The “notebooks scandal” is proving to be a double-edged sword for the government. It helped it score several political points, mainly because the wide-ranging corruption scheme described by Oscar Centeno and confirmed by a myriad former officials and business leaders who took plea deals solely involves officials from the Kirchner administrations. But at the same time, it can help turn the current economic crisis into much, much worse.
Most private companies involved in the government contracts scandal are currently working on the largest public work contracts in the country and are set to play an instrumental role in the so-called Public Private Partnerships (PPP): projects in which private companies finance infrastructure works and then enter a long-term contract with the government in order to get their investment back.
Considering that the government has cancelled a significant percentage of future public works to reduce public spending, these companies have now become a vital tool to keep the construction sector afloat. And this means that removing them from current and future works would bring even more detrimental to the economy.
That’s why, according to La Nación, the government is trying to insulate these companies from further shock waves, with the fallout from the notebooks scandal only hitting the executives who took part in the bribery scheme. Companies will still have to pay a fine for their involvement and follow an ethics protocol if they want to bid in future public tenders, but will still be allowed to take part in them.
The executives who confessed to having paid bribes will no longer be allowed to be employed by them.
La Nación reports that on Wednesday, the Chief Attorney for the Executive Branch (Procurador del Tesoro, translated sometimes in Argentina as Attorney General, even though he’s really isn’t) Bernardo Saravia Frías, confirmed the decision to separate them from their jobs, explaining that if a company wants to participate in a PPP, it can’t have in its board someone who has reached a plea bargain or was convicted in a corruption case.”
“We can’t compare a person to a corporation. We are talking about companies that have thousands of workers, that have the ability to conduct public works in the country. The common good is above everything,” Saravia Frías added. Some executives have already left their posts before the government’s strategy even began making the rounds: Aldo Roggio (Grupo Roggio), Gerardo Ferreyra (Electroingeniería) and Juan Chediack (Chediack S.A) have all stepped down since the “notebooks scandal” broke.
At the same time, the government published a resolution today from the Anti-Corruption office (OA) with ethical guidelines for private companies – as well as civil society organizations and government agencies – with “tools allowing them to adjust their structure in order to prevent, detect and remedy corruption events.”
One of its paragraphs highlights the need to “implement measures aimed at preventing bribery of national and foreign officials, and establish enough internal controls to allow its staff to detect potential corruption.” The system establishes punishments that range from fines to a ban from participating in future public tenders.
Both the government and the private sector are already facing hurdles to move on with the projects: since the companies involved have already been tarnished by the scandal, many are having problems to finance the PPPs they have been awarded, as most banks have protocols preventing them from lending funds to companies involved in corruption cases.
For that reason, and in an attempt to save the projects, the government decided to vouch for the integrity of the companies and presented itself as an intermediary between banks and companies in order to ensure they get the financing they need.