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Weekly Report - 07 October 2021 (WR-21-40)

ARGENTINA: Pandora hits across the political divide

The Pandora Papers scandal has had a significant impact in Argentina, with revelations that political leaders and others have used tax havens to conceal their financial operations. However, neither of the two opposing political coalitions fighting next month’s congressional elections appears to have secured a decisive advantage because of the revelations.

Perhaps unsurprisingly, the leaked data obtained by the International Consortium of Investigative Journalists (ICIR) shows that politicians and wealthier Argentines make extensive use of tax havens. The global investigation of over 11.9m leaked documents showed that Argentine citizens were ranked third overall, with a total 2,521 identified as beneficiaries of offshore accounts, behind the Russians (4,437) and the British (3,506). Argentines favour the use of offshore companies and tax havens set up in the British Virgin Islands (BVI), Belize, Panama, and US jurisdictions such as Delaware.

Several prominent individuals were revealed to be holders of secret accounts. They include Mariano Macri, brother of former centre-right president Mauricio Macri (2015-2019); Jaime Durán Barba, the former president’s campaign strategist; Zulemita Menem (daughter of the late president Carlos Menem [1989-1999]); Humberto Grondona (son of football impresario Julio); and football stars such as Ángel Di María, Javier Mascherano, and Mauricio Pochettino.

As in many other countries, holding an offshore account is not illegal under Argentine law, although it may suggest the holder is interested in ethically questionable activities such as tax avoidance (also legal). On the other hand, some offshore accounts may be using secrecy to cover up outright criminal activity – tax evasion, money laundering, and corrupt practices.

The Pandora Papers revelations do suggest some cases of illegality. The most prominent is the case of the late Daniel Muñoz, former private secretary to former president Néstor Kirchner (2003-2007) and his wife and successor Cristina Fernández (2007-2015). Kirchner died in 2010; Muñoz died in 2016; Fernández is currently vice president and possibly the most powerful politician in the country. Also named in connection with offshore accounts linked to the Kirchners is financier Ernesto Clarens.

What the papers show is that Muñoz operated a complex network of offshore companies used to buy 16 properties and other assets in the US worth up to US$73m. Where the money came from is not clear. The activities of Muñoz, who was also named in the Panama Papers leaks of 2016, are at the centre of ongoing Argentine court investigations of money laundering, including the cuadernos de las coimas (‘bribery notebooks’) case which involves allegations of a scheme to pay bribes for public contracts during Fernández’s presidency, in which she stands accused of involvement. The current vice president denies any wrongdoing and claims that the various corruption cases in which she is implicated are no more than a form of ‘lawfare’ – the manipulation of the courts for the purposes of political persecution.

  • Supreme Court resignation

One of the five members of Argentina’s supreme court, Elena Highton de Nolasco, resigned on 5 October. The resignation of Highton, 78, will complicate things for the government led by President Alberto Fernández, who will struggle to appoint a similarly friendly successor. The balance of opinion on the supreme court is important because it is the ultimate court of appeal in three ongoing corruption cases involving Vice President Cristina Fernández, relating to her time in the presidency (2007-2015).   

It is not immediately obvious who will benefit most politically from the Pandora revelations. The ruling left-of-centre Frente de Todos (FdT) coalition appears to have decided that the best angle of attack is to focus on former president Macri. Axel Kicillof, the governor of Buenos Aires province, and a close political ally of the vice president, set the tone by saying it was primarily wrongdoing by Macri, not the Partido Justicialista (PJ, Peronists) – the main component of the FdT – that was “in the Pandora papers”. 

This statement was obviously inaccurate since it ignored the fact that the most serious allegations involve Muñoz and what is known as ‘la ruta del dinero K’ (‘the Kirchner money route’). While public sympathy for former president Macri is low (he is largely seen as one of the architects of Argentina’s ongoing economic crisis), targeting him may be a tactical mistake for the government as he is no longer the key figure in the opposition.

In fact, the success of Juntos por el Cambio (JxC), the main opposition coalition, in last month’s primaries is largely due to campaigning by politicians such as Horacio Rodríguez Larreta, the head of government of the City of Buenos Aires, and María Eugenia Vidal, a former governor of the province of Buenos Aires. Focusing the big guns on Macri looks unlikely to help the government escape electoral punishment in the congressional elections on 14 November.