Failure to transfer to Argentina and sell for pesos the foreign currency proceeds of certain exports

In re “Cosméticos Avon S.A.C.I. s/ inf. Ley 19.359”, Tribunal B of the Court of Appeals for Economic Criminal Matters –in the recently published decision dated February 8, 2008- partially confirmed the decision of the lower court, imposing fines to the company and the chairman of its Board of Directors. As a result, the Court of Appeals accepted some of the main arguments sustained by the Central Bank in many of the administrative proceedings prosecuted against Argentine companies for infringing the Foreign Exchange Criminal Regime (established by Law No 19,359, as amended) during the economic crisis that started on December 2001.

The decision of the Court of Appeals concluded the following:

a)           As a general rule, in foreign exchange criminal matters, guilt is presumed. Therefore, the burden of proof is shifted: the defendant must prove the absence of responsibility in the case.

b)           Legal entities are subject to criminal responsibility and a prior sentence against an individual is not required for such purpose, as long as the infringement is committed by the individual on behalf of the legal entity.

c)           Criminal responsibility of the chairman of the Board of Directors cannot be based exclusively on the fact that the chairman held that position when the infringements occurred.

d)           The mere infringement of foreign exchange regulations is enough to constitute a violation of the Foreign Exchange Criminal Regime, and no real damage is required.

This last conclusion contradicts the arguments held by Tribunal A of the same Court of Appeals in re “Hijos de Pedro Vincenti S.A. s/ infracción Ley 24.144” (please see “Failure to transfer to Argentina and sell for pesos the foreign currency proceeds of certain exports” published in Marval News # 73 dated June 30, 2008), which concluded that the duties of the exporter regarding the obligation to transfer to Argentina the foreign currency proceeds are not absolute but subject to certain conditions, and that the economic crisis that affected the Argentine economy during the time of the alleged infringements justified the delay of “over a month” in transferring the foreign currency proceeds to Argentina.

The tenor of the decision held in re “Cosméticos Avon”, and its differences with the ruling in re “Hijos de Pedro Vincenti S.A.”, rekindles the judicial and doctrinarian debate in this matter and confirms the importance that the defenses submitted in the administrative proceedings prosecuted by the Central Bank for alleged infringements to the Foreign Exchange Criminal Regime adequately reflect and address the implications of those decisions.