According to the Auditor General's Office (AGN, for its acronym in Spanish), the Trust Fund for Reconstruction Companies (FFRE) has no guarantees of assisted entities to serve as safeguard against possible problems in the repayment of loans and does not control the fulfillment commitments of assistance agreements.

The Fund primarily has the function of giving loans or guarantees to financial institutions (whether they are health insurance providers, education, goods and services, cultural or technological, etc.., and their control bodies), within a capitalization process and strengthening of Argentina’s economic system.

While the AGN said that the financial statements of FFRE "present fairly, in all respects, its financial position", it found that there are "deficiencies in the internal control system" and that "there is no evidence of monitoring by the trustee on the implementation of the commitments made by the entities to be assisted”.

Back in 2004, the General Office of the Comptroller (SIGEN, for its acronym in Spanish) had identified weaknesses in the internal control system to determine that "the loans did not meet the requirements to ensure that the assets borrowed be returned in a timely manner." As a result, in 2005, the Anticorruption Office initiated a criminal complaint for "embezzlement, breach of duties of public officials and fraudulent administration," however; the AGN said "no constant background monitoring of such cases in the trust files".

In turn, the audit indicated that there is no unified documentation related to the financing, the existing filed "do not include the requirements of Award", they also don’t contain information for the rights guaranteed by the assisted entities, nor insurance on the mortgaged or pledged in favor of the trustee”.

In fact, the watchdog said that "the administration of loans is done manually and so is the accrual of interest." Even the Trust Fund "is done by manually entering the results into the accounting system" which then records the calculation of the repayment, capital, calculation of penalty interest, etc.

Accounting Information Is Sought

According to the report, approved last year over 2006 figures, "FFRE accounting was made by external professionals -without supervision from the Fund, from the beginning of its activities until 2004." These professionals used accounting systems that "the trustee did not have access to." The AGN says that when the employment relationship is broken, "the FFRE could not retrieve their accounting information and had to redo all accounting since 2001."