Another step towards the Argentine access to OECD (Organization for Economic Co-operation and Development).
Thanks to the enactment of the Corporate Criminal Liability Law, Argentina is at the same position as other countries such as Chile, Brazil, Colombia, Spain and France. Under this Law, legal persons are bound to review their internal rules in order to determine whether they comply with the statutory requirements. In addition, as of the entry into force of the Law, Argentina complies with the international agreements undertaken when it ratified the OECD Anti-Bribery Convention.
On March 1st, 2018, Law No. 27401 entered into force (the “Law”). This Law modifies the Argentine Criminal Code (“ACC”) and imposes criminal liability to private legal persons, whose corporate capital is either national or foreign, with or without state ownership.
The Law imposes criminal liability to legal persons for the following crimes:
(i) Local or international bribery and influence peddling (section 258 and 258bis of the ACC);
(ii) Negotiations incompatible with public office (section 265 of the ACC);
(iii) Extortion by public officers (section 268 of the ACC);
(iv) Unjust enrichment by public officers and employees (section 268 (1) and (2) of the ACC)
(v) Falsification of balance sheets and reports (section 300 bis of the ACC).
Legal persons will be liable for the abovementioned crimes when, either direct or indirectly, the entity intervened in the commission of the crime or when someone acted in his name, interest or benefit for said purpose; even when this individual had no powers to do so, provided that the legal person ratified the act. Liability is transmissible in case of business reorganization and the legal person will be exempted from liability only if the individual who committed the crime acted exclusively on his own benefit and no advantage was given to the legal person.
The criminal action against the legal person cannot be initiated in cases of amnesty and prescription. The Law establishes that the criminal action against legal persons prescribes after six (6) years as from the crime was committed. It should be noted that the prescription of the criminal action against individuals who were criminal actors or accomplices will not affect the period under which a criminal complaint against the legal person may be initiated.
Moreover, the legal person may be convicted even when the individual who intervened in the crime cannot be identified, provided that from the circumstances of the case it may be concluded that the crime could not have been committed without the consent of the corporate bodies.
With regard to the penalties applicable to legal persons, the Law establishes the following:
- i) Fine from two (2) to five (5) times the improper benefit obtained or that could have been obtained;
- ii) Full or partial suspension of activities, which in no event must exceed ten (10) years;
iii) Suspension to participate in government bids and contracts related to public constructions or services or in any other activity related to the government. This suspension in no event must exceed 10 years.
- iv) Dissolution and liquidation of the legal person if it was created for the sole purpose of committing crimes, or when such acts were the corporate main business.
- v) Loss or suspension of state granted benefits.
- vi) Publication of judgment of conviction against the legal person.
The legal person will not be criminally liable when the entity reported a crime set forth by the Law as a consequence of the entity´s internal detection and investigation; the corporate implementation of a proper system of control and supervision in accordance with the Law and prior to the facts under investigation; and after returning the benefit obtained. In relation to this, the Law highlights the importance of “Integrity Programs” or “Internal Rules of Compliance” adopted by the legal person before the commission of the crime, and hence it is important to implement this type of rules into the legal person.
The legal person may enter into an “Effective Collaboration Agreement” with the Public Prosecutor´s Authority (Ministerio Público Fiscal), under which the entity, under strict confidentiality rules, undertakes to cooperate by disclosing precise and useful information for clarifying the facts. As essential conditions for entering into this agreement, the legal person must do the following:
(i) Pay a fine equivalent to half the minimum amount established by the Law.
(ii) Return the goods or profits which resulted from the commission of the crime.
(iii) Giving to the State the goods that may presumably be forfeited in the event of conviction.
In addition, the Effective Collaboration Agreement may establish the following conditions which include but are not limited to the following:
(i)Perform any action necessary to repair the damage caused.
(ii) Render a certain service for the community.
(iii) Apply disciplinary rules for those who had participated on the commission of the crime.
(iv) Implement an integrity program in accordance with the Law, or improve or modify the preexisting programs.
The Law emphasizes the creation of an “Integrity Program” (the “Program”) implemented by the legal persons. This Program must consist in a set of actions, mechanisms and internal procedures that promote integrity, supervision and control, aimed at preventing, detecting and correcting irregularities and wrongful acts indicated in the Law. Moreover, the Law establishes the minimum content of the Program:
- i) Code of ethics or conduct, or the existence of integrity policies and procedures applicable to all directors, managers and employees, regardless of their position, that could guide the planning and execution of tasks in order to prevent the commission of crimes set forth in the Law.
- ii) Specific rules and procedures for preventing wrongful acts in government bids, in the execution of contracts entered into with the government or any other interaction with the public sector.
iii) Periodic training about the Integrity Program to directors, managers and employees.
In addition to said minimum content, other elements may be added such as the periodic analysis of risks and the resulting adaptation to the Program, a policy on protection against retaliation for individuals who report crimes, constant monitoring and evaluation of the effectiveness of the program, the appointment of individuals in charge of the development, coordination and supervision of the Program, among other elements.