Costa Rica imposes corporate criminal liability, compliance program requirements

Costa Rica recently strengthened its anti-corruption regime for the first time since 2005 by imposing corporate criminal liability for all corruption offenses and setting out the basic elements that a compliance program must have in order to obtain a reduction of the criminal fine.

The new law known as Statute 9699 (pdf) also added accounting fraud as a new offense under the criminal code.

Corporate criminal liability is established where corruption is committed by directors, shareholders, and other individuals with decision-making power in the corporation, as well as by employees and even by third parties acting on behalf of the corporation.

Corporations found guilty of corruption can be fined up to $8 million or ten percent of the amount of the public contract that was obtained by paying a bribe. Additionally, for up to ten years the companies can be prohibited from contracting with the state, receiving tax incentives, holding licenses and operating permits, and even maintaining commercial premises and their status as legal entities.

The sanctions can be applied to Costa Rican corporations, foreign corporations that do business in Costa Rica, and public state companies. Statute 9699 also anticipates merge and acquisition scenarios.

Individuals can face up to 12 years in jail for corruption crimes.

In establishing the minimum requirements compliance programs must meet, Statute 9699 lists the following:

1. Conduct a specific risk assessment for the business activity in Costa Rica

2. Implement a code of conduct and adopt specific rules and processes that prevent the commission of crimes

3. Establish adequate financial controls and financial records

4. Determine the scope of these policies for third parties

5. Periodic anti-corruption training

6. Schedule a periodic risk assessment and verification of the model

7. Establish a disciplinary model

8. Conduct an external accounting audit

9. Appoint a compliance officer, and

10. Establish a specific protocol to prevent commission of crimes for public bidding contracts, obtaining licenses, or any other activity related to the public administration.

Disclosure and cooperation are also requirements for companies in corruption cases.

If the compliance, disclosure, and cooperation requirements are met, companies may receive a 40 percent reduction of the fine that can be imposed for a corruption crime.

Statute 9699 doesn’t expressly mention a whistleblowing system and internal investigations as requirements of compliance programs. But these elements would generally be essential to meet the obligations for self disclosure and cooperation in order to achieve a reduction of the fine.

The Costa Rican Attorney General’s Office has already issued a direct alert to big construction companies that participate in public bidding contracts, since they could become the first corporations criminally charged for corruption crimes under the new Statute 9699.

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Sergio Herra, pictured above, is an associate at the regional law firm Nassar Abogados Centroamerica, in the firm’s Costa Rica office. He specializes in White Collar Crimes, Compliance, Anti-Corruption & Internal Investigations. He holds a Master’s in criminal law and postgraduate degree in anti-corruption compliance from the University of Barcelona in Spain, where he is also a PhD candidate. He’s a former Visiting Scholar at the Law School of the University of Pennsylvania and the Max Planck Institute for Criminal Law at Freiburg, Germany. He can be contacted here.