 27,442;
  • Supply Law No. 20,680; and
  • Retirement and Pension System Law No. 24,241.

3Which law enforcement authorities regulate corporations? How is jurisdiction between the authorities allocated? Do the authorities have policies or protocols relating to the prosecution of corporations?

Corporations are regulated by the relevant public register of commerce as well as other government agencies, for example, the Argentine tax authority (AFIP).

Also, depending on the industry, additional regulatory agencies or entities may issue regulations that govern corporations’ activities, such as the Argentine Securities Commission for corporations that trade securities, or the Argentine Central Bank for corporations that provide certain financial services or products.

Jurisdiction between the authorities based on their subject matter and competence is allocated by territory.

There are no specific policies or protocols relating to the prosecution of corporations.

4What grounds must the authorities have to initiate an investigation? Is a certain threshold of suspicion necessary to trigger an investigation?

In some instances, the law indicates the degree of suspicion to initiate or defer an investigation to another agency. The Anti-money Laundering Law No. 25,246 establishes that the Argentine Financial Intelligence Unit shall notify the public prosecutor when there are ‘sufficient elements of conviction’ to determine that an operation under review may indicate a case of money laundering or terrorism financing.

As regards criminal investigation, the mere affirmation of the possible existence of a crime is enough to start an investigation. The authorities have the duty to investigate all facts that come to their knowledge and can constitute a crime under their jurisdiction.

5How can the lawfulness or scope of a notice or subpoena from an authority be challenged in your country?

A notice or subpoena may be challenged through a procedural remedy requesting it to be declared null. It may be admissible when the notice or subpoena contains a serious irregularity that prevents the party from promptly complying with the obligations that stem from it.

The most common irregularities that give grounds for challenging a notice or subpoena include that the notice does not contain the court details, the court details are wrong, or service of the complaint was effected in a domicile other than that of the defendant.

If the notice or subpoena is issued by an administrative authority, it must first be challenged before the administrative authority to allow questioning before the courts.

6Does your country make use of co-operative agreements giving immunity or leniency to individuals who assist or co-operate with authorities?

Argentine law allows individuals suspected of participating in certain crimes set forth in Law No. 27,304 to enter into collaboration agreements with the prosecution. Under this regime, suspects and defendants who provide relevant information may obtain a penalty reduction in exchange of their assistance. Once signed, the collaboration agreement has to be submitted to the court for approval.

As regards legal entities, Law No. 27,401, for example, includes the possibility for corporations under investigation to sign collaboration agreements with the prosecution. The corporation must provide useful and verifiable information or accurate details that assist in clarifying the facts under investigation, identify the persons involved, or recover the assets or proceeds of the crime, among other requirements. Once signed, the collaboration agreement has to be submitted to the court for approval.

7What are the top priorities for your country’s law enforcement authorities?

The Office of the Federal Public Prosecutor has not issued policy papers stating its current priorities. However, recently there has been a reported interest in economic and financial crimes, such as money laundering, as well as public bribery and corruption offences.

Also relevant are drug crimes and gender-based violence.

Cyber-related issues

8Does your country regulate cybersecurity? Describe the approach of local law enforcement authorities to cybersecurity-related failings.

Argentina lacks a comprehensive legal framework addressing cybersecurity issues. However, there are certain resolutions ruling cybersecurity issues applicable to the public sector. Technological Standards for the Federal Public Administration were approved by Disposition 5/2019, published in the Official Gazette on 2 September 2019.

The Argentine Data Protection Authority (ADPA) has issued Resolution No. 47/2018, which establishes two sets of recommended security measures for the processing and conservation of personal data with the aim of ensuring the continuous improvement of the administration, planning and control of information security.

Resolution 47/2018 entails a change in the approach towards personal data security that follows the principle of accountability, introduced by ADPA in other recent regulations and in line with the European General Data Protection Regulation. It is worth noting that among these recommended measures, Resolution 47/2018 lists that security incidents should be notified to ADPA.

Certain industries have their own cybersecurity regulations and standards (e.g., financial institutions are required to report security incidents to the Argentine Central Bank).

9Does your country regulate cybercrime? What is the approach of law enforcement authorities in your country to cybercrime?

On 22 November 2017, the Argentine Congress signed the Convention on Cybercrime of the Council of Europe (ETS No. 185) adopted in Budapest, Hungary, on 23 November 2001 (the Budapest Convention), but is still pending enactment by the president.

In 2008, Argentina passed the Cybercrime Law No. 26,338 and amended its Criminal Code to include several cybercrimes, modelling them on those contained in the Budapest Convention. Consequently, the new aspects relate to procedural law and international co-operation. Argentina still uses these rules for securing physical evidence for searches in computer systems, which is inefficient from a digital evidence standpoint.

Regarding the approach by law enforcement authorities, various federal and local authorities (including prosecutors and police) have created specialist cybercrime units.

Cross-border issues and foreign authorities

10Does local criminal law have general extraterritorial effect? To the extent that extraterritorial effect is limited to specific offences, give details.

Overall, Argentine criminal law is applicable to acts committed in its territory and places under its jurisdiction (e.g., national aircraft and embassies).

The application of local criminal law will be extended to acts committed abroad the effects of which are deemed to be produced in the territory of Argentina or places under its jurisdiction.

Likewise, Argentine criminal law will apply to offences committed abroad by federal authorities’ agents or employees in the exercise of their public functions. Moreover, criminal law will apply to bribery of foreign officials committed abroad by Argentine citizens and legal entities domiciled in Argentina.

Finally, Argentina has ratified several treaties that establish universal jurisdiction over serious crimes, such as genocide and torture.

11Describe the principal challenges that arise in your country in cross-border investigations, and explain whether and how such challenges depend on the other countries involved.

There are many legal, operative, strategic, technological, communicational and accounting challenges in cross-border investigations that arise in the initial stage and continue throughout the investigatory process. The most important challenges are the protection of the attorney–client privilege and compliance with data privacy and data protection regulation, especially across jurisdictions that have different legal standards of compliance.

12Does double jeopardy, or a similar concept, apply to prevent a corporation from facing criminal exposure in your country after it resolves charges on the same core set of facts in another? Is there anything analogous in your jurisdiction to the ‘anti-piling on’ policy as exists in the United States (the Policy on Coordination of Corporate Resolution Penalties) to prevent multiple authorities seeking to penalise companies for the same conduct?

Argentine law protects against double jeopardy, that is to say a person who has been convicted or acquitted of an offence cannot be prosecuted again for the same offence.

The principle of double jeopardy (also known as ne bis in idem) is established in the Federal Criminal Code, the Federal Constitution and certain human rights treaties that have constitutional hierarchy in Argentina. The law does not distinguish between federal and foreign jurisdictions when it prohibits double jeopardy. Depending on the jurisdictions involved, there may be co-operation treaties establishing rules to resolve a potential double jeopardy conflict.

The fact that a corporation has entered into a deferred prosecution agreement (DPA) in another country is unlikely to prevent prosecution in Argentina, unless a treaty prescribes otherwise or the DPA is viewed as being equivalent to an acquittal, a conviction or any other decision that puts an end to the criminal proceeding.

There is nothing analogous to the United States ‘anti-piling on’ policy between Argentinian law enforcement authorities.

13Are ‘global’ settlements common in your country? What are the practical considerations?

Global settlements are not usual in cases investigated by Argentinian authorities.

14What bearing do the decisions of foreign authorities have on an investigation of the same matter in your country?

Decisions made by foreign authorities may attract the attention of Argentine authorities and be the catalyst for local investigations.

Economic sanctions enforcement

15Describe your country’s sanctions programme and any recent sanctions imposed by your jurisdiction.

Argentina has not implemented a specific autonomous trade sanctions system. However, Argentina complies with the sanctions established in the United Nations Security Council’s resolutions. In that context, compliance with the sanctions established therein is mandatory for Argentina. Also, once the Ministry of Foreign Affairs publishes the United Nations Security Council’s resolutions in the Argentine Official Gazette, those sanctions regimes become mandatory for Argentine individuals and legal entities.

16What is your country’s approach to sanctions enforcement? Has there been an increase in sanctions enforcement activity in recent years, for example?

Argentina has not conducted any relevant enforcement activity.

17Do the authorities responsible for sanctions compliance and enforcement in your country co-operate with their counterparts in other countries for the purposes of enforcement?

Argentina has not conducted any relevant enforcement activity.

18Has your country enacted any blocking legislation in relation to the sanctions measures of third countries? Describe how such legislation operates.

Law No. 24,871 regulates the extent of the application of foreign regulations. In particular, it sets forth that any foreign laws establishing extraterritorial sanctions intended to trigger, for example, negative consequences on a third country, would be deemed null and inapplicable in Argentina.

19To the extent that your country has enacted any sanctions blocking legislation, how is compliance enforced by local authorities in practice?

Any individual or legal entity shall not invoke rights, execute or claim the execution of acts nor be compelled to comply with measures, orders, instructions or indications that are a consequence of the extraterritorial application of foreign regulations, as referred to in question 18.

Additionally, Law No. 24,871 establishes additional provisions regarding, for example, the enforcement of foreign rulings under the aforementioned foreign regulations, or the exchange of information between Argentine authorities and the authorities of the foreign country issuing sanctions.

Before an internal investigation

20How do allegations of misconduct most often come to light in companies in your country?

In our experience, most allegations of wrongdoing in companies in Argentina have been made through whistleblower reports on ethical lines.

In our experience, in many cases, when an issue comes to light as a result of a regular internal auditing process, most companies fail to take early action to investigate the matter.

Information gathering

21Does your country have a data protection regime?

Personal data protection is governed by Personal Data Protection Law No. 25,326 (PDPL), which has the main purposes of guaranteeing (1) the complete protection of the data contained in files, records, databases or other technical means, whether public or private, and (2) the rights to reputation, privacy and access to information. Any information relating to individuals or companies, whether identified or identifiable, is considered personal data and subject to the terms of the PDPL.

22To the extent not dealt with above at question 8, how is the data protection regime enforced?

The PDPL is enforced by ADPA and the judicial courts. Depending on the type of behaviour, failure to comply with the PDPL could be considered as minor, serious or very serious infractions.

During 2018, ADPA imposed sanctions with fines for an accumulated amount of 71,625,320 Argentine pesos.

23Are there any data protection issues that cause particular concern in internal investigations in your country?

As a general rule, valid data treatment requires the free, express, informed and written (or similar) consent of the data subject (i.e., the relevant individual or legal entity). Data subjects are free to revoke their consent, although this will only have effect for the future (not retrospectively). They also have the right to have access to, rectify and delete their personal data. Treatment of data that is limited to the data subject’s name, identification number, tax identification number, occupation, date of birth and domicile, does not require consent.

Moreover, the PDPL determines restrictions to cross-border transfers of data.

24Does your country regulate or otherwise restrict the interception of employees’ communications? What are its features and how is the regime enforced?

From a privacy perspective, it is highly important to provide employees with prior notice explaining the way in which the company treats the data they use (generally through corporate IT or privacy policies).

From a labour law perspective, there are no specific regulations in force regarding the access, monitoring and surveillance of electronic communications and devices in the workplace.

It is of key importance to analyse any internal policy (duly notified to the employees) relating to the monitoring of corporate emails and, upon default thereof, implement an internal policy for the monitoring of emails, electronic communications and devices, and the use of working tools and to notify employees in advance that (1) electronic communications and devices are work tools and, thus, they shall be used only for work purposes and (2) they should have no expectation of privacy in connection with their use (even if a personal password has been created). Further, a company should have in place further provisions for monitoring employees’ activity and ultimately to prove misconduct.

Dawn raids and search warrants

25Are search warrants or dawn raids on companies a feature of law enforcement in your country? Describe any legal limitations on authorities executing search warrants or dawn raids, and what redress a company has if those limits are exceeded.

According to the Federal Criminal Procedural Code, if there is reason to presume that in a certain place there are things relating to the investigation of a crime, or the suspicion of a criminal offence, a judge may issue a search warrant. Further, a judge may order the seizure of objects and documentation that (1) may be relevant to the investigation, (2) may be subject to confiscation or (3) can serve as evidence.

Besides the formal requirements, search warrants must indicate the crime under investigation, the exact place where the search will be conducted and its purpose. If any of these requirements are not fulfilled, the search – and any evidence collected during the search – can be challenged in court.

26How can privileged material be lawfully protected from seizure during a dawn raid or in response to a search warrant in your country?

The Federal Criminal Procedural Code protects letters and documents sent to or received by a defendant’s counsel from being seized, as long as they are connected to a criminal investigation.

Moreover, a judge may request the testimony of witnesses and third parties and the submission of documents in their possession. However, this order shall not be addressed to persons exempted from testifying as witnesses by reason of family or professional links, or state secrecy.

27Under what circumstances may an individual’s testimony be compelled in your country? What consequences flow from such compelled testimony? Are there any privileges that would prevent an individual or company from providing testimony?

Judges can request the testimony of any person who may have relevant information relating to a criminal investigation. The request is mandatory and the person summoned to render testimony must appear before the judge and state the truth of what they know, unless an exception applies. Failure to do so may be construed as contempt of court or harbouring, and may trigger raids to seize the information. According to Argentine law, these offences are only attributable to individuals.

Argentine law protects the right against self-incrimination. For instance, when a representative of a legal entity is called to give information relating to a criminal investigation, the representative may refuse to give testimony on the basis of the constitutional right against self-incrimination.

Additionally, the Federal Criminal Procedural Code establishes that those who must keep the secrecy of what they learn by virtue of their service, profession or official capacity must abstain from rendering testimony of facts and issues covered by such secrecy. Among the persons expressly included are lawyers, notaries, doctors, nurses, military personnel and public officials. However, they cannot refuse to give testimony when released from their secrecy duty by the interested party, for instance.

Whistleblowing and employee rights

28Describe the whistleblowing framework in your country. What financial incentive schemes exist for whistleblowers? What legal protections are in place for whistleblowers?

Law No. 27,319 regulates special investigation techniques than can be used in the investigation of certain complex crimes, such as drug-related crimes, smuggling, terrorism and economic crimes.

Under this framework, persons who provide useful and relevant information to initiate or guide an investigation concerning the crimes set forth in the law will be entitled to receive monetary compensation. The identity of whistleblowers will be withheld and, if necessary, other adequate protective measures may be ordered to protect the life and integrity of the whistleblower and his or her family.

Depending on the circumstances, other regimes may apply. For instance, recently a permanent rewards fund for whistleblowers created in 2009 was used to offer monetary rewards in exchange for useful information to trace and recover assets in a high-profile corruption case.

29What rights does local employment law confer on employees whose conduct is within the scope of an investigation? Is there any distinction between officers and directors of the company for these purposes?

There is no specific labour regulation concerning investigations or a specific procedure for internal investigations. Nevertheless, labour and civil rights are fully applicable to all employees. Thus, it is important to bear in mind that any kind of discrimination or adverse effect on employees’ dignity or right of defence could be challenged within the context of the investigation.

Investigations should be carried out as quickly as possible, so that disciplinary action, if any, can be decided as soon as possible after discovery of the behaviour under investigation.

If the personnel involved are board members or authorised signatories of the company, measures regarding removal of control and replacement to ensure the normal operation of the company should be jointly analysed.

Additionally, since each case will be different on its merits, there could be different practical matters to consider within the context of a labour investigation; thus, it is important to duly liaise with the appropriate legal adviser.

30Do employees’ rights under local employment law differ if a person is deemed to have engaged in misconduct? Are there disciplinary or other steps that a company must take when an employee is implicated or suspected of misconduct, such as suspension or in relation to compensation?

Different courses of action and different sanctions could be implemented, depending on the seriousness of the misconduct, the extent to which it affects the employer’s activity or business, the level of responsibility of the relevant employee, previous performance, among other aspects, all of which should be considered in each case.

Damage caused by the misconduct could also be considered, although this is not essential since the misconduct itself could be subject to disciplinary measures. Possible sanctions could involve a first warning, suspension from duty without payment of salary or even dismissal with just cause, subject to full analysis of the case in question.

Prior to implementing any course of action or disciplinary sanction, it is important to bear in mind that (1) there are both specific requirements applicable to disciplinary sanctions and practical legal recommendations, and (2) dismissal with just cause is interpreted narrowly in Argentina.

31Can an employee be dismissed for refusing to participate in an internal investigation?

Employees are entitled to refuse to participate in an internal investigation, without their refusal construing a just cause for termination of the employment contract.

Commencing an internal investigation

32Is it common practice in your country to prepare a document setting out terms of reference or investigatory scope before commencing an internal investigation? What issues would it cover?

Before commencing an internal investigation, it is useful for companies to draft a flexible investigation plan, which may lead the investigation process and determine, among other things, its scope, time limits and main objectives.

There is currently no legal requirement regarding the need for an investigation plan. Therefore, in practice, implementing such a plan depends on each company, the complexity of the subject under investigation and the regulations involved.

33If an issue comes to light prior to the authorities in your country becoming aware or engaged, what internal steps should a company take? Are there internal steps that a company is legally or ethically required to take?

Law No. 27,401 (on corporate criminal liability) addresses the concept of internal investigations and sets forth that each legal entity, depending on the risks to its activities, may implement an internal investigation system.

In general, there is no particular legal obligation to comply with when misconduct comes to light in the course of an internal investigation; however, certain industry-specific regulations may establish additional provisions regarding internal investigations, which companies should take into account.

34What internal steps should a company in your country take if it receives a notice or subpoena from a law enforcement authority seeking the production or preservation of documents or data?

If a company receives a notice seeking the production of documentation or a subpoena requiring its testimony to clarify the facts or allegations under investigation, the company shall comply within the terms specified, unless it is subject to any exception provided in the applicable regulation.

There is no specific regulation setting forth mandatory steps for companies to comply with such notices or subpoenas. Therefore, the measures implemented may depend on the company’s policies and procedures, the facts and persons under investigation, and so on.

35At what point must a company in your country publicly disclose the existence of an internal investigation or contact from a law enforcement authority?

A public company in Argentina is not obliged to disclose the existence of an internal investigation until the investigation results in verification of the existence of an event that, in all likelihood, could have a substantial effect on its trading value (except when an investigation was commenced following verification of the existence of an event having such effects, which must be disclosed). Likewise, there is no obligation to disclose any contact by a law enforcement authority until the company is served with notice of the commencement of formal proceedings (except where such circumstances are made public or disclosure is required by a law enforcement authority).

36How are internal investigations viewed by local enforcement bodies in your country?

Provided that the rights of employees are respected, internal investigations are well tolerated. Investigations of wrongdoings and crimes in Argentina are usually conducted by law enforcement authorities; therefore, as yet, acceptance among local agencies is not widespread.

Law No. 27,401 (on corporate criminal liability) encourages companies to implement an internal investigation system that respects the rights of the persons under investigation and permits the imposition of effective sanctions on those who breach the company’s policies.

In this sense, an internal investigation may be useful to show to the authorities that the company acted diligently and in good faith to try to prevent, identify and remedy a potential wrongdoing. Given the recent enactment of Law No. 27,401 there are no precedents yet to establish how law enforcement agencies will assess the efforts taken by companies during an internal investigation.

Attorney–client privilege

37Can attorney–client privilege be claimed over any aspects of internal investigations in your country? What steps should a company take in your country to protect the privilege or confidentiality of an internal investigation?

Attorney–client privilege stems from the constitutional right to defence during trial. Criminal procedure codes prohibit disclosure of protected confidential information when obtained by certain professionals when performing as such, including attorneys and doctors. Further, the Federal Civil Procedure Code establishes that a witness may refuse to answer questions if the answers may disclose information protected by the attorney–client privilege.

There is very little legislation and jurisprudence regarding the attorney–client privilege on internal investigations. As a minimum, all attorney work-product is protected by the attorney–client privilege. Marking documents as confidential and protected by attorney–client privilege is recommended.

38Set out the key principles or elements of the attorney–client privilege in your country as it relates to corporations. Who is the holder of the privilege? Are there any differences when the client is an individual?

The Federal Supreme Court has ruled that privilege protects documents or communications held on the occasion or in the performance of the profession of attorney. Another key principle is that the client may waive the privilege.

The holder of the privilege is the client, and the attorney has the duty and the right to protect the privileged information.

39Does the attorney–client privilege apply equally to in-house and external counsel in your country?

There are no legal standards in Argentina for this. However, according to the majority of legal experts, provided the attorney is a member of a professional association, the attorney–client privilege will apply if he or she is either in-house or external counsel.

40Does the attorney–client privilege apply equally to advice sought from foreign lawyers in relation to (internal or external) investigations in your country?

The applicable regulation in Argentina does not make any difference between advice sought from foreign and local lawyers. Privilege should apply equally to both.

41To what extent is waiver of the attorney–client privilege regarded as a co-operative step in your country? Are there any contexts where privilege waiver is mandatory or required?

There are no precedents that would allow us to consider the waiver of attorney–client privilege as a co-operative step. Privilege waiver is not mandatory or required.

42Does the concept of limited waiver of privilege exist as a concept in your jurisdiction? What is its scope?

The applicable regulations do not stipulate partial waivers.

43If privilege has been waived on a limited basis in another country, can privilege be maintained in your own country?

There is no developed jurisprudence on this matter.

44Do common interest privileges exist as concepts in your country? What are the requirements and scope?

This concept does not exist in Argentina.

45Can privilege be claimed over the assistance given by third parties to lawyers?

There are no material studies or case precedents in Argentina that would allow us to conclude that privilege protects the work-product of third parties that assisted the work performed by the lawyer.

Witness interviews

46Does your country permit the interviewing of witnesses as part of an internal investigation?

Witness interviews as part of internal investigations are not forbidden or specifically regulated in Argentina.

Nonetheless, the Guidelines of the Argentine Anti-corruption Office on Compliance Anti-corruption Programmes briefly address certain mechanisms for corporate investigations, including witness interviews. In particular, the Guidelines emphasise that all the investigative mechanisms carried out by companies shall not put the employees’ rights in jeopardy.

47Can a company claim attorney–client privilege over internal witness interviews or attorney reports?

There is no law that particularly regulates the extent of attorney–client privilege in internal investigations. In this context, a company may claim attorney–client privilege over internal witness interviews or attorney reports, but its chances of success will depend on the factors relevant to the case.

48When conducting a witness interview of an employee in your country, what legal or ethical requirements or guidance must be adhered to? Are there different requirements when interviewing third parties?

There is neither Argentine regulation nor relevant judicial precedents setting forth legal or ethical requirements or guidance for conducting witness interviews, whether they involve employee or third parties (e.g., former employees or contractors).

We advise our clients to apply internationally accepted common practices, such as providing Upjohn warnings to interviewees, avoiding recording interviews and preparing reports that merely include attorneys’ impressions on the topics addressed in the interviews.

49How is an internal interview typically conducted in your country? Are documents put to the witness? May or must employees in your country have their own legal representation at the interview?

The timing, order and steps taken in each interview (e.g., putting documents to the witness) will vary from case to case.

We advise our clients to consider all factors and good practices, as mentioned in question 48, when carrying out interviews. There are case precedents that acknowledge, for example, a witness’s rights to be informed about the scope and nature of an interview, and to be accompanied at the interview by their own lawyer.

Reporting to the authorities

50Are there circumstances under which reporting misconduct to law enforcement authorities is mandatory in your country?

Under Argentine law, there is no general obligation to report misconduct to law enforcement authorities. However, depending on the industry, some laws and regulations may mandate companies to disclose certain forms of misconduct to the authorities.

51In what circumstances might you advise a company to self-report to law enforcement even if it has no legal obligation to do so? In what circumstances would that advice to self-report extend to countries beyond your country?

Self-reporting in Argentina is still unusual. Whether this is a convenient course of action will depend on the case in question.

Generally speaking, a company might be advised to self-report if it is likely to receive some leniency from the authorities. For instance, Law No. 27,401 (on corporate criminal liability) provides a regime under which companies may seek exemption from criminal liability. It also allows legal entities seeking a reduction in penalties to enter into ‘effective collaboration agreements’ with the authorities (see question 52).

The decision to self-report to foreign authorities should be made having taken into account the law of the jurisdictions involved and the particular facts of the case.

Note that public officials have a duty to report offences that are known to them in the exercise of their public functions. Directors of state-owned companies and those appointed by the government might be considered public officials for the purpose of this reporting duty.

52What are the practical steps you need to take to self-report to law enforcement in your country?

The particular steps to be taken will depend on the requirements imposed by the respective applicable laws and competent authorities.

For instance, Law No. 27,401 (on corporate criminal liability) provides a regime for companies to obtain an exemption from criminal liability and for it to be possible to sign ‘effective collaboration agreements’ with the prosecution to obtain a reduction in applicable penalties.

In the former situation, the law requires self-reporting of a crime as a consequence of internal detection and investigation, which suggests that conducting an internal investigation will be necessary to engage in negotiations with the prosecution.

Responding to the authorities

53In practice, how does a company in your country respond to a notice or subpoena from a law enforcement authority? Is it possible to enter into dialogue with the authorities to address their concerns before or even after charges are brought? How?

In the case of a judicial notice or subpoena, the company must respond to it through judicial channels within the relevant legal terms laid down under the Procedure Code.

It is possible to enter into dialogue with the authorities to establish the position of the defendants. However, official challenges, requests and decisions must be made through judicial or administrative channels, according to the relevant procedural rules.

54Are ongoing authority investigations subject to challenge before the courts?

Any decision issued by the centralised or decentralised federal administration is deemed legitimate, but could be challenged before courts if the requisites set forth in the applicable administrative regulations of the proceedings are fulfilled.

Since Argentina is a federal country, depending on the territorial competence of the relevant authorities, local regulations may be applicable and the particular requisites established therein shall be taken into account.

55In the event that authorities in your country and one or more other countries issue separate notices or subpoenas regarding the same facts or allegations, how should the company approach this?

There is no general statute covering this matter. The approach will have to be assessed for each case, taking into account applicable laws and international treaties, if any.

56If a notice or subpoena from the authorities in your country seeks production of material relating to a particular matter that crosses borders, must the company search for, and produce material, in other countries to satisfy the request? What are the difficulties in that regard?

The company must comply with the requirement for production of material relating to a particular matter that crosses borders. However, according to the Federal Civil and Commercial Procedural Code, it is necessary to establish whether the company in question is party to the proceedings or not.

In the case of companies acting as plaintiffs or defendants, they must produce the required material (documents or information) that is in their possession, even when the documents or information are outside the country.

If the company is a third party to the procedure in which the requirement is made, it is also obliged to produce the documents or provide the required information. However, the requested party may challenge the request if the material required is its exclusive property and its disclosure may cause damage.

The company that intends to produce material that is abroad will face certain difficulties that could delay the procedure. For instance, the company must comply with the requirements imposed by international treaties to verify the authenticity of foreign documents (i.e., through the Hague Apostille or authentication through diplomatic channels as well as translations, among other things). Further, the attendant costs could be significantly higher.

57Does law enforcement in your country routinely share information or investigative materials with law enforcement in other countries? What framework is in place in your country for co-operation with foreign authorities?

The frequency of co-operation and challenges to co-operation vary according to the law enforcement authorities involved.

On the one hand, in respect of judges and prosecutors, cross-border co-operation and exchanges of information usually proceeds after a long period of time because of the many difficulties that can arise. For instance, in the Operation Car Wash bribery cases, leniency agreements and evidence produced in Brazil and requested by Argentine authorities are still pending.

On the other hand, certain law enforcement authorities frequently share information within the federal administration. For example, the Argentine Financial Intelligence Unit – being a member of the Egmont Group of Financial Intelligence Units – shares information with other units across the world, and the AFIP shares information in accordance with the Common Reporting Standard, among other methods.

Additionally, international treaties (either multinational or bilateral) may govern cross-border co-operation.

58Do law enforcement authorities in your country have any confidentiality obligations in relation to information received during an investigation or onward disclosure and use of that information by third parties?

Overall, law enforcement authorities are bound to maintain confidentiality with respect to information obtained during investigations. They shall not share or disclose information or documents unless such conduct falls within one of the exceptions set forth in their statutes or applicable laws.

In some cases, the law allows the transfer of information between law enforcement agencies. For instance, the AFIP may share certain information with revenue agencies from the provinces, or foreign tax agencies, in accordance with applicable co-operation agreements.

In the course of a criminal investigation, the secrecy of the proceedings shall be respected. In particular, under Law No. 27,401, when corporations enter into negotiations with the prosecution with the aim of concluding a collaboration agreement, the information shared will be kept confidential.

59How would you advise a company that has received a request from a law enforcement authority in your country seeking documents from another country, where production would violate the laws of that other country?

In these circumstances, companies should claim an exception and inform the relevant law enforcement authority that they cannot reasonably comply with the request without violating the laws of another country.

In addition, foreign legal advice should be obtained as to the company’s exposure to liability if it produces the requested information.

60Does your country have secrecy or blocking statutes? What related issues arise from compliance with a notice or subpoena?

Certain statutes and regulations set forth secrecy obligations, including those relating to banking (Law No. 21,526), tax (Law No. 11,683) certain professions (e.g., attorneys, health professionals) and confidential commercial information (Law No. 24,766). These statutes and certain regulations (e.g., Anti-money Laundering Law No. 25,246) establish certain circumstances when secrecy does not prevail and compliance with a notice or subpoena becomes mandatory.

61What are the risks in voluntary production versus compelled production of material to authorities in your country? Is this material discoverable by third parties? Is there any confidentiality attached to productions to law enforcement in your country?

The rules applicable in a certain jurisdiction and the type of proceeding initiated against a company will determine the applicable rules of evidence. Nonetheless, Argentina does not regulate discovery rules. Thus, production is usually compelled by law enforcement authorities and interested parties can occasionally produce complementary evidence (e.g., expert witnesses).

Production of evidence within civil procedures is usually available to the parties and any other stakeholder, unless confidentiality is expressly imposed, which may be the case, for instance, in procedures where family issues are in question or when minors are involved.

Production of evidence within criminal procedures is confidential and withheld from the parties (including private prosecutors) during the investigative stage. However, during the trial stage, production of evidence is, in general, not subject to confidentiality and is accessible by the general public.

Prosecution and penalties

62What types of penalties may companies or their directors, officers or employees face for misconduct in your country?

Companies may be subject to the following penalties:

  • fines that normally will be determined based on the ‘undue’ benefit obtained or that could have been obtained through the crime;
  • total or partial suspension of activities;
  • debarment from participating in government bids and contracts, or in any other activity relating to the government;
  • dissolution and liquidation of the legal entity;
  • suspension or termination of government benefits;
  • publication of the conviction sentence at the cost of the convicted entity; and
  • forfeiture of assets obtained through the illegal actions.

Directors, officers and employees are subject to the penalties prescribed for the specific crime in the relevant statutes. Penalties for individuals include imprisonment, fines and debarment. Additionally, defendants may be subject to forfeiture of assets that have been obtained illegally.

63Where there is a risk of a corporate’s suspension, debarment or other restrictions on continuing business in your country, what options or restrictions apply to a corporate wanting to settle in another country?

Depending on the circumstances (such as the existence of a criminal investigation or whether precautionary measures were issued against the company), there might be restrictions on relocating assets sited or registered in Argentina to another country.

64What do the authorities in your country take into account when fixing penalties?

In a criminal trial, judges must refer to the penalty scale of the crimes and take into account aggravating and mitigating circumstances, whenever applicable. Additionally, they will consider, among other things:

  • the nature of the conduct;
  • the means employed to commit the crime;
  • the injury or risks caused;
  • personal circumstances of the defendant, such as his or her age, education;
  • conduct during the proceedings;
  • motive to commit the crime (especially state of necessity or indigence);
  • degree of participation in the crime; and
  • recidivism.

Moreover, in respect of economic and financial crimes committed with intervention, on behalf, or for the benefit, of a legal entity, judges will also consider:

  • compliance with internal rules and procedures;
  • failure to monitor the conduct of the perpetrators and accomplices;
  • the extent of the damage caused;
  • the amounts of money involved;
  • the size, nature and economic capacity of the legal entity; and
  • the need to continue the activities of the company (for the purposes of suspension or debarment).

Finally, in respect of publicly traded companies, penalties shall be prescribed having in mind the protection of shareholders to whom no liability is attributable.

Resolution and settlements short of trial

65Are non-prosecution agreements or deferred prosecution agreements available in your jurisdiction for corporations?

Since the enactment of the Law No. 27,401 (on corporate criminal liability), corporations can enter into agreements with the prosecution. The law envisions two sets of circumstances:

  • It allows companies to be exempted from criminal liability when they have:
    • self-reported a crime set forth in that law as a consequence of internal detection and investigation;
    • established a proper control and supervision system before the facts under investigation occurred and breaching this system required an effort by the wrongdoers; and
    • returned the undue benefit obtained.
  • Companies may execute ‘effective collaboration agreements’ with the prosecution to obtain a reduction of applicable penalties.

Companies must disclose precise and verifiable information that is useful for the investigation. The agreement is subject to court approval to enter into effect. At the time of writing, there are no precedents of collaboration agreements signed by corporations.

66Does your jurisdiction provide for reporting restrictions or anonymity for corporates that have entered into non-prosecution agreements or deferred prosecution agreements until the conclusion of criminal proceedings in relation to connected individuals to ensure fairness in those proceedings?

Argentina has regulated effective collaboration agreements in Law No. 27,401. Until the conclusion of an agreement with the public prosecutor, all negotiations are deemed to be strictly confidential.

The law makes no reference to the confidentiality of the information after the agreement is concluded and approved by the criminal judge. Therefore, there are no provisions that determine implementation of further restrictions or anonymity until the conclusion of the criminal proceedings. Consideration may be given to these measures in a particular case, depending on the potential risks that may affect a fair resolution of those proceedings.

67Prior to any settlement with a law enforcement authority in your country, what considerations should companies be aware of?

When considering entering into an agreement with any Argentine enforcement authority, a company should conduct a thorough analysis of the alleged facts and the possible legal violations that may be triggered, either in Argentina or abroad. The company should also consider whether entering into a collaboration agreement would allow the authorities to gather information to prosecute other crimes.

68To what extent do law enforcement authorities in your country use external corporate compliance monitors as an enforcement tool?

Corporate compliance monitors are not regulated as an enforcement tool in Argentine law.

69Are parallel private actions allowed? May private plaintiffs gain access to the authorities’ files?

When conduct gives rise to civil liability that also constitutes a crime, Argentine law allows both civil and criminal actions to be pursued simultaneously. Both proceedings are independent of each other; however, the civil judge is foreclosed from reaching a decision until a judgment is passed on the criminal case. Therefore, plaintiffs usually do not incur efforts and expenses until a decision is reached by the criminal court.

In criminal cases, the Federal Criminal Procedure Code recognises victims’ right to offer and control evidence. It prescribes that the case docket is public to the parties, which includes the private prosecutor but not the civil petitioner, whose participation is limited to claiming compensation, restitution or other civil remedies. Despite this general principle, during the criminal investigation, judges may be reluctant to grant private prosecutors full access to some confidential information for reasons of security or privacy. During the trial, the private prosecutor has access to all files and evidence that will be used in court.

Publicity and reputational issues

70Outline the law in your country surrounding publicity of criminal cases at the investigatory stage and once a case is before a court.

In criminal investigations governed by the Federal Criminal Procedure Code, the docket file is withheld until the first appearance of the defendant before the judge (the investigative statement), where the defendant is put on notice about the investigation and informed of their rights.

However, third parties (e.g., the defendant, the victim and state authorities) may request information if they justify having a ‘legitimate interest’. After this stage, the docket file can be accessed by the parties, including the defendant, the public prosecutor and the private prosecutor, if any. Notwithstanding, judges may order the secrecy of some information when disclosure would jeopardise the investigation. Only acts that cannot be reproduced at a subsequent stage shall not be kept confidential. The docket file will continue to be withheld from third parties during the investigation.

Once the case is in trial, hearings are public unless the court decides, as an exception, to restrain access by some or all public parties (e.g., relevant witnesses who have not yet given their testimony).

71What steps do you take to manage corporate communications in your country? Is it common for companies to use a public relations firm to manage a corporate crisis in your country?

In our experience, companies have used both their in-house public communications department and external firms. Larger companies are more likely to retain the services of public relations companies when there is a risk of negative publicity.

72How is publicity managed when there are ongoing related proceedings?

First, it should be assessed whether there are any disclosure restrictions. Public communications, whether involving an external public relations company or not, should be vetted by the company’s legal adviser and the team in charge of litigation to ensure that there is nothing that could compromise the company’s position in the proceedings.

Duty to the market

73Is disclosure to the market in circumstances where a settlement has been agreed but not yet made public mandatory?

Settlements are made within a criminal action, the existence of which must be disclosed upon service of process. Disclosure of settlements is forbidden until endorsement by the criminal court under penalty of sanctions under the Criminal Code.

Anticipated developments

74Do you expect to see any key regulatory or legislative changes emerge in the next year or so designed to address corporate misconduct?

Certain bills that address corporate misconduct, asset recovery and corruption-related crimes were recently introduced to the Argentine Congress. Additionally, a new bill to reform the Criminal Code was submitted to the Senate in March 2019. These bills are expected to be assessed in the near future.

Moreover, in view of the latest development in corporate governance matters, it is likely that regulatory bodies will issue specific regulations focusing on corporate misconduct and internal policies or procedures.


Footnotes

1 Pedro Serrano Espelta, Gustavo Morales Oliver and María Lorena Schiariti are partners at Marval, O’Farrell & Mairal.

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