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Legal Update
November 14, 2017
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Act on Criminal Liability of Legal Entities
for Crimes Committed against the Public Administration and Transnational Bribery
On November 8, 2017, National Congress passed an Act addressing Criminal Liability of Legal Entities for crimes committed against the public administration and transnational bribery (the "Act"). The Act will enter into force on the 90th day following its publication in the Argentine Official Gazette
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The Act provides that the private legal entities[1] (with or without State participation, either controlled by national or foreign investors) will be liable for the crimes covered by the Act when these have been committed, directly or indirectly, with their participation or on their behalf, or in their interest or benefit. The legal entity is also liable if a third party, without powers to act on its representation or behalf, acted in its own benefit or interest, provided that the legal entity has ratified the third party's involvement, even implicitly. The legal entity shall be exempted from liability only if the individual that committed the crime acted exclusively in his/her own interest and the legal entity did not obtain any benefit from such crime.
The Act provides successor's liability determining that in the event of transformation, merger, absorption, spin-off or any other corporate restructuring, the legal entity's responsibility will be transferred to the surviving legal entity.
Criminal sanctions are severe and include: fines between two (2) and five (5) times the amount of the benefit illegally obtained or that could have been obtained; total or partial suspension of business operations; suspension to participate in public tenders or bids for public works or services or in any other activity
involving the
public sector; dissolution and liquidation of the legal entity when it was formed for the sole purpose of committing the crime, or the commission of crimes constitutes the legal entity's main activity; loss or suspension of government benefits and the publication of a summary of the conviction sentence at the expense of the legal entity.
Having and implementing a compliance programme -including appropriate policies and procedures to prevent, detect and punish acts of corruption- will be a mitigating factor of liability and if certain additional conditions are met -as explained
below
- the legal entity could also be exempted from liability. The legal entities that do not implement a compliance programme will not be able to enter into contracts with the public sector and they will not be exempted from liability (since having a compliance programme prior to the occurrence of the crime is a necessary but not sufficient condition to access the sanction exemption benefit). The absence of an adequate compliance programme will be considered as a negative factor by the authorities at the time of determining the applicable sanctions.
The compliance programme should include as a minimum: (i) the adoption of a code of conduct, policies and procedures applicable to all employees, managers and directors; (ii) specific rules and procedures to prevent crimes in public tenders, bidding processes or administrative contracts and (iii) periodic training on the compliance programme.
The Act provides for the possibility of signing effective leniency agreements with the Attorney General's Office, when the legal entity commits itself to cooperate by providing accurate, useful and verifiable data and information for the clarification of the facts, identification of the perpetrators and participants or the recovery of the product or the proceeds of the crime.
For further information, you may access the full text of this Legal Update here.
[1]
Includes all private legal entities as defined in Sections 141 and 148 of the Argentine Civil and Commercial Code
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Our Firm has extensive experience in the implementation of compliance programs for local and multinational companies as well as in the drafting of corporate policies, personnel training, monitoring and control of activities and has a team of professionals specially dedicated to issues related to regulatory compliance and anti-corruption policies. Our Compliance and Corporate Crime practice is dedicated to developing measures and procedures to prevent, detect and combat fraud, ethical misconduct, and other violations of laws and regulations governing corporate activity.
Our professionals also provide compliance due diligence and assist clients in internal and external corporate investigations in different business sectors. The firm has conducted or participated in independent investigations involving, among others, insider trading, corporate and tax fraud, money laundering, antitrust, public corruption, and government contracting issues.
The firm also assists clients in assessing and handling self-reporting issues, navigating through administrative, civil and criminal investigations or proceedings before public bodies, and developing and implementing anti-corruption policies, compliance plans and training programs.
We invite you to contact us if you have any question.
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This Newsletter is a free service provided by Mitrani Caballero & Ruiz Moreno for informative purposes only.
For further information, please contact:
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Cristian Mitrani
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Mariela Melhem
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Paula Díaz
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