auditors often leaked the information. However, the media’s interest in audit work tends to focus on highly visible corruption scandals, rather than more mundane efforts at improving public sector efficiency.
To fully understand the determinants of the effectiveness of the AGN, it is necessary to inquire into its historical origins and institutional trajectory. The AGN emerged in 1992 as part of broader efforts to discipline public finances and rationalize public budgeting (World Bank 2001; Uña et al. 2005). By the end of the 1980s, the budget process had dramatically deteriorated to the extent that it became irrelevant (Petrei 1998). No budgets were approved in 1990 and 1991. 18
Under pressure from international financial institutions, the 1992 reform of financial administration was designed to tackle the disarray in public budgeting and government finances. However, the government’s original proposal for a new federal AAA was significantly altered during the legislative debate, which lasted for a year and a half, from April 1991 until September 1992 (Makón 2002; Baglini 2002). The main areas of contention centered on the features and functions of the AAA.
The AGN replaced the National Tribunal of Accounts (Tribunal de Cuentas de la Nación, TCN), established in 1956 as a court-type AAA modeled after its French and Spanish counterparts. It was made-up of five permanent members with life-tenure, tasked with controlling legal and financial compliance of federal public finances. It possessed ex-ante control authority and was endowed with quasi-judicial enforcement powers. The TCN reviewed ex-ante the legality of the executive actions, including executive decrees, and was able to suspend or annul them. In addition, the TCN judged the public accounts of public administrators and held accountability proceedings.
Yet, despite having wide powers, the performance of the TCN was uneven. By the end of 1980s, there was a broad consensus that the TCN needed reform. However, there is evidence to suspect that the decision to abruptly change audit system, rather than introduce changes to the existing system, was designed to neutralize external constraints on executive discretion. In the first months of the Menem administration, the TCN conflicted with the president’s expeditious style of government and his reliance on urgency decrees. Allegations of corruption emerged, especially in the privatization process and public procurement, including overpricing and favoritism. The TCN questioned several executive decrees and exposed financial improprieties by government officials (Morgenstern and Manzetti 2003).
When it became too much of an irritant, the TCN was eventually dismantled. In March 1990, Menem dismissed the members of the TCN and replaced them with close allies led by his own brother, Eduardo Menem, in flagrant violation of the law according to which auditors-general could only be fired if impeached by the Senate. The courts recognized this abusive dismissal several years later. Not surprisingly, the TCN ceased to create problems for the government. Upon neutralizing TCN’s administrative oversight, Menem pushed through the legislature the new financial administration law, which led to the replacement of the TCN by the AGN. Between 1990 and 1993, the AAA was thus effectively neutralized.
Anecdotal evidence suggests that this maneuver was intentional, similar to the well-documented packing of the Supreme Court.19 It represents another example of the strategies deployed by the
18 The last budget submitted to the legislature within the statutory deadline was in 1966 and the last budget formally approved by the legislature within the required time was in 1954 (Makón 1997).
19 Other administrative oversight institutions neutralized in the first years of the Menem administration included the Fiscalía Nacional de Investigaciones Administrativas and Sindicatura General de Empresas Públicas (SIGEP).