A more robust anti-corruption culture is taking hold in Latin America. In line with this trend, the National Congress of Argentina just last week passed a bill creating a criminal liability regime for legal entities. As the bill awaits to be signed into law by President Mauricio Macri, companies doing business in Argentina need to start analyzing how to adjust their compliance efforts to the requirements of the new legal regime.
With the adoption of this statute, Argentina joins other nations (including the U.S.) in their efforts to combat corruption on a global scale. More importantly, the South American nation will now be in compliance with obligations it assumed under the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, which requires signatories to "take such measures as may be necessary . . . to establish the liability of legal persons for the bribery of a foreign public official."
Modeled after other major anti-corruption laws in the world (such as the Foreign Corrupt Practices Act, U.K. Bribery Act and Brazil's Clean Companies Act, among others), Argentina's new statute presents the following salient features:
- Companies are criminally liable for corrupt acts committed by their owners, directors, executives, employees and third parties acting on their behalf, as long as the crime furthers the company's interest or benefit. The logic behind this vicarious-liability regime is clear: just as they benefit from the acts of its constituents and related third parties, companies should also share in the consequences of their wrongdoing.
- A company's criminal liability is wholly independent from the liability of the individual who committed the corrupt act, to the point that a company can be tried and convicted under the statute regardless of whether the responsible individual is also convicted or even identified.
- Applicable penalties include fines ranging from two to five times the illegally obtained profits; total or partial suspension of the company's activities and, in some cases, even compulsory dissolution; and the prohibition to receive, or participate in, government contracts or benefits.
- Similar to the FCPA Pilot Program, the new statute sets forth requirements under which a company can avoid prosecution: a) voluntary self-disclosure; b) the existence of a compliance program, containing certain mandatory components (to wit, written ethics or conduct code; specific policies and procedures for public procurement; and periodic training), prior to the commission of the corrupt act; and c) disgorgement of illegally obtained profits.
- Companies may also obtain leniency by negotiating with prosecutors a cooperation agreement, under which the company has an obligation to provide relevant, useful and verifiable information that can lead to the discovery of all relevant facts, responsible individuals and illegally obtained profits. Via these agreements, companies are eligible for a 50 percent reduction off the bottom of the applicable fine range.
While it remains to be seen how the new statute will be enforced, its passing alone is a strong signal that the anti-corruption environment in Argentina is changing rapidly. And in times of increased global enforcement, companies doing business in Argentina should – under the guidance of qualified counsel – revisit their compliance strategy to ensure it adequately conforms to the new statute.