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Argentina: Corruption in high places?

Former Argentine President, Cristina Fernandez de Kirchner, is facing criminal charges along with others in connection with allegations that her government fraudulently manipulated the dollar futures market in the last months of her administration for private gain knowing that her successor intended to devalue the peso Allegedly, the Central Bank sold dollar futures at artificially high rates (up to US$17bn at 10.65 pesos to the dollar when the peso was worth only 14-15pesos to the dollar) which resulted in a significant drain on central government reserves. She first appeared in federal court in mid-April and again in mid-May before Judge Claudio Bonado, against whom she has since filed a counter-claim of political prejudice, particularly as he has put a restraining order on some of her assets. Separately, she is also under investigation for illicit enrichment and embezzlement in connection with her real estate business (Los Sauces) in Patagonia in which again several others are also accused of being complicit. 

The extent of corruption alleged against her regime has led to former Ministers in her administration being charged. This developed almost into farce when her Public Works Secretary, José Lopez, was arrested in the act of trying to hide some $9m in various currencies within a convent in Buenos Aires. 

President Macri, who came into office avowing that he would stamp out corruption, has not escaped embarrassment. His name came up in the leaked Mossack Fonseca (“Panama”) papers made public in April ’16. He was shown to have $1.25m invested in the Bahamas, which he had not declared on assuming office, which he subsequently promised to re-invest in Argentine Treasury bills under a wider tax amnesty offered by his administration to Argentine citizens with unregistered offshore accounts. The extent of asset flight from Argentina for tax evasion purposes is estimated at $4-500bn (almost as much as Argentina’s annual GDP). Under the tax amnesty, Macri hopes to raise $20bn but a similar amnesty in 2013 netted only a fraction of the $2.5bn target (Argentine citizens have long been wary of keeping their savings in the domestic banking system, given Argentina’s fragile banking history). This time, however, the amnesty might have better success since new international regulations governing overseas assets will come into force in 2017. 

Argentina has long suffered the burden of corruption in its ruling elites. Notwithstanding Macri’s good intent, many are less than sanguine that this will change much.

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