The Argentine arms trafficking scandal involved illegal arms shipments of 6500 tons of weapons and ammunition from Argentina to Croatia and Ecuador between 1991–1995. At the time of the shipments Croatia was under a United Nations arms embargo, and Argentina was prohibited from selling weapons to Ecuador under the terms of a peace agreement signed in 1942.
The sale of weapons to Ecuador took place in the midst of armed conflict with Peru. The scandal was very important in Argentina because they were among the four official guarantors of peace of the Treaty of Rio de Janeiro, which breached its international commitment and missed with its obligations under international law, and in Peru also, since it damaged the long friendship between the two countries, that was highly boosted during the 1982 Falklands War, when Peru sent weapons, fighter planes and soldiers to help Argentina against Great Britain.
Shipments to Croatia began in 1991, to do this President Menem signed two secret decrees, endorsed by several ministers, and continued from 1993 until 1995, when Menem affixed his signature to a third secret decree for the same purpose.
According to these two decrees of 1991 weapons were destined for Panama and as the third in 1995, to Venezuela. None of these countries had ordered weapons from Argentina before, at that time Panama also lacked a proper army after the 1989 United States invasion of Panama. Most of the weapons were diverted to Croatia which in the middle of the war in Yugoslavia, needed weapons, and the rest to Ecuador in 1995.
Seven shipments where made by sea to Croatia, the first one in 1991 with military equipment produced by the Dirección General de Fabricaciones Militares (Government military Industries), the six other shipments contained weapons from regular army units like 155 mm cannons, and cannon powder, Italian Oto Melara mortars. FM offered the weapons used and refurbished, and Croatia accepted them.
It was estimated that a total of 6500 tons of trafficked weapons and ammunition where smuggled. The weapons were built by FM, some army serial number and Argentine coats of arms were removed from cannons and weapons in the military factory in Rio Tercero that later exploded in a sabotage action created to remove evidences that destroyed half the city causing several deaths. Most of the witnesses in the trial of the explosion have died in bizarre accidents.
The confession of former Controller of Fabricaciones Militares, Luis Sarlenga, which prompted on June 2001, to process and send house arrest Carlos Menem done by the federal judge Jorge Urso.
Six months later, the Supreme Court issued a controversial acquittal in which the former president was released.
However, in 2007, was prosecuted again for the economic criminal judge Rafael Caputo, who was prevented from leaving the country and issued an order to seize their property.
Despite this, the former president is protected by legislative privileges accruing to him as senator from the province of La Rioja. In the case were also involved former economy minister Domingo Cavallo, former Defense Minister Oscar Camilion and former Air Force Brigadier Juan Paulik.