Recent Developments in Argentina

01/03/2002

© 2002 Haynes & Boone, L.L.P.

Resignation of Two Argentine Presidents.  In late December 2001, Argentina saw the rare occurrence of the resignation of two Argentine Presidents.  First, Fernando de la Rúa resigned after public protests to the administration’s economic policies resulted in civil unrest.  Also resigning at the same time was his Minister of Economy Domingo Cavallo.  This development was followed by the resignation of the recently designated President Rodriguez Saá, a member of the Peronist party, who served approximately one week.  In response to the resignation of President de la Rúa, the Argentine Congress called for a presidential election on March 3, 2002 to fill the remaining two-year term of President de la Rúa.  However, after the resignation of Rodriguez Saá, Congress cancelled the call for a presidential election and designated Eduardo Duhalde, a former Vice President under President Menem and member of the Peronist Party, to serve as President until 2003.  Duhalde lost the presidential election to de la Rúa in 1999.  President Duhalde will face many political and economic obstacles, including an overvalued Peso (due to the long-standing Convertibility Law), a prolonged recession, and the renegotiation of Argentina’s debt to foreign creditors, for which there has been a default.

Adoption of New Exchange Control Decree.  Prior to resigning, former Argentine President de la Rúa signed, effective December 3, 2001, Decree 1570-2001 (the “Exchange Control Decree”) which limits the amount of money that may be withdrawn from an Argentine bank or sent abroad.  The Exchange Control Decree was prompted by a run on Argentine banks which had resulted in nearly 20% of the total bank deposits leaving the country.  The Exchange Control Decree restricts individuals or legal entities from withdrawing more than $1,000 per month from their bank accounts.  In addition, checks in excess of $250 may not be cashed, but may only be deposited in Argentine bank accounts.  In addition, individuals will not be able to leave the country with more than $1,000 in cash and the transfer of money abroad is prohibited with the exception of import/export sales.  The Exchange Control Decree was purportedly temporary in nature and only scheduled to last 90 days.

 
Issuance of Data Privacy Decree.  On December 2, 2001, the Executive Branch issued Decree 1558-2001 (the “Data Privacy Decree”), which regulated Argentina’s Data Privacy Law No. 25,326 adopted in November 2000.  In general, the law, adopted on the EU model, distinguishes between “personal data” and “sensitive data” and provides different treatment depending upon the classification of the data.  “Sensitive data” is defined as data that reveals ethnic and racial origin, political opinions, religion, moral or philosophical opinions, and health and sexual preference information.  All other information is defined by implication as “personal data.”  With respect to sensitive data, nobody shall be obliged to reveal such information and the formation of a data base with sensitive data is prohibited.  With respect to personal data, the transfer of such information is only permitted when the assignment is necessary to further a legitimate interest of the assignor or the assignee and with the express prior consent of the assignee.  The Data Privacy Decree also prohibits the transfer of personal data to countries that do not provide adequate levels of privacy protection.  In addition, the National Directorate for the Protection of Personal Data, formed pursuant to the Data Privacy Decree, will, upon the request of an interested party, evaluate the protection offered by another country with respect to its privacy protection.  The Directorate is in the process of designating public officials to carry out its mandate.  Finally, in addition to potential criminal liability and civil liability for damages, the National Directorate may impose administrative fines for violations of the law ranging from $1,000 to $100,000 per violation.

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