New Political Contribution Law
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Joint report of the Compliance and Public Law Departments | New Political Contribution Law
Dear Sir or Madam,
The Argentine National Congress enacted a law that allows companies to make contributions to finance political campaigns, within certain limits. It did so on May 15th, 2019, and it is an amendment to Law 26.215 regulating Financing of political parties, which prohibited donations or contributions destined to financing electoral campaigns. The following are some of the relevant points of the law, which should help companies adapt their anti-corruption policies regarding political contributions.
Contributions must be made through the banking system
The amendment establishes that private financing is “all contributions made either in cash or in kind”. Even so, if it is in cash, it requires to be made through the banking system in order to allow the reliable identification of the contributor and the traceability of the contribution. In this way, they “must be made only through bank transfer, bank deposit accrediting identity, electronic mediums, bank checks, credit or debit cards, or platforms and digital applications”.
A 2% limit for amounts by campaign and by company
The new law limits the amount that political parties can receive form private parties, per campaign. They cannot receive from the same legal entity “an amount of over 2% of the spending allowed for that year’s campaign”. This amount is set by the National Electoral Authority, on the basis of certain criteria, such as the number of electors registered on the previous year.
Increase in the limit for institutional financing contributions
The amendment also increases a legal entity’s contribution limit to fund political parties’ institutional financing. The previous law allowed a legal entity to contribute up to 2% of the allowed total expenses. Whereas, the new law increases the amount to 2%.
More companies can be punished
Regarding violations, the amendment keeps existing punishments and broadens companies that can be reached by them. Those that will be punished are the ones that violate limits to contributions, contribute anonymously, and those that, forbidden to make contributions, do them. The latter includes companies that are concessionaries or contractors of public services or works, or suppliers of the National government, provinces or municipalities or the City of Buenos Aires; legal entities in gaming industry; foreign legal entities that do not have residence or domicile in the country; and those indicted in a criminal procedure related to criminal tax law or under investigation by tax authorities.
Conclusion
The amendment seeks to add transparency in the interaction between the public and the private sector, in line with the progress being made in the fight against corruption. This being the case, it is important for companies to adapt their anti-corruption and bribery polities according to the new law.
Please, do not hesitate to contact us should you require any additional information on this matter.
Sincerely,
Maximiliano D’Auro
Oscar Aguilar Valdez