On December 1, 2017, the National Congress of Argentina enacted Law No. 27,401 , which establishes the legal framework for corporate criminal and administrative liability for domestic and transnational bribery, influence peddling, participation in the illicit enrichment of public officials, as well as falsification of books and records in order to conceal such offenses. The new Law is set to enter into force in March 2018.
Law No. 27,401 establishes that legal entities may be held liable for the direct or indirect committing of the abovementioned crimes, when committed with their intervention or in their name, interest or benefit, by their own employees or third parties, regardless of formal authorization being given, provided that the legal entity expressly or tacitly ratified the act.
Among the applicable penalties, we highlight: (i) a fine of two to five times the amount of the undue benefit obtained or that could have been obtained; (ii) total or partial suspension of activities, for up to ten years; (iii) suspension of participation in public bids for the provision of good or services or in any other activity related to the State (debarment), for up to ten years; (iv) dissolution and liquidation of the legal personality if the legal entity was created for the sole purpose of committing the offense(s), or if those acts constitute the main activity of the entity; (v) loss or suspension of public benefits; and (vi) publication of an extract of the conviction at the expense of the legal entity.
Under Law No. 27,401 , legal entities can be held liable even when the individuals involved cannot be identified, provided that the circumstances of the case show that the act could not have been committed without tolerance or acquiescence by the corporate governing bodies.
Law No. 27,401 also sets forth three cumulative requirements that may exempt legal entities from criminal and administrative legal action: (i) spontaneously reporting the offense to the competent authorities as a consequence of an internal investigation; (ii) restitution of the undue benefit obtained; and (iii) the existence of an Integrity Program prior to the offense, of which there is proof that the perpetrator’s actions breached the legal entity’s policy. The new Law defines the requirements for evaluating the adequateness of Integrity Programs in its Articles 22 and 23.
The new statute Law further establishes successor liability in cases of mergers, acquisitions and other corporate changes, which reinforces the importance of conducting Anti-Corruption & Compliance due diligence in such transactions.
Additionally, Law no. 27,401 allows infringing legal entities to enter into collaboration agreements with the Public Prosecutor’s Office with a view to cooperating with local authorities by disclosing accurate, useful and verifiable information to assist the investigation of the facts, the identification of its perpetrators or participants, or the recovery of the proceeds of the crime, while ensuring the confidentiality of such information and the negotiation itself. The agreement should include, among other topics, the reduction of the applicable fine, the restitution of proceeds from the crime, the application of disciplinary measures against the individuals who participated in the violation, the duty to implement an Integrity Program or improve existing ones. The agreement will be subject to judicial approval.
Argentina is the sixth country in South America to regulate criminal and administrative corporate liability for corrupt practices, following the Brazilian (Law No. 12,846/2013), Chilean (Law No. 20,393/2009), Colombian (Law No. 1,778/2016), Peruvian (Law No. 30,424/2016) and Venezuelan (Law No. 6,155/2014) examples.
The enactment of Law No. 27,401 is yet another indication of the change in focus of the global fight against corruption, which traditionally targeted the corrupt public agent(s) instead of the corrupting persons and/or entities, while at the same time promotes a culture of compliance, ethics and transparency in the conducting of business activities, most notably in view of the expansion of multijurisdictional investigations such as the "Lava Jato" operation.