Corporate anti corruption law: Congress Approves Corporate Anti-Corruption Law 

On Thursday March 17, the Peruvian Congress approved the “Law Regulating Administrative Liability of Legal Entities for the Commission of Active Transnational Bribery” (hereinafter, “the Law”), and the signed bill has been remitted to the President of Peru for enactment. The Law’s distinctive features are described below.

  1. To whom does it apply and what is new about it?

The Law applies to private law entities organized under any of the categories set forth in the Peruvian General Corporations Law (closed corporations, ordinary and open corporations, limited liability companies, individual limited liability companies), associations, foundations, non-registered committees, de facto companies, administrative bodies of autonomous estates, as well as State-owned companies and partially government-owned companies.

It establishes a new system for imputing liability, through which legal entities are autonomously (severally) liable and directly penalized for committing a criminal offence: active transnational bribery. Once in force, legal entities may be investigated, prosecuted and penalized for committing a crime as part of its business activities, even if the individual perpetrator of the crime has not been prosecuted or convicted.

It does not modify the existing legal regulations stipulating that legal entities may be subject to penalties as accessories to any crime committed, provided that, as part of criminal proceedings (i) it is proven that a crime was committed in the course of the organization’s activities or using the organization to facilitate or cover up the crime; and (ii) the individual who committed the crime is convicted as the perpetrator of the crime.

The Law’s main innovation is that, in addition to the accessory liability system currently in force for legal entities, it adds an autonomous liability system, which does not require that the individual perpetrator of the crime be prosecuted nor convicted.

  1. With what crime may legal entities be charged under the new Law?

Solely for the crime of active transnational bribery, pursuant to Article 397 – A of the Criminal Code, defined as offering, promising or providing any gift or advantage to a public official of a foreign government or an official of a public international organization (e.g., World Bank, IBD, UNDP, UNOPS, ILO, UNHCR, FAO, WHO, UNESCO, etc.) with the purpose of obtaining or retaining business or any other improper advantage in international business or financial activities.

The Law does not have a cross-border scope of application (as do the US Foreign Corrupt Practices Act, the UK Bribery Act, and the Canadian CFPOA), because the new Law applies only to bribery of public officials (of a foreign government or an International Organization) committed within Peruvian territory or when payment of the bribe is intended to obtain or retain business in Peru.

  1. When is autonomous liability applicable to legal entities for the commission of the crime of active transnational bribery?

The organization is autonomously liable for committing the crime of active transnational bribery in the following cases:

(i) When the act of bribery is committed on behalf (or at the request) of the organization, by its de facto or legal administrators, legal or contractual representatives, or corporate bodies, provided the criminal act was committed in the course of performing their position’s duties.

(ii) When the act of bribery is committed on behalf (or at the request) and for the direct or indirect benefit of the organization, by individuals providing services to the organization as employees, service providers, or under any other legal relationship, acting at the request or as authorized by the organization’s governing bodies.

(iii) When the act of bribery is committed on behalf (or at the request) and for the direct or indirect benefit of the organization, by individuals providing services to the organization as employees, service providers or under any other legal relationship, and said organization’s governing bodies have failed to properly supervise and monitor their actions.

  1. How is autonomous liability imputed to legal entities for the commission of the crime of active transnational bribery?

Within a criminal trial prosecuting the legal entity (which must be duly represented pursuant to its established power-of-attorney structure), which is carried out in accordance with the provisions of the new Criminal Procedure Code.

The criminal investigation and proceedings are directed autonomously against the legal entity, and not against the individual representing it in the proceedings. This is also applicable to the criminal penalty applied to the organization: it does not apply to its representatives.

  1. What penalties may apply to a legal entity if it is found to be autonomously liable for the commission of the crime of active transnational bribery?

A fine of up to six times the benefit obtained, or expected to be obtained, with the commission of the crime. When the benefit expected or obtained cannot be quantified, the following criteria apply to determine the amount of the fine: (i) if the organization’s annual income is up to 150 tax units (“UIT”, for its Spanish acronym), the fine is no less than 10 and no more than 50 UIT; (ii) if the organization’s annual income is up to 1,700 UIT, the fine is no less than 50 and no more 250 UIT, and, (iii) if the organization’s annual income is over 1,700 UIT, the fine is no less than 250 and no more than 500 UIT.

  • Suspension of the organization’s activities for no more than 2 years.
  • Ban from future activities in the same categories as those in which the crime was committed, facilitated or covered up.
  • This ban may be permanent or temporary (in which case, it may be no longer than 5 years).
  • Ban from entering into agreements with the government (for no longer than 5 years).
  • Cancellation of licenses, concessions, rights, and other administrative or municipal authorizations.
  • Permanent or temporary closure of establishments or facilities (temporary closure for no longer than 5 years).
  • Dissolution of the legal entity.

Changes to the legal entity’s business or corporate name, or the reorganization, transformation, division, merger, dissolution or liquidation of the organization, or any other act that may modify its legal status, do not prevent liability from being imputed to said legal entity, nor the application of the penalties provided in the Law.

  1. Can any measures be applied to the organization during the criminal proceedings, before sentencing?

Yes, the Criminal Court Judge may apply precautionary measures such as: (i) ban from future activities in the same categories as those in which the crime was committed, facilitated or covered up; and, (ii) ban from entering into agreements with the government.

  1. What is the purpose of establishing a prevention system?

The Law expressly states that the legal entity that commits a crime of active transnational bribery shall be exempted from liability if, prior to the commission of the crime, said organization adopted and implemented a prevention system appropriate to its nature, risks, needs and characteristics, consisting of supervision and monitoring measures suitable for preventing the crime or significantly reducing the risk of it being committed.

  1. When does the new Law come into force?

The Law becomes effective on July 1, 2017.

 

For further inquieries, please contact our experts in Compliance, José Reaño: jlreano@estudiorodrigo.com and Fernando Molina: fmolina@estudiorodrigo.com.