Argentina Customs Fraud Scheme Harkens Back to Venezuela

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A customs fraud that allegedly allowed a criminal network to steal millions from Argentina’s government looks eerily similar to how some of Venezuela’s private businesses and corrupt government officials have also benefitted from that Andean nation’s efforts to manipulate currency values.

Argentine authorities conducted 23 simultaneous search warrants and arrested 10 individuals accused of defrauding the state by more than $300 million between 2012 and 2015, according to a July 11 press release by Argentina’s Security Minister.

The scheme was rooted in the difference between the dollar’s official value against the Argentine peso and its informal black market price. Authorities claim that 55 front companies were used to falsify Anticipated Sworn Declarations of Importation (Declaraciones Juradas Anticipadas de Importación – DJAI). These documents allowed import companies to buy dollars from the government at a subsidized price in order to buy foreign goods. Argentina’s previous administration artificially boosted the value of a peso, so an official dollar was worth much less than on the black market. But under the scheme, DJAIs were produced for goods that were never imported and with the sole purpose of buying cheaper official dollars, before selling them at a much higher price on the black market exchange.

The investigation, initiated last year after an official complaint from the director of Argentina’s customs agency, focuses on a network of textile companies owned by members of Buenos Aires’ Korean community, according to Infobae.

Infobae, which described the well-structured network integrated by professional accountants as a “mafia,” notes that not a single official has been charged for corruption, even though the official press release admits that bribes were paid.

InSight Crime Analysis

The scheme currently investigated in Argentina illustrates how organized crime can profit from government monetary policy, as well as a good dose of corruption.

The sum involved may appear large, but other regional country’s losses to such frauds are measured in percentages of the gross domestic product and reach the highest levels. In Guatemala, for example, corruption reached as high as the president, who was directly leading and benefitting from a vast customs fraud, according to government investigators prosecuting the case.

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Argentina’s case, however, appears to have more similarities to Venezuela. Indeed, the latter’s government control of currency exchange rates and the sale of dollars was exploited to embezzle as much as $70 billion in a decade, reported The New York Times. And following a regional pattern, corruption stood as a primary factor enabling these frauds.

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