Monthly Archives: April 2013

Argentina: Ralph Lauren Outed Its Subsidiary’s Bribery and Set an Example for All

Forbes.com – by Jonathan Green & James L. Athas

In 2010, while working to enhance its worldwide internal controls and compliance program, Ralph Lauren Corporation discovered evidence that its Argentine subsidiary had been paying bribes to government officials in Argentina. The bribes, paid through customs brokers, facilitated the entry of RL’s products into the country without necessary paperwork and avoidance of inspections of prohibited products. The bribes were disguised, along with other legitimate charges, as “loading and delivery expenses” and “stamp tax/label tax” on invoices submitted by a local customs broker to RL’s general manager in Argentina.

Between 2005 and 2009 RL paid approximately $568,000 in bribes to Argentine officials.  Its general manager also provided or authorized gifts to three different government officials, including perfume, dresses, and handbags valued at $400 to $14,000 each, to secure the importation of RL’s products into Argentina.

The challenges RL encountered in Argentina are similar to those encountered by many companies operating internationally, as general counsel and compliance officers everywhere well know. The Justice Department and the Securities and Exchange Commission have not hesitated in pursuing Foreign Corrupt Practices Act cases against companies involved in such conduct.

RL didn’t act perfectly (it had, for example, little anti-corruption training or oversight in Argentina before 2010), but once under investigation it served as a model for any other company that faces such challenges in the future. It addressed the issues head on, by:

(1) Terminating its customs broker,
(2) revising its anti-corruption policy and translating the policy into eight languages,
(3) increasing its due diligence procedures for third parties,
(4) implementing more stringent commission and gifts policies,
(5) conducting in-person anticorruption training for certain employees, and, most significantly,
(6) ceasing retail sales in Argentina and winding down all of its operations there.

In addition, upon learning of the misconduct RL promptly—within two weeks—reported the violations to the SEC and the Justice Department, voluntarily and expeditiously produced documents and transcripts from interviews (translated into English), and otherwise cooperated in investigations by both. RL even made its overseas witnesses available for SEC interviews and brought them to the U.S.

According to the SEC’s acting director of enforcement, RL’s timely and thorough cooperation resulted in “substantial and tangible benefits” for the company, including non-prosecution agreements with both the SEC and the Justice Department. In sum, RL agreed to pay more than $700,000 in disgorgement and interest to the SEC, and $882,000 in penalties to the DOJ. These amounts are not insignificant, but they are significantly better than the company might otherwise have faced for a five-year bribery scheme involving hundreds of thousands of dollars. Most important, the company will not face charges and can now put the matter behind it.

This is not the first time the government has gone out of its way to encourage cooperation and praise robust compliance programs. In 2012 the SEC and the Justice Department publicly declined to bring enforcement actions against Morgan Stanley MS +0.64% after one of its employees bribed a Chinese government official in violation of the FCPA. That decision was the result, in large part, of the fact that “Morgan Stanley constructed and maintained a system of internal controls, which provided reasonable assurances that its employees were not bribing government officials.” Government officials similarly lauded Morgan Stanley’s cooperation and thorough internal investigation in the case.

The lesson to be learned from RL’s recent experience is that a vigilant (re)assessment of one’s anticorruption policies and swift action and cooperation when any misconduct is discovered will continue to be the height of fashion—and function—regarding the FCPA.

The proven Buenos Aires – Argentina lawyer professionals at the Kier Joffe law firm have experience working with foreign clients involved in all kind of cases in Argentina. Buenos Aires Argentina attorney professionals are knowledgeable in almost all the practice areas of law, to service its international cases in Buenos Aires Argentina. International clients will have the confidence of knowing that the case is being handled by an experienced and knowledgeable Buenos Aires  lawyer in Argentina.

www.kierjoffe.com

Argentina Visa Categories

As an Argentina visa applicant, you will need to establish that you meet all requirements to receive the Argentina Visa Categories for which you are applying. The purpose of your intended travel and other facts will determine what type of visa is required under Argentina immigration law.

Argentina Visa Categories

Migrant Worker: One who enters the country to dedicate him or herself to the exercise of a legal activity that is paid, with authorization to stay in the country for a maximum of three (3) extendable years, with multiple entries and exits, and with permission to work under a relation of dependency;

Rentier: One who pays for his or her stay in the country with his or her own resources brought from the exterior, from the rent that said resources produce, or from any other legal income from external sources (Shares, Certificate of Deposit, . These individuals are eligible for a term of residence of three (3) years, which are extendable and with multiple entries and exits;

Pensioner: An individual who receives borrowed services in the exterior or a pension whose amount allows him or her a regular financial income from a government or international organization or particular company. These individuals are eligible for a term of residence of three (3) years, which are extendable and with multiple entries and exits;

Investor: An individual who contributes his or her own assets to realize activities of interest to the country. These individuals are eligible for a term of residence of three (3) years, which are extendable and with multiple entries and exits;

Scientists and specialized personnel: Anyone who dedicates him or herself to activities of scientific, research-oriented, technical, or advisory nature, or activities contracted by public or private entities to realize work in his or her specialty. Likewise, directors, technicians and administrative personnel from public or private foreign enterprises that earn fees or salaries in the Republic of Argentina. These individuals are eligible for a term of residence of three (3) years, which are extendable and with multiple entries and exits;

Athletes and artists: Contracted for his or her speciality by physical or legal entities that develop activities in the country. These individuals are eligible for a term of residence of three (3) years, which are extendable and with multiple entries and exits;

Religious figures: from officially recognized religious creed, with legal capacity expedited by the Ministry of Exterior Relations, International Commerce and Worship, that enter the country to develop in exclusive form activities from his or her own worship. These individuals are eligible for a term of residence of three (3) years, which are extendable and with multiple entries and exits;

Patients under medical treatments: To attend to health-related problems in a public or private facility, with authorization to stay in the country for a year with the possibility of an extension, with multiple entries and exits. In the case of minors, disabled or those who are ill due to disease, may stay in the country with a chaperone, who may be a direct family member, legal representative or guardian;

Academics: Those who enter the country by virtue of academic agreements between institutions of higher education in specialized areas, under the responsibility of the institution that has contracted said individual. The agreement is valid for the term of up to one (1) year, with the possibility of an extension of the same period, with authorization for multiple entries and exits.

Students: Those who enter the country to complete secondary, tertiary or university studies or recognized specialties as regular students in public or private, officially recognized educational establishments, with the authorization to stay in the country for two (2) years, with the possibility of extension, with multiple entries and exits. Said individual must demonstrate formal registration in the educational institution in which he or she will complete said studies, and for the successive renovations, certification of his or her condition as a regular student;

Exilees or Refugees: Those who have been recognized as refugees or exilees will be authorized to reside in the country for the term of two (2) years with the possibility of extension for whatever duration is deemed necessary by the authorities in charge of exilees and refugees, determined by the circumstances that determine the existing legislation in the matter;

Humanitarian Reasons: Foreigners that evoke humanitarian reasons that justify special treatment according to the National Direction of Immigration;

The proven Buenos Aires – Argentina lawyer professionals at the Kier Joffe law firm have experience working with foreign clients involved in immigration cases in Argentina. Buenos Aires Argentina attorney professionals are knowledgeable in almost all the practice areas of law, to service its international cases in Buenos Aires Argentina. International clients will have the confidence of knowing that the case is being handled by an experienced and knowledgeable Buenos Aires  lawyer in Argentina.

For more information, just fill out the Quick Contact Form on the right or give us a call today, and we will get back to you.” 

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Argentina Visa Categories

Argentina Visa Categories

Argentina’s debt default – Payback postponed

The Economist

The dramatic showdown between Argentina and holders of its defaulted debt looked for a moment last week as if it was about to move one step closer to closure. Instead, the legal and financial tangle has become still more confused.

In 2001 the Argentine government reneged on $81 billion of liabilities. It staged two restructurings in 2005 and 2010, in which the owners of 93% of the defaulted debt agreed to exchange their holdings for new securities, at a 65% loss. The other creditors have held out for a better deal, which they hope to get through the courts. On March 29th, following a request by New York’s Second Circuit Court of Appeals, Argentina submitted a filing detailing how it proposed to pay these so-called “hold-outs”, who are suing it for $1.3 billion in principal and past interest. The plaintiff group, which consists of billionaire hedge funds and individual retail-investors, insists that a clause called pari passu (“equal step”) dictates that if Argentina is to continue paying back the bondholders who exchanged their defaulted debt, it must pay back the hold-outs too. Thomas Griesa, a district court judge, endorsed this argument in October. Now it is up to the appellate panel to determine how to fulfill his equal-treatment order.

In a move that frustrated many but surprised few, Argentina’s 22-page non-answer to the court was to offer the hold-outs a choice of discount bonds, par bonds or a combination of the two—essentially the same package the hold-outs have refused twice before. Argentina’s lawyers argued that the proposal satisfied the pari passu clause and asserted that plaintiffs cold not use the clause to “compel payment on terms better than those” given to the bondholders who exchanged their holdings in 2005 and 2010.

On April 2nd the court gave the plaintiffs three weeks to respond to the offer. Having spent 11 years and untold money on legal fees, the hold-outs are highly unlikely to accept such a deal, which makes it difficult for the appellate panel to accept the proposal as a genuine attempt to fulfill its request.

Choosing an alternative will be tricky. Argentina has already promised to defy any order to pay the hold-outs in full, and cautions that awarding the hold-outs their full claim could provoke “me-too” demands totaling $43 billion—more than Argentina currently holds in foreign-currency reserves. Such a ruling would have a worrisome and potentially fatal effect on future sovereign-debt restructurings worldwide, since it would eliminate incentives for accepting a haircut. A Goldilocks ruling in the middle would invite similar problems on a smaller scale.

Many believe that if the court does not accept Argentina’s proposed payment plan, Argentina will appeal to and have its case rejected by the Supreme Court. After that, few judicial avenues would remain to explore: the only choices would be to comply with the orders of the appellate court, or enter into technical default.

Most countries would scramble to avoid that. But Argentina has already sealed its reputation as a serial defaulter, making one more instance less daunting. The country doesn’t receive much external financing or foreign investment and economists suspect that defaulting would not damage the country’s GDP by more than 1.5%. That is not to say it would be painless. Argentina’s provinces and businesses would be worse hit, and consumer confidence would undoubtedly dive, propelling the black market exchange-rate even higher than its current level, 60% above Argentina’s official rate.

Should it choose to default, Argentina will also need to puzzle out how to continue paying holders of its restructured bonds—a difficult feat, but one which its leaders appear committed to undertaking. At a press conference on March 30th Amado Boudou, the vice-president (pictured above), seemed to be speaking to these “exchange-bond” holders when he insisted Argentina would continue to meet its debt obligations and affirmed his country’s “willingness and capacity” to pay, “whatever the result” of the case before the appeals court. In order to respect such a promise, Argentina would probably transfer its current New York-law bonds to Argentine law. This offer would be laughable under other circumstances, says Bret Rosen, head of Latin America research at Standard Chartered Bank. But “between getting paid something or nothing, exchange-bond holders will likely choose something, even if it comes with risks.”

The proven Buenos Aires – Argentina lawyer professionals at the Kier Joffe law firm have experience working with foreign clients involved in all kind of cases in Argentina. Buenos Aires Argentina attorney professionals are knowledgeable in almost all the practice areas of law, to service its international cases in Buenos Aires Argentina. International clients will have the confidence of knowing that the case is being handled by an experienced and knowledgeable Buenos Aires  lawyer in Argentina.

www.kierjoffe.com