Bill On Corporate Criminal Liability For Cases Of Corruption And Guidelines For Compliance Programs

Author:Mr Pedro Espelta, Gustavo L. Morales Oliver and Ayelén Eliana López Camino
Profession:Marval O'Farrell & Mairal

Although it has a narrower scope, this Bill follows the trend established by foreign regulations such as the Clean Companies Act of Brazil (Law 12,846), the UK Bribery Act, and the US Foreign Corrupt Practices Act (FCPA).

If enacted into law, this Bill would mean a material change in the anti-corruption regulation in Argentina by penalizing legal entities in addition to individuals.

Crimes against public administration and transnational bribery

Legal entities are liable for crimes against the public administration and transnational bribery when:

the crime resulted from lack of appropriate supervision and control; the crimes have been committed, directly or indirectly, in their names, in their interest, on their behalf, and when the legal entity might benefit from the crimes; and the crimes were committed by any of (i) their owners or controlling parties, (ii) their representatives, directors, managers, employees under their supervision or direction, or (iii) representatives in partnership, agency, distribution, concession or trust agreements. With the exception of small and medium-sized companies, legal entities are be responsible for the actions of their suppliers, contractors, agents, distributors or individuals or other legal entities with whom they have a contractual relationship when no due diligence procedures in order to check their integrity and reputation were carried out.

Further, legal entities may be sanctioned even in those cases where no individuals are convicted.

Joint and Several Liability of Controlling Companies - Successor Liability

The Bill also sets forth joint and several liability of controlling companies for the economic penalties imposed on their controlled companies, as well as successor liability in cases of transformation, merger, splits or any other corporate modification. However, it will be possible to avoid successor liability if appropriate due diligence processes aiming to verify irregularities or illegal actions are carried out and corrective measures are adopted in order to prevent the repetition of similar situations once the relevant corporate modification is over.

Compliance Programs - Exclusion of Liability

Considering that one of the elements of the definition of the crime is that such crime derives from inadequate control and supervision, it is of the utmost importance to determine when such control and supervision may be considered adequate. According to the Bill, it will be deemed adequate...

To continue reading