Due diligence in Argentina may become less challenging in the near future following the election yesterday of pro-business presidential candidate Mauricio Macri.
Macri’s top priority will be cabinet appointments to help devise policy and implement his pledges to overhaul macroeconomic management, including the immediate removal of foreign exchange controls and the search for a prompt agreement with holdout creditors, to lure back foreign investors to areas such as financial services, utility companies and infrastructure.
But a secondary expectation is that the election of Macri, which ends 12 years of Kirchnerismo in the Casa Rosada, will institute a return to more transparency in public records.
Due diligence on potential acquisition targets or joint venture partners in Argentina has been complicated in recent times as a result of the Kirchner governments’ tight grip over the Inspección General de Justicia, IGJ, which holds corporate records.
Late President Néstor Kirchner and then Cristina Fernández de Kirchner pulled down the shutters on public access to corporate records held with the IGJ following a series of scandals and allegations that business leaders dubbed ‘Empresarios K’ made fortunes as a result of, at best, cosy links with top government figures. Some of these business leaders are also believed to act as financial fronts, or testaferros, for political figures.
In just one example, the IGJ has been accused of deliberately refusing to allow access to the documents on a Patagonian hotel chain group called Hotesur which opponents have alleged has intimate links to the Kirchner family and has been involved in money-laundering.
The IGJ, a unit of the Justice Ministry, has been controlled by officials closely associated with La Cámpora, the political clique centered on Cristina Fernández herself and her son Máximo.
The IGJ long ago ruled that access to corporate records could only be granted to parties with a highly-subjective ‘legitimate interest’ in the information.