The Argentine Congress approved a new law last month that criminalizes corporate bribery and corruption and imposes requirements for compliance programs.
The new law also sets out rules for reaching settlements with the authorities in bribery investigations.
Before the approval of this law, legal entities were only criminally liable in a limited number of cases such as money laundering, tax evasion and smuggling. Similarly, there were few instances in which companies were required to or received credit for having compliance programs in place, such as under money-laundering regulations.
The new law makes legal entities criminally liable when the following crimes are committed, directly or indirectly, with their intervention or on their behalf, interest or benefit:
- local or international bribery and influence peddling
- negotiations that are incompatible with public office
- illegal payments made to public official under the appearance of taxes or fees owed to the relevant government agency upon undue request by a public official (“concusión”)
- illegal enrichment of public officials and employees, and
- producing aggravated false balance sheets and reports to cover up local or international bribery or influence peddling.
Penalties include fines ranging from 2 to 5 times the “undue” benefit that was obtained or that could have been obtained.
Additionally, defendants can forfeit assets obtained through the illegal actions, disgorge profits, and be debarred from government bids and contracts.
Legal entities are exempted from penalties and administrative responsibility when they
(a) self-report a crime set forth by this law as a consequence of internal detection and investigation
(b) established a proper control and supervision system before the facts under investigation occurred and breaching such system required an effort by the wrongdoers, and
(c) return the undue benefit obtained.
Legal entities under investigation for breaching this law may enter into effective collaboration agreements with the authorities seeking a reduction in penalties. The entity is required to disclose precise and verifiable information that is useful for the investigation, pay 50 percent of the minimum fine, disgorge gains obtained through the illegal actions, and voluntarily hand over assets that would be forfeited in case of conviction.
The new law requires legal entities involved in certain contracts with the federal government to implement compliance programs.
The compliance programs, according to the new law, must be appropriate to the risks, size and economic capacity of the entity and include a Code of Ethics, internal policies and training.
Compliance programs may also include periodic risk analysis to improve the program, support from top management, whistleblower reporting lines, internal policies to protect whistleblowers from retaliation, among other elements.
This new law becomes enforceable 90 days after being enacted by the President and published in the Official Gazette.
This post provides general and limited information on a legal development and only summarizes certain aspects of the new law. For legal advice, the reader should consult with an attorney.
Gustavo Morales Oliver, pictured above, is a legal practitioner at MO&M and professor at Universidad Torcuato Di Tella Law School in Buenos Aires. He specializes in anti-corruption compliance. He has an LL.M. from the University of Illinois and is admitted to the Bar both in Buenos Aires, Argentina, and in New York.