In a prior post for the FCPA Blog, Elena Lazareva wrote about Caso Penta — one of the biggest corruption scandals in Chilean history. As she said, the case is revealing hidden connections between business and politics in the country.
Caso Penta started in 2012 as a tax fraud investigation. Now it is taking on more importance as a landmark case dealing with the prosecution of companies. The prosecution may boost the enforcement of Law nº 20.393, which provides criminal liability of legal persons for offenses of money laundering, terrorist financing and bribery of public officials.
Chilean prosecutors requested a hearing to charge five Penta Group companies for bribery of two Internal Revenue Service’s officials and tax offenses. The hearing is set for November 18.
The companies — Inversiones Penta 3, BanPenta, Penta Sociedad Anónima, Inversiones Challico Limitadas, and Administraciones SantaSarella Limitadacan — could be punished with sanctions ranging from fines, restrictions on government contracts, and even dissolution.
Two Penta owners, Carlos Délano and Carlos Lavín, and three company administrators have also been charged with criminal offenses.
During the so-called Pentagate investigation, another company surfaced. SQM, a Chilean chemical and mining company, is being investigated for an alleged payment to the sister-in-law of Pablo Wagner, a former mining minister, in connection with award of a lithium-mining license.
SQM is also under indictment and investigation for tax fraud and violations of political campaign laws for allegedly funneling money to politicians on both sides of the political spectrum.
Concern in Chile is growing as enforcement of Law 20.393 is on the rise. The law on corporate criminal liability was enacted to meet the requirements of the OECD. There have been only three convictions so far under the law.
But the recent investigations and prosecutions have alerted companies to antibribery compliance. Already about 25 percent of “large companies Level 4” — defined by the Internal Revenue Service (SII) as all those who bill more than a million CUF (about $37 mllion)– are already “certified” to have effective compliance programs.
Lucas Zanoni is an undergraduate student of law at University of São Paulo and a legal intern in the compliance and anti-bribery team of Chediak Advogados. The firm offers legal assistance for both Brazilian and international clients across different industries and business sectors.