FCPAméricas Blog

New Argentine Law on Corporate Liability and Compliance Programs for Certain Corruption Cases

Author: Guest Author

Macri3This guest post is from Gustavo Morales and Pedro Serrano, partners at the Marval, O’Farrell & Mairal, law firm in Argentina.

A new Argentine anti-corruption law was approved by Congress on November 8, 2017 and becomes enforceable 90 days after being promulgated by the President and published in the Official Gazette. Its five key aspects are described below.

Corporate Liability

The 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:

  1. local or international bribery and influence peddling;
  2. negotiations that are incompatible with public office;
  3. illegal payments made to public officials under the appearance of taxes or fees owed to the relevant government agency upon undue request by a public official (“concusión”);
  4. illegal enrichment of public officers and employees; and
  5. producing aggravated false balance sheets and reports to cover up local or international bribery or influence peddling.

If a legal entity which is liable under this law becomes involved in a merger, split or any other modification, the resulting entity shall also be liable.

Penalties

Penalties include fines ranging from 2 to 5 times the “undue” benefit that was obtained or that could have been obtained through the actions incurred in breach of this regulation. Additionally, the authorities may seek forfeiture of assets obtained through the illegal actions.

Legal entities may lose or suffer suspension of government benefits previously earned, and they may be debarred from participating in government bids and contracts or in “any other activity related to the government”.

However, legal entities shall be exempted from penalties and administrative responsibility when they:

  1. self-report a crime set forth by this law as a consequence of internal detection and investigation;
  2. have established a proper control and supervision system before the facts under investigation occurred, and breaching such system required an effort by the wrongdoers; and
  3. return the undue benefit obtained.

Anti-corruption Compliance Programs Under this Law

Legal entities involved in certain contracts with the Federal Government are required by this law to implement anti-corruption compliance programs. Such compliance programs are voluntary for all entities not engaged in such contracts.

Having an effective compliance program may mitigate penalties for the company if it breaches this law. In this regard, if implemented, the program shall (a) be appropriate to the risks, size and economic capacity of the entity, and (b) include a Code of Ethics, internal policies to prevent crimes in interactions with the public sector, and training. Other elements of the compliance program such as appointing a compliance officer or establishing due diligence procedures for third-party contractors are deemed voluntary by this law.

The law sets forth that further regulation is expected regarding compliance programs.

Effective Collaboration Agreements

Legal entities under investigation for breaching this law may enter into effective collaboration agreements with the authorities seeking a reduction in penalties. To such end, the entity shall disclose precise and verifiable information that is useful for investigating the facts, authors and participants in the crime, as well as for recovering assets and gains obtained through the illegal actions.

The agreement shall be subject to the following conditions: the legal entity shall (a) pay 50% of the minimum fine; (b) disgorge ill-gotten gains; and (c) abandon in favor of the State those goods that presumably would be forfeited in case of conviction.

Initial thoughts on impact of this law

This law is a game changer in terms of anti-corruption regulations for companies in Argentina, particularly regarding bribery and other related interactions with public officials – corporate liability already existed in a limited number of cases such as money laundering and smuggling.

This law encompasses certain activities such as illegal enrichment of public officials which are generally not covered by the leading international anti-bribery laws such as the FCPA, the UK Bribery Act or the Brazilian Clean Companies Act. Therefore, it is advisable that companies review how this law impacts their activities and what amendments to their compliance programs are necessary to meet these new standards.

This law is also a novelty in terms of having legal entities negotiating collaboration agreements with the authorities. Therefore, properly handling cases in the field will be most relevant.

The opinions expressed in this post are those of the author in his or her individual capacity, and do not necessarily represent the views of anyone else, including the entities with which the author is affiliated, the author`s employers, other contributors, FCPAméricas, or its advertisers. The information in the FCPAméricas blog is intended for public discussion and educational purposes only. It is not intended to provide legal advice to its readers and does not create an attorney-client relationship. It does not seek to describe or convey the quality of legal services. FCPAméricas encourages readers to seek qualified legal counsel regarding anti-corruption laws or any other legal issue. FCPAméricas gives permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author and to FCPAméricas LLC.

© 2017 FCPAméricas, LLC

Post authored by Guest

Categories: Anti-Corruption Compliance, Argentina, Enforcement, English, FCPA

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