Legislative Order No. 1385 – Legislative Order sanctioning corruption in private sector
Today, Legislative Order No. 1385, which defines corruption crimes within the private sector, comes into effect upon its publication yesterday in the Official Gazette “El Peruano”. Below, the essential aspects are detailed to understand the scope of the new criminal models being adopted by our legal system.
I. Backgrounds
Under these two types of crime, both those accepting or soliciting unlawful benefits and those offering or giving unlawful benefits are sanctioned. Therefore, it should be distinguished, at the same time, sub-types of corruption—passive and active—based on the sanction set forth by law to those accepting or soliciting (passive corruption) or those offering or giving (active corruption) unlawful advantages or benefits.
II. Crime of Private-Sector Corruption, Type: Unfair Competition
1. Sub-Type: “Passive Private-Sector Corruption” (Peruvian Criminal Code, Section 241-A, First Paragraph)
a. Subjects whom the regulation applied thereto (potential authors)
The crime can be committed by those of a legal entity under the private law (corporations, limited liability partnerships, general partnerships, and branches) who are partners/members, shareholders, directors, managers, administrators, legal representatives, attorneys-in-fact, employees or (external) advisors.
b. Subjects whom the regulation protects thereby (victims)
By the criminalization of this model, it is intended to protect competitors affected by decisions of the procurement of goods and services taken based on soliciting unlawful benefits by those who have the capacity to influence in such decision inside a company.
c. Prohibited or criminalized conduct
Soliciting or accepting gifts, advantages or benefits of any nature, for oneself or third parties, for the purpose of performing or omitting an act to favor someone (individual or company) in the procurement of goods and services are sanctioned. That is, soliciting or accepting any type of benefit (to the private company’s officer, any third party or even the company itself) as a consideration for obtaining or retaining some business, either under procurement or trading of assets or goods, or procurement of commercial services.
It is about a type of crime that does not require to verify the existence of detriment of the company whose partner/member, shareholder, director, manager, administrator, legal representative, attorney-in-fact, employee or advisor agreeing or solicited an unlawful benefit. This is due to the fact that it is a crime committed in detriment of the company’s competitors offering or giving an unlawful benefit. The company where the bribe payee belongs thereto is not considered a victim of this crime.
For instance, it constitutes this type of crime if the Procurement Chief Officer solicits a supplier any amount of money or employment for a relative, or any gift or commission as a consideration for approving a purchase or service order or awarding a contract. Although the supplier would not accept the Procurement Chief Officer’s soliciting, the crime is consummated by the latter. And if the supplier accepted such unlawful conditions, he would be criminally responsible together with the Procurement Chief Officer.
d. Criminal punishment
Up to 4 years of imprisonment; suspension from profession, business, art or industry from 6 months to 10 years; and 180 to 365 days fine penalty (day fine equals to daily income of the perpetrator of the crime).
e. Type of proceeding
Criminal prosecution meaning that any person can file a criminal complaint for the commission of this type of crime, with no need to prove his status of victim. Additionally, the criminal investigation can be prosecuted sua sponte by the Government Attorney General, in the event he would get to know about the act, for example, through social media. Certainly, the criminal complaint can be filed by a competitor who considers himself affected and he can request, during the criminal proceeding, a compensation payment (civil remedy).
2. Sub-Type: “Active Private-Sector Corruption” (Criminal Code, Section 241-A, Second Paragraph)
a. Subjects whom the regulation applied thereto (potential authors)
The crime can be committed by any individual acting on his own behalf or on behalf of a company or another individual.
b. Subjects whom the regulation protects thereby (victims)
By the criminalization of this model, it is intended to protect competitors affected by decisions of procurement of goods or services taken based on the offering of unlawful benefits by another competitor.
c. Prohibited or criminalized conduct
Offering and giving (or promise of giving) advantages or benefits of any nature to partners/members, shareholders, directors, managers, administrators, legal representatives, attorneys-in-fact, employees or (external) advisors from any legal entity under private law for the purpose of performing or omitting an act to favor such individual or legal entity giving the unlawful benefit (or a related third party like the company where he belongs to) in the procurement of goods and services are sanctioned.
It is about a type of crime that does not required to verify the existence of detriment of the company whose partner/member, shareholder, director, manager, administrator, legal representative, attorney-in-fact, employee or advisor agreed an unlawful benefit. This due to the fact that it is a crime committed in detriment of the company’s competitors offering or giving an unlawful benefit. The company where the bribe payor belongs thereto is not considered a victim of this crime.
For instance, it constitutes this type of crime if the sales executive of a service provider company offers any gift, commission or benefit to a private company’s officer as a consideration for awarding a contract. Although the company’s officer requesting services would not accept the offering of the provider company’s sales executive, the crime is consummated by the latter.
d. Criminal punishment
Up to 4 years of imprisonment; suspension from profession, business, art or industry from 6 months to 10 years; and 180 to 365 days fine penalty (day fine equals to daily income of the perpetrator of the crime).
e. Type of procedure
Criminal prosecution meaning that any person can file a criminal complaint for the commission of this type of crime, with no need to prove his status of victim. Additionally, the criminal investigation can be prosecuted sua sponte by the Government Attorney General, in the event he would get to know about the act, for example, through social media. Certainly, the criminal complaint can be filed by a competitor who considers himself affected and he can request, during the criminal proceeding, a compensation payment (civil remedy).
III. Crime of Private-Sector Corruption, Type: Unfair Administration
1. Sub-Type: “Passive Private-Sector Corruption” (Peruvian Criminal Code, Section 241-B, First Paragraph)
a. Subjects whom the regulation applied thereto (potential authors)
The crime can be committed by those of a legal entity under the private law (corporations, limited liability partnerships, general partnerships, and branches) who are partners/members, shareholders, directors, managers, administrators, legal representatives, attorneys-in-fact, employees or (external) advisors.
b. Subjects whom the regulation protects thereby (victims)
By the criminalization of this model, it is intended to discourage unfair administration practices of private companies’ shareholders, executives, employees or advisors.
c. Prohibited or criminalized conduct
Soliciting or accepting gifts, advantages or benefits of any nature for the purpose of performing or omitting an act to the detriment of the company itself are sanctioned.
It is about a type of unfair administration or infidelity in shareholders’ equity management, in broad sense, by accepting any advantage or benefit as a consideration for performing or omitting an act causing economic losses to the company which the bribe payee is liable thereto. That means, accepting or soliciting any personal benefit as a payment for preferring contracting counterpart’s interests instead of the company which the executive, employer or advisor is liable to. The circle of potential perpetrators of this type of crime is not only restricted to those having legal powers in terms of administration or representation, but also to those taking decisions in practice that may be detrimental to the company.
For instance, it constitutes this type of crime if, within the framework of a company’s private bid to contract services, the awarding person would receive or solicit any payment for awarding the contract to a certain bidder, whose prices or quality are lower than his competitor. Although the bidder would not accept the soliciting of the person in charge of the private bid, the crime is consummated by the latter. And if the bidder accepted to make the solicited payment, he would be criminally responsible together with the person in charge of the private bid.
d. Criminal punishment
Up to 4 years of imprisonment; suspension from profession, business, art or industry from 6 months to 10 years; and 180 to 365 days fine penalty (day fine equals to daily income of the perpetrator of the crime).
e. Type of proceeding
Private criminal action meaning that the proceeding can be only filed by the company affected with the unfair conduct of its partner/member, shareholder, director, manager, administrator, legal representative, attorney-in-fact, employee or advisor. The proceeding is filed directly with the Criminal Court, through a special proceeding named private criminal complaint (querella), with no intervention of the Government Attorney General or the Peruvian Police Department.
2. Sub-Type: “Active Private-Sector Corruption” (Peruvian Criminal Code, Section 241-B, Second Paragraph)
a. Subjects whom the regulation applied thereto (potential authors)
The crime can be committed by any individual acting on his own behalf or on behalf of a company or other individual.
b. Subjects whom the regulation protects thereby (victims)
By the criminalization of this model, it is intended to discourage unfair administration practices of private companies’ shareholders, executives, employees or advisors.
c. Prohibited or criminalized conduct
Offering and giving (or promise of giving) of advantages or benefits of any nature to partners/members, shareholders, directors, managers, administrators, legal representatives, attorneys-in-fact, employees or (external) advisors of any legal entity under private law for the purpose of performing or omitting a conduct to the detriment of the company are sanctioned.
For instance, it constitutes this type of crime if the customer of a financial entity delivers or offers a payment to any bank officer to obtain credit facilities without complying with requirements established by the entity, or it is given under conditions being detrimental to the bank. Although the financial entity’s officer would not accept the offering of the customer, the crime is consummated by the latter. And if the officer accepted the offered payment, he would be criminally responsible together with the customer.
d.Criminal punishment
Up to 4 years of imprisonment; suspension from profession, business, art or industry from 6 months to 10 years; and 180 to 365 days fine penalty (day fine equals to daily income of the perpetrator of the crime).
e. Type of proceeding
Private criminal action meaning that the proceeding can be only filed by the company affected with the conduct of the bribe payor and/or its partner/member, shareholder, director, manager, administrator, legal representative, attorney-in-fact, employee or advisor. The proceeding is filed directly with the Criminal Court, through a special proceeding named private criminal complaint (querella), with no intervention of the Government Attorney General or the Peruvian Police Department.
IV. Neutral Conducts
The Preamble of the aforementioned regulation states that it does not constitute crime of private-sector corruption those usual gratuities or protocol gifts in business with no sense of payment as a consideration for the decision on the procurement of goods and services. Expressly, it specifies that, in order to distinguish permitted practices from those considered criminal, it is necessary to establish internal procedures inside companies that ensure the operational development of their officers.
In this sense, the Preambles refers to the Anticorruption Enforcement Programs in order to set limits between gratuity or protocol gifts and private-sector corruption, recommending the definition of the following aspects in the code of ethics of the companies and enforcement programs:
