Emergency Raises Anti-corruption Compliance Risks

The COVID-19 global crisis has given rise to several emergency regulatory changes by governments around the world, including the Argentine government.

Given this unprecedented global situation, time is the most sensitive variable. Therefore, “urgency” and “emergency” are the most frequently used words in both COVID-19-related regulations and operations developed by the companies regarding such regulations. It is safe to say that corruption risk is directly proportional to the degree of urgency. This is due to the fact that promptness in the decision-making process is usually accompanied by an inversely proportional loosening of the previously established control systems.

In such situations, companies can face breaches of their anti-corruption compliance procedures. Even worse, they may realize that their procedures are inadequate and not designed for this new reality. A similar situation may occur to governmental entities and public officials, which interact with such companies. If such situations give rise to acts of corruption, people may face fines and imprisonment  and companies may lose business.

In Argentina, the press has given extensive  coverage to food purchases by the Argentine government that exceeded the maximum selling prices set by the very same government. The press also covered alleged irregularities in the purchase of face masks and the payment of accommodation in hotels for patients who were mildly ill with  COVID-19 by the government of the City of Buenos Aires. Because of these situations, several public officers resigned or were removed from office.

Furthermore, the press also reported several donations from private sector companies to government entities in the light of the COVID-19 crisis. In many cases, medical supplies were donated.

In this context, the COVID-19 emergency has produced greater anti-corruption compliance risks that must be properly handled to limit or avoid them, wherever possible. In the future, many internal investigations can be expected to evaluate if certain behaviors during this crisis involved corrupt acts. The same future can be expected for several investigations performed by the authorities. This gives rise to a high exposure to potential sanctions and costs on companies and any individuals involved.