Recent developments in internal investigations: Argentina
Marval O´Farrell Mairal, Buenos Aires
Marval O´Farrell Mairal, Buenos Aires
Argentine criminal courts have consistently held that private citizens have the right to conduct their own private investigations for the purposes of protecting their own interests and rights (National Criminal Court of Appeals, Section V, in re Scaturchio, Miguel et al, 13/07/16).
In fact, Argentine criminal courts have frequently relied on evidence thus collected, which was ruled admissible and valid for the purposes of substantiating criminal convictions (Federal Court of Cassation, Section III, in re Abramovici, Bernardo, 04/03/15).
However, internal investigations remain mostly unregulated. Private individuals or companies may conduct their own internal investigations with no specific legal or regulatory requirements. On the other hand, third-party professionals specialising in investigation or evidence collection services may be subject to licensing and regulatory requirements, depending on the relevant jurisdiction.
Relevant laws and regulations
Law No 27,401 on Corporate Criminal Liability came into force in 2018, marking the most important anti-corruption milestone of the past decade. It introduced corporate liability for certain bribery-related offences, which until then applied only to individuals. Although the act does not specifically regulate internal investigations in terms of procedure and admitted practices, it does stipulate that the results thereof may serve as the basis for avoiding criminal sanctions.
More recently, the National Anti-Corruption Office issued non-mandatory ‘Guidelines for the Implementation of Integrity Programs’, stating that a robust compliance programme should include internal investigation protocols. Most notably, these guidelines point towards balancing the employer’s right to control and supervise its activity, with the employees´ legitimate expectation of privacy.
Case law on permitted/forbidden investigative activities
The company conducting an internal investigation is not required to give any specific form of warning to an employee that they are in fact the target of an internal investigation. Therefore, if the individual agrees to be interviewed and volunteers incriminating documents and/or information, these may be used as charging evidence in court (Argentine Supreme Court, case file CFP 18579/2006/266/1/RH3).
Under Argentine criminal law, it is not a criminal offence for the participant of an in-person conversation (or communication of any nature, for that matter) to record the content thereof, regardless of whether the other participant(s) consent(s) to, or is even aware of, such recording (National Criminal Court of Appeals, Section VII, in re Lazarte, Miriam, 15/07/16).
Argentine criminal courts have long held that from the moment that a person willfully engages in a conversation with another, they accept the risk that such communication may be recorded or otherwise documented by the other participant (National Criminal Court of Appeals, Section V, in re Miranda, José, 18/08/16). Specifically, the National Criminal Court of Appeals has confirmed the validity of covert recordings, when made by the victim for the purpose of supporting a criminal action (Section VII, in re Dorado, Flavio Alejandro, 28/09/2018).
There is no distinction in relation to the way in which the conversation is documented (eg, tape recorded, videotaped, photographed, etc). Indeed, Argentine criminal courts have consistently held that parties to a communication are free to document the contents thereof in any way they see fit, even if such documentation is conducted covertly.
Prevailing case law holds that employers may review employee emails, provided that they are given prior written notice of that possibility. In that scenario, Argentine criminal courts have held that the employee has no legitimate expectation of privacy over the content of company emails. (National Criminal Court of Appeals, Section II, in re Crisculolo, Lino; 16/10/2009).
Office space search
In general terms, Argentine criminal courts hold that the employer is not allowed to search private spaces assigned to an individual employee, in the understanding that they have a legitimate expectation of privacy over said spaces. In this sense, the Federal Criminal Court of Appeals held that an employer may not search an employee’s locker without a court order, even if there are reasonable grounds to suspect that a crime may have been committed (Section I, in re Farías, Diego Hernán, 28/04/2009).
Legal privilege on the results of the internal investigation
At the national level, criminal proceedings are governed by the National Code of Criminal Proceedings (NCCP) and the Federal Code of Criminal Proceedings (FCCP), which will fully replace the former by 2024. Both codes recognise the attorney-client privilege (ACP) and regulate its procedural implications for the purposes of internal investigations.
Section 244 of the NCCP states that attorneys are barred from testifying about facts or circumstances in their knowledge on account of, or by reason of, their profession.
Section 232 of the NCCP limits the court´s subpoena powers, stipulating that a subpoena may not be directed to any person bound by a duty of professional secrecy. Furthermore, section 237 of the NCCP precludes seizure of letters or documents exchanged between an attorney and his or her client, for purposes of legal counselling.
In similar terms, section 160 of the FCCP bars attorneys from testifying in connection with information known to them on account of their legal profession. Section 149 of the FCCP states that individuals bound by professional secrecy duties may refuse court document subpoenas. Finally, pursuant to section 147 of the FCCP, those individuals bound by the prohibition to testify are likewise exempt from the duty to produce relevant documents upon court or prosecutor request.
Relevant ACP regulations make no distinction between outside or in-house counsel. Therefore, insofar as the internal investigation is conducted or directed by a licensed Argentine attorney, ACP provisions will apply to the results thereof.
Internal investigations and self-reporting
Law No 27,401 introduced the possibility of avoiding criminal sanctions for corrupt practices when companies spontaneously self-report to relevant authorities.
In this sense, the legal entity may be exempted from penalties if it: spontaneously self-reports the relevant crime, detected through an internal investigation; had an integrity programme in place, the bypassing of which required a substantive effort by the wrongdoers; and disgorges ill-gotten gains.
Partial compliance with these requisites means that the company will not be exempted from the application of the relevant penalty; although, it may be still considered as a mitigating factor for sentencing purposes.
However, exemption from penalties does not mean exemption from a criminal investigation. The prosecutor is not required (and is also unlikely) to take company reports at face value. The prosecutor will probably conduct a full investigation to validate the terms of the report, clarify all relevant facts and define applicable criminal sanctions.
In that process, neither the court nor the prosecutor are precluded from exercising normal investigative powers, including – but not limited to – the possibility of issuing subpoenas for additional information, summoning witnesses, moving for a raid or freezing company assets.
Criminal proceedings are essentially dynamic, meaning that the court and prosecutor may expend the scope of the investigation if they understand that additional facts warrant further scrutiny. That is, the prosecutor will not be limited in his or her investigative powers by the factual allegations made in the self-report.
Also, self-reporting does not ensure immunity against other non-criminal allegations (eg, antitrust actions, consumer class action), which could also have substantial adverse consequences.
Due to these (and other) shortcomings, self-reporting under Law No 27,401 remains an untested mechanism in Argentina. There are no judicial, prosecutorial or administrative guidelines to understand how federal authorities would react to a filing of this nature.
In general terms, the Argentina system has very few incentives to self-report, as compared to other jurisdictions where this mechanism is more mature. However, if the investigation involves multiple jurisdictions and the company decides to self-report abroad, then following suit in Argentina would avoid eventual prosecutorial claims of: an inconsistent behaviour in different countries; an attempt to conceal the matter in Argentina; and a lower ethical/transparency standard for Argentine operations.
Specific considerations for collection of digital evidence
Although internal investigations are generally unregulated, federal and provincial courts observe good practices for the collection of digital evidence for the purposes of evaluating admissibility in the context of a criminal proceeding.
Therefore, if an internal investigation in Argentina entails collection, preservation and/or treatment of digital evidence, the company should observe any of the three set of best practices accepted by local authorities: (1) The ‘Public Ministries’ Guide for Evidence Collection and Preservation’; (2) the Cybercrime Prosecutorial Unit’s ‘Guide for Digital Evidence Collection, Preservation and Treatment’; and/or (3) ISO Standard ISO/IEC 27037:2012 on Digital Evidence Collection.
In short, the regulation of internal investigations in Argentina is still in its infancy, as compared to other jurisdictions. In very general terms, they are mostly used as a means for collecting evidence towards the prosecution of company employees and/or third parties, rather than a defensive measure towards spontaneous self-reporting.