For CIPPEC, Increased Transparency and Good Governance Are Key to Creating an Equitable Argentina

At the end of 2020, the Center for International Private Enterprise (CIPE) sat down with members of one of Argentina’s leading independent think tanks, Centro de Implementación de Políticas Públicas para la Equidad y el Crecimiento (CIPPEC), to discuss the organization’s work and how it relates to CIPE’s anti-corruption efforts in Latin America. Public Management Coordinator, Paula Nuñez, shared CIPPEC’s vision for efficient public institutions and discussed their work promoting public policies that would make for a more developed and equitable Argentina.

Among their ongoing projects is an initiative to promote better governance and transparent management of Argentina’s state-owned enterprises (SOEs), which are scattered across multiple sectors including energy, water and sanitation, transport, telecommunications, and financial services.[1] In the interview, CIPPEC highlights how the current administration presents both challenges and opportunities for this initiative.

This interview is part of a series with CIPE’s partners in Latin America working on improving transparency and governance in SOEs.

Note: This interview took place in November 2020 and has been edited for length and clarity.

Can you describe the work you do at CIPPEC to improve governance and combat corruption in Latin America? Do you have any projects related to CIPE’s efforts to combat systemic corruption in the region that you would like to share?

CIPPEC had a justice and transparency program that worked as one of the main promoters of the national transparency law passed in 2016. Thanks to the support of CIPE, we have been able to return to this agenda as we are once again working on transparency and integrity issues within SOEs. The latest example of that is a new regulation regarding SOEs and gender equity in boards of directors. In it, our publications were quoted as evidence of the need to improve the presence of women on boards.

When we started this project with CIPE, there was no other organization producing updated information about state-owned enterprises and their related transparency, anti-corruption themes, and corporate governance. We were interviewed by the likes of the Organisation for Economic Co-operation and Development (OECD) and the Anticorruption Office of Argentina to discuss priorities for the integrity agenda for SOEs because we were the only ones that had applied research on SOEs. We were also interviewed by analysts and public officials, and our work is quoted in several academic journals, in the media, and even in some internal documents of public bodies.

This work opened the door for us to not only work on SOEs, but also…with different ministries – the Ministry of Public Works, the Ministry of Social Development and the Ministry of Transportation. With the Ministry of Public Works, other NGOs, and specialists we are currently going through an evaluation of the standards for public works. We are also leading a project to improve transparency in the Ministry of Social Development, which is very important in the context of the pandemic because there is a lot of financial aid being directed to individuals.

So I have to say, CIPE’s support for that project four years ago was very important. Since then, this work has kept growing over time, beginning with SOEs at the national level and now involving work with other parts of the government.

Corruption, or the abuse of entrusted power for private gain, affects countries to varying degrees around the world. To what degree is it a problem in Argentina and what impact does it have on Argentina’s democratic institutions?

It is not easy to answer that question accurately. In reality, you do not have to apply research to determine levels of corruption as it is solely based on perception. It is as if the perception of corruption is the only thing you have because you can go to any given country and see people convicted for corruption, but you never see what’s behind that. So I can talk about my personal perception, having talked with public officials and state employees from different sectors and of different seniority levels.

I do not think that corruption in Argentina is only concentrated in the few people in power. You can find corruption everywhere and on all levels, at the national level, provincial and local governments, central administration, SOEs, etc.

I believe citizens have the perception that Latin American culture is more prone to corruption. Personally, I think the problem with corruption is a combination of lack of ethics and values, as well as lack of control and punishment. It cannot be explained by only one factor. I think the difference is that in more developed countries, sounder institutions and increased controls put high barriers in place to discourage unethical behavior. On the other hand, the presence of these barriers also shapes culture to an extent.

When it comes to data, all we have is the Corruption Perceptions Index that Transparency International publishes annually. In the case of Argentina, our ranking has climbed from 85th in 2018 to 66th in last year’s publication. I would say that was largely due to the government making a huge effort over the last four years to fulfill international commitments to fight corruption, such as enacting the recent transparency law and strengthening the online public procurement process. The government was very motivated to implement those reforms.

The main reason to focus on SOEs is because they provide public goods and services relevant to social and economic development. But they also have corruption risks that are different from other areas of government. For instance, they manage large contracts and have more flexible systems for contracting than other sectors. In addition, they also develop and maintain close relationships with government officials.

In fact, one of the biggest problems in Argentina is that SOE boards of directors are not independent as they are appointed by, and answer to, the ministry. Traditionally, that closeness to political circles has also been pointed out as a major problem that can lead to conflicts of interest and, ultimately, corruption. In regards to its impact on democracy, I would say that the lack of independence and accountability in democratic institutions has made corruption easier and affects the legitimacy of the state.

I think the best way to think of it is as a vicious circle where corruption occurs and affects people’s access to better quality services. For instance, let us say an infrastructure SOE buys low-quality supplies from a vendor they want to benefit. The SOE ends up spending more to repair or replace the issues and may even pressure auditors not to highlight the problem. This kind of cover up can put people’s lives in danger and ultimately results in additional state funds to finance the mismanaged company.

How have you benefited from working on these issues with local, regional, and global partners? How are these partners important to your organization?

I believe the work we have been doing with local, regional and global partners the last three years is very important. There is this saying that if you really want to know your country, you need to leave your country to have a better understanding of where you are and your place in the world. So I believe that is what the rational and global approach provides for this kind of process and, in this case, for transparency and integrity. When you have global standards, nobody is going to have the will to reinvent the wheel. You need to understand the global standards in effect in other countries and draw from these experiences.

In our case, we are working with regional partners by exchanging experiences and consulting one another. For instance, right now we are developing a transparency index for SOEs. We have been developing diagnoses, but an index is a much more accurate way to measure the deficit. Our partners in México Evalúa developed a similar index last year and so we consulted that index to develop our own methodology. Similarly, we invited the Instituto Brasileiro de Governança Corporativa (IBGC) from Brazil here to Buenos Aires to provide training on corporate governance because in Argentina, the integration of corporate governance in state-owned enterprises is at a standstill. At the time, there was nobody in Argentina with the necessary knowledge because it involves a very specific kind of corporate governance. Our partnership with these organizations is very important as it allows us to collaborate and leverage the quality of our work as a team.

The same can be said about our local partners in Argentina. We devote time and resources to strengthen our civil society networks, which is very important because one of the main problems here is the lack of state policies. Traditionally, priorities have tended to shift with every new incoming government, magnifying the role and need for civil society to provide oversight when these changes in priorities occur.

We are happy to see that this new administration, despite coming from a different political color, is picking up where the last government left off, at least in terms of preventing corruption. So while we have had major advances in the last five years with new regulation and a new control system, there is still a lot of work to do.

Can you describe your existing relationships with government and SOE officials? How have those relationships affected the progress of your transparency initiatives?

The people holding these positions change regularly and between administrations some of the government relationships remain and others do not. While part of the turnover from one administration to the next is expected, including changes to ministers, secretaries, political chairs, state workers and all that, you also have significant turnover with people in middle management positions.

This phenomenon regarding widespread changes with every incoming administration has been going on in Argentina in the last decades. . Although these positions were once perceived to be the highest attainment for those pursuing public careers and used to be filled based on one’s technical expertise, they have now become political positions. In the case of SOEs, we have seen boards of directors leave their posts when they were supposed to. However, we have noticed, in the case of certain compliance officers, that they are also leaving their positions when they are supposed to remain with changing administrations. So to answer your original question, while we only have a rough estimate of the number of government and official connections remaining, I would say that more than half are now gone.

Now this is where we have to begin again each change in administration in terms of rebuilding our institutional relationship with the government. This takes time and effort, but these connections with public officials are particularly important if you want to make certain changes happen.

What have been some of the biggest obstacles and largest successes related to your SOE transparency initiatives in Argentina?

I would say that one of our greatest successes has been that because of the work we have done we are frequently referenced in this space and are invited to participate in roundtables and meetings to present good practices, perform evaluations, and develop legislation. Through the roundtables we stay up to date with what is really going on in discussions between public officials and experts. This also allows us to enrich our ongoing processes and have the opportunity to develop new projects, such as positioning ourselves as reference experts on issues beyond SOE corporate governance.

Due to our background, we were invited to participate in a roundtable regarding a new ethics law in the province of Buenos Aires, one of the main provinces in Argentina, which had no such law for the last 20 years. We were also called by the City of Buenos Aires to help brainstorm a law around integrity and corporate governance of SOEs. Those were major milestones, ones which we were able to participate in thanks to our experience and background.

Also, I forgot to mention the Inter-American Development Bank’s Network of State-Owned Enterprises and how we have been participating at that roundtable as well. We are in the loop with this multilateral group which helps our long term development. Inter-American Development Bank experts have expressed interest in learning more about our research.

What’s next for CIPPEC?

We not only look forward to continuing our ongoing projects, but also increasing our participation in other types of activities. Pursuing avenues separate from our existing projects particularly benefits us because in these cycles where you have all these changes in the government, being in different spaces allows us to better position ourselves and our work with the new administration as we seek to build those relationships. In the future we will continue to work with the relevant ministries to extend our knowledge and to work with other types of governmental bodies beyond SOEs so as to be able to influence even higher levels of policy making and decision making.

Learn more about CIPPEC’s work promoting transparency and integrity in Argentine SOEs here.

Cover photo: Pxhere

[1] SOEs CIPPEC has worked with include: Administración de Infraestructura Ferroviarias S.E.; Administración General de Puertos S.E.; Aerolíneas Argentinas S.A.; Agua y Saneamientos Argentinos S.A.; Banco de Inversión y Comercio Exterior (BICE); Banco de la Nación Argentina; Belgrano Cargas y Logística; Casa de la Moneda S.E; Construcción de Viviendas Para la Armada (COVIARA); Contenidos Públicos; Corredores Viales; Correo Oficial de la República Argentina S.A.; Dioxitek S.A.; S.E.; Empresa Argentina de Navegación Aérea Sociedad del Estado (EANA S.E.); Empresa Argentina de Soluciones Satelitales S.A. (AR-SAT); Empresa de Cargas Aéreas del Yacimientos Minero Agua de Dionisio (YMAD); Fábrica Argentina de Aviones “Brigadier San Martín” S.A.; Fabricaciones Militares S.E.; Innovaciones Tecnológicas Agropecuarias S.A. (INTEA); Integración Energética Argentina; Intercargo S.A.; Nucleoeléctrica Argentina S.A.; Operadora Ferroviaria S.E.; Playas Ferroviarias de Buenos Aires; Polo Tecnológico Constituyentes; Radio de la Universidad Nacional del Litoral S.A.; Radio y Televisión Argentina Sociedad del Estado (RTA S.E.); Servicio de Radio y Televisión de la Universidad de Cordoba S.A. (SRT-UNC); Talleres Navales Dársena Norte S.A.C.I. y N. – Tandanor; Télam S.E.; Trenes Argentinos Capital Humano; Vehículo Espacial  de  Nueva Generación S.A.; Yacimientos Carboníferos Río Turbio (YCRT); YPF S.A.