In 2007, the state-owned Energy Argentina SA (ENARSA, for its acronym in Spanish), obtained loans to buy shares of an electricity company. By its nature, an entity created in 2004 is subject to the Financial Administration Act 24,156, but according to a report by the General Audit Office (AGN), two areas of the same firm have "discrepancies" on the application of the standard transaction, which totaled 27 million dollars.

On the one hand, the AGN says it was the Supervisory Committee of ENARSA itself which observed that "it has not been taken into account as prescribed in Articles 52, 57, 59, 61, 63, and 66 of Law 24,156" to buy Transener shares, a company that is responsible for controlling the power network of extra high voltage. And, to cite one example, Article 59 of the regulation provides that "no national public sector entity may initiate proceedings to public credit transactions without prior approval of the coordinating body of the financial management systems." This was not done by the State.

However, the board of the company responded to the AGN having "another perspective" on the scope of the Act, to understand that "the provisions of the norm-referenced systems, internal and external control are applicable only" of their management.

The audit adds that this "discrepancy" got to the Ministry of Federal Planning, which oversees ENARSA-who is under the aegis of the Treasury Solicitor's Office, to be the agency that will determine the scope of the law. At the end of the investigation, the Attorney General had not ruled on the matter.

"The company only considers those issues in respect to the preparation of the budget," says the AGN, but adds that "it does not fit the budget nor does it handle paperwork as it should" On the purchase of Transener shares and budgetary maneuvers, the Comptroller General (SIGEN) had written about this in a report published in 2008.

The Operation

Transener is a company controlled by the Investing Company Electricity Transmission (CITELEC SA). Until 2007, its shareholders were Petrobras were Transelec in equal shares. In 2005, a provision of the Energy Department set to sign a divestment obligation for which Petrobras had to sell their shares.

That’s how ENARSA comes into play. The state owned company bid 27 million dollars for Petrobras’ shares. Electroingeniería took the other half for the same amount.

The transaction was completed on June 27th, 2007. EARSA paid an advancement of 5.4 million with their own resources, and then made three disbursements, two 8.1 million through two loans, and the last for 5,4 million, with funds from the second loan.

Upon purchasing, the audit revealed that "the Board of ENARSA did not provide the Audit Committee all the information requested, in the exercise of power of review with respect to the business faced by society." Despite the amounts involved, the report noted that "the Commission could not issue the purchase, the characteristics of the financial loan, the payment, and repayment capabilities to solve this, the risk of the loan and the interest rate". This information was requested by the Commission itself during Board meetings numbers 46, 56, 59, 60, 61, and 66, in which the purchase of CITELEC’s shares were discussed, arising from the minutes to which AGN had access.