Asociación colombiana de derecho penal empresarial

HOWARR PROJECT ON CRIMINAL LIABILITY OF LEGAL ENTITIES IN COLOMBIA

HOOVER WADITH RUIZ RENGIFO

Hoowarr project on criminal liability of legal entities in Colombia

Explanatory statements

Hoover Wadith Ruiz Rengifo[1]

The prevention of crimes such as money laundering, financing terrorism and transnational bribery is the major concern of developed States. Adding to that the multiplicity and transformation of crime that has permeated businesses. Which has led for the need to establish criminal liability of legal entities. National and international corruption scandals show that collective legal assets are affected by legal entities. In today’s world there is no doubt that there are criminal businesses.

This initiative is a response to the unstoppable international trend[2] of the commitments acquired by Colombia to regulate the liability of legal entities: The United Nations Convention against corruption, the United Nations Convention against Transnational Organized Crime, the International Convention for the Suppression of the Financing of Terrorism, the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, and the 40+9 recommendations of the Financial Action Task Force (TAFT) for combating money laundering and financing of terrorism.

The introduction of criminal liability of legal entities in Colombia is the most effective measure to fight corruption and the criminal activity.

This is a global tendency to reduce to a higher degree the levels of corruption, and that is because there is no magical measure to eradicate corruption. But we can reduce it using the toolbox of a preventive criminal law, inherent in the liability of businesses.

There is clarity that the increase of penalties is not an effective response against crimes. The complex criminal business infrastructure is not resolved with the increase of punishments nor with simple answers. The proper way to fight of a problem is to build an effective measure that solves the roots and practices.

The roots and causes of corruption are located in the disorganization and lack of control of the businesses. So to try and change that root and those causes is through rules of preventive criminal law for businesses. The foundation is self-regulation through the compliance.

A corporative culture fights the roots and causes of this problem. This way the compliance becomes a key component to fight off corruption. A current need for businesses. The criminal Compliance as accurate as it is in the design of the management and control system does not guarantee that crimes are or will not be committed. Because the criminal compliance is no a end in itself. It is just a simple tool to obtain within the business an ethic culture and respect of criminal law. Therefore it is necessary to prove that is effective, which means seeing that it works and that it generates the ethic culture that it aims.

In a nutshell contemporary criminal theory and criminology it is justified if it is preventive, whether it applies to a natural person or a legal entities. This is a pragmatic hyper modern perspective of criminal law. In Colombia the valid dogma is societas non potest. In conclusion with the admission of criminal liability of legal entities said dogma comes to an end.

The OECD requests member States to establish liability of legal entities as the most effective measure to fight transnational bribery. The global world emphasizes two central issues of importance in our time: The Governance and the business. That is why business and its consequences occupy a central role. A public world needs of private cooperation. In this effort is where we find self-regulation. There is an enormous concern to control economic criminality.

Colombia started the process to join the OECD in the year 2013, and from that point on it undertook the commitment of establishing sanctions for legal entities that are effective, proportionate and deterrent. To fulfill this international commitment the best way is through criminal law.

Being a member of the OECD has many advantages: a being a participant of Colombian development by being part of the OECD group that unites several developed countries, competitiveness at the international level, and high degree of investment efforts the country as it would be considered as low risk.

Many countries have embraced criminal or administrative liability of legal entities. A global trend that looks through any way possible the respect of Rights and Security for this new citizen: the legal entities.

It is not about pursuing businesses. It is rather self-regulation for them to become more successful. That is why businesses are required to adopt compliance programs. In English the term “Compliance” means the legal fulfillment to prevent criminal behavior of the organizations.

Compliance was born in the U.S.A during the 70s and 80s, when three huge corruption and financial scandals shook important companies. One to be mention rid the Lockheed Corporation Scandal (between 1972 and 1974) it involved bribery of high foreign officials, which prompted the Foreign Corrupt Practices Act or FCPA (19/12/1977) which included Anti-Bribery provisions. The FCPA regulation revealed at a global scale a series of corruption acts comparable to the Watergate scandal (1972), the latter ended the administration of the 37th president of the United States: Richard Milhous Nixon (1969-1974). The Vice President Gerald Ford took over the role the 9th of August, 1974. That same year the Securities and Exchange Commission (SEC) informed that more than 400 companies registered in the United States would have paid more than $300 million dollars in bribes and other corruption acts to government officials and other authorities in foreign countries.

With the OECD Treaty of 1997 it is establish that the act of transnational bribery is illegal, and it is recommended that all member states prohibit the behavior through the use of liability of businesses, in accordance to the legal principles of the country, whether it be criminal, civil or administrative. The United States is a pioneer in laws that punish transnational bribery.

The treatment of compliance in businesses should be conceived to serve humanity in an effective manner, so much that is one of the needed measures to stop climate change, and as the existential organization of the products that men needs to interact.

The compliance should cover all areas of human interaction. It is a global measure in the service of men. Its requirement will make better men and the interrelations in which is enveloped: Technology, water, food, consumption, construction, habitat, market, financial activity, pharmaceuticals, events, contests, among other fields of life.

From our point of view the compliance is a fundamental right. A hyper modern law that fulfills a role in society and if effective it maintains balance between other fundamental rights. I have an optimist perspective of law, just as the magnificent German Professor Claus Roxin[3], that with Law we can develop a more positive and secure life in the world.

It is certain that the Odebretch, Reficar case, the sanctions against rice guilds and the strict sanctions to six pharmaceuticals by the Superintendency of Industry and Commerce, among others, there are many examples that lead to rethink that sanctions towards businesses should be done with the use of criminal law, which offers the best warranties in the due process of businesses and its liability. The 1778 Law of the 2nd of February of 2016 that regulates the administrative liability of legal entities does not have enough toughness to fight transnational bribery.

The most effective measures is found in criminal law, this is the criminal liability of legal entities, and an strategic measure pending for implementation in Colombia. This is the main objective of this bill. This bill aims to fulfill the harmonization with the international commitments, and the pragmatic trend of criminal law that looks to perfect our legal criminal framework to position ourselves in the same level of developed countries.

The regulation of criminal liability of legal entities in Colombia should start from the Criminal Code, the imposable penalties toward legal entities, and the basis of this liability is the failure to carry out <<due control>> to establish direct and autonomous liability of legal entities. In this line of thought the first condition for a criminal liability of legal entities is precisely the liability, which translates that they are political-criminal reasons.

Businesses should embrace self-regulation measures and be more liable in our hypermodern world, a place where every day businesses occupy a central role in our lives. An additional emphasis should be made on the compliance programs whose effectiveness allows the exonerations of liability of the legal entities that would have benefited in any way from a felony.

The numerus clausus of crimes obeys to the idea that the international community and in our national context there is an agreement that this crimes are specially harmful. The possibility is still open to include other behaviors as our lives and criminal framework develop. The criminal liabilities of legal entities is a complex response to a complex problem, which allows to distance itself from the punitive populism in criminal law.

Punitive populism is wrong tendency all across the world, as affirmed by Claus Roxin[4]. To be truthful, populism in criminal law and politics appears every time we give a simple answer to a complex problem.

 

 

Bill N°____ of 2017

By which it is establish the legal liability of legal entities for the crimes of money laundering, financing of terrorism, transnational bribery, crimes against natural resources and the environment

The Colombian Congress

Decrees

Chapter 1

Criminal liability of legal entities for the crimes of money laundering, financing of terrorism, transnational bribery, and crimes against natural resources and the environment

Article. 1. Object. The current law establishes a regime of criminal liability of legal entities for the crimes of money laundering, financing of terrorism, transnational bribery, and crimes against natural resources and the environment.

Article. 2. Definition. For the effects of this law, legal entities is understood as every association, company to corporation.

Chapter 2

Of the imputation of criminal liability of legal entities

Article. 3. Imputation of criminal liability of legal entities. It is established that legal entities will be criminally liable for:

3.1. The crimes committed in their name or by their own account, in regard to a direct or indirect benefit, by their legal representatives or those whom acting in their own accord, and being members of a legal entity, are authorized to make decisions in the name of the legal entities, or have any faculties of control and organization within it, unless the conduct is imprudent or intentional, if the criminal type is planned in this modality that the physical individual carries out the action in its own and exclusive benefit or if a third party, and it be suitable to establish a benefit to the entity, handling the circumstances for every particular concrete case.

3.2. Of the crimes committed to obtain any benefit for the legal entity, whether it be committed by a subordinate of the physical individuals mentioned in paragraph 3.1 because of the lack of due control of the legal entity over him, improperly organized.

Chapter 3

Of the exemption or attenuation of the criminal liability of legal entities: Management and organization models of attenuation

Article. 4. If the felony were committed by the people mentioned in numeral 1 and 2 of Chapter 2 of article 3, the legal entity will be exempt of liability if the following condition is fulfilled: that the administrative body had adopted and executed effectively a criminal compliance to prevent felonies of the same nature or to reduce in a significant manner the risk of perpetration. If the management and organization is partial it will be taken into account for the attenuation of the punishment. If the case were with small businesses the role of supervision can be carried out by the administrative body.

Chapter 4

Management and organization models

Article. 5. The management and organization models have to fulfill the following requirements:

  1. Evaluate the risk: identify the risk, quantitative and qualitative risk evaluation, prioritize the risk and plan a response (It is up to the Crisis management department and its Crisis Director), and risk monitoring of the felonies that should be prevented,
  2. The existence of an ethics or corporate behavior code,
  3. Adequate Financial resource management models to prevent felonies in regard to enterprise activities, this means a due diligence reviewed and improved.
  4. Periodical reports on the effectiveness of the compliance programs that require it to establish the tight relationship between the program and the risks associated to the activity carried out by legal entities, due to its size and economic capacity to prevent, detect, correct and improve.
  5. A complaint channel, internal procedures and monitoring of the criminal procedures against the legal entity, e) establish a disciplinary system, f) periodical verification of the compliance program and its eventual modification, when a relevant infringement has occurred which implies a normative change of the compliance program, or when an enterprise changes its organization, control structure or activity.
  6. Periodical communication with all employees, including the board members, regarding prevention procedures.
  7. Existence of a compliance officer responsible of the management and organization model.

Chapter 5

Relationship between the criminal liability of the legal entity and the natural person

Article. 6. The legal entity will be criminally responsible when a felony is perpetuated by any of the members linked to the legal entity mentioned in article 3, whether it is an individual or not, and whether a legal proceeding can be taken against it.

Chapter 6

The livelihood of criminal liability of legal entities in light of situations that modify the legal existence of the legal entity

Article. 7. In the case of a transformation, fusion, absorption, division or any other legal modification, the criminal liability falls on the legal entity born after the change, if there was one, and without damage to the good will rights of a third party.

Chapter 7

Aggravating and extenuating circumstances of criminal liability of legal entities

Article. 8. Extenuating circumstances for criminal liability of legal entities are:

  1. Confess to the infringement of crimes, after the infringement, and before the oral trial.
  2. Collaborate in an effective matter with the investigation at any point of the proceedings, and any other procedures forwarded against another legal entity.
  3. Remedy and repair the harm done, totally or partially.

Paragraph. The prosecutor and the legal entity may celebrate a written or verbal preliminary agreement, subsequently verified hearing in front of a specialized knowledge judge, regarding effective collaboration following the rules of Law 906 of 2004, prepared for preliminary agreement and enforceable to the nature of legal entities.

Article. 9. Aggravating circumstances of criminal liability of legal entities are:

  1. The fact that a conviction had been carried out five years before the infringement of the felony investigated and judged.
  2. A total or partial breach of the imposed sanctions, in the virtue of this law, by the business.

Chapter 8

Suppression of the criminal liability of the legal entity

Article. 10. The criminal liability of the legal entity is suppressed:

  1. By the fulfillment of the conviction.
  2. By the statute of limitations of the action.
  3. By the statute of limitations of the sentence.

Article. 11. Statute of limitations.

The actions to investigate the criminal liability of legal entities will prescribe in the term of eight (8) years from the day of infringement of the enforceable crime.

The penalties imposed to legal entities for criminal liability will prescribe in the established time by the sentence, counted since the day of its application. And it is interrupted when the legal entity, during the established time, commits a new crime of the mentioned in this law.

Chapter 9

Individuals to whom criminal liability of legal entities is not enforceable

Article. 12. The criminal liability of legal entities is not enforceable to the State, territorial entities, international organizations of public law and any public entity.

Chapter 10

Principal penalties enforceable to legal entities

Article. 13. The penalties pointed out in this subheading can be imposed in a joint manner, tow or more at the time. They are as follow:

  1. Fine between five (5%) and twenty percent (20%) of brute annual income that the legal entity had obtained the year before.
  2. Dismantling of the legal entity for twenty (20) years.
  3. Suspension of activities for a time that may not exceed eight (8) years.
  4. Closure of venues and establishments for a time that it may not exceed eight (8) years.
  5. Prohibition to carry out in the future in a definitive manner activities in whose exercise a crime was committed, favored or concealed.
  6. Ineligibility to contract with the purblind sector for a time that may not exceed four (4) year, unless there is a commitment to implement an effective criminal compliance program for the legal entity convicted as a tool of rehabilitation.
  7. Legal intervention to protect, repair and remedy the rights of workers and creditors, the time may not exceed eight (8) years.

Chapter 11

Accessory penalties to legal entities

Article. 14. Accessory penalties of the legal entity are the following:

  1. Issuing of the decision: an abstract or the complete conviction will be published in a newspaper of national circulation by 8 days, this shall the determined by the Judge in the conviction.
  1. Exclusion to contract with the State for a time that does not exceed twenty (20) years.
  2. Temporal or permanent disqualification to participate in sales to the government and to carry out commercial activities.
  3. Remain under legal supervision for a period of up to eight (8) years.

Paragraph. Of Rehabilitation.

The legal entity that is convicted through a legal ruling and its excluded from participating in the allocation of grants or contractual proceedings, it may benefit from the possibility of rehabilitation during or after the time of the conviction, if it adopts an effective compliance program, and proves a rupture of all links with individuals and organizations that participated in illegal conducts.

It is understood that adequate and effective measures are establish in the reorganization of personnel, implementation of information and control systems, creation of an internal auditing structure to supervise de compliance and adoption of internal rules of liability and compensation. In any circumstance the legal entity may bring forward proof that the measures adopted are enough to show its reliability. If said proof is considered to be enough, the legal will not be excluded from a contractual procedure. To an extent the legal entity will have to show that it has made a retribution, or has committed itself to making a compensation corresponding to any damage caused for the criminal infringement, also it has to show that is has cleared the facts and circumstances in an exhaustive manner by actively cooperating with the authorities, and has adopted appropriate concrete technical, organizational and personnel measures to prevent any criminal infringement. The adopted measures of the legal entity will be evaluating taking into account the severity and particular circumstances of the criminal infringement. When the measures are considered inadequate, the legal entity will receive the motivation by the respective Judge, it shall be notified and subject to appeal.

Chapter 12

Criterions to legally determine the penalty of the legal entity

Article. 15. Principles. The penalties to legal entities should be effective, proportionate, and deterrent. In every case, any conviction should be guided by the informed principles of criminal law. In such manner that determines the quantity and nature of the imposed penalty to the legal entity, in regards to the duration, as well as the value of the fine. The judge must have in consideration the criteria stated in the following article.

Article. 16. Criterion. The judge shall take into account the following criterion:

  1. The absence of measures to prevent the felony, or its flawed implementation.
  2. Size and nature of the legal entity.
  3. Economic capacity of the legal entity.
  4. The severity of the felony.

Chapter 13

Application to political parties, unions, State own businesses, and corporate joint ventures

Article. 17. The provisions related to the criminal liability of legal entities are enforceable to political parties, unions, State own businesses and corporate joint ventures.

Chapter 14

Expiration of criminal proceedings

Article. 18. The criminal proceedings against a legal entity by the felonies contemplated in this Law are terminated by:

  1. By Statute of limitations.
  2. By the application of the principles of opportunity, invasion or a preliminary agreement in accord to the enforceable procedural law.
  3. By fulfillment of an effective cooperation agreement.

Article. 19. Expiration of the criminal proceedings.

A criminal proceeding against a legal entity regarding the crimes contemplated in this law expire in accordance with art. 11 of this law, an all other dispositions compatible with the Criminal Code, according to the special nature of the legal entity.

Chapter 15

Procedural aspect of the legal entity

Article. 20. Not regulated in this Law. The provisions of Law 906 of 2004 and the Criminal Procedural Code shall apply to legal entities, when possible.

Article. 21. Cooperation.

A enterprise felony is primarily transnational, which implies the cooperation of all agencies in Colombia and other countries committed to the investigation of legal entities.

Paragraph.

All anti-corruption agencies and the academia will be required to spread the reach of this Law, and the promotion of new practices for its fulfillment.

Article. 22. Opportunity principle.

The rules of the principle of opportunity will applied to the legal entity as establish in the Criminal Procedural code, enforceable for its nature.

Article. 23. Representation.

The legal entity shall be represented by its trusted attorney. If it does not have one, one from public office shall be appointed to it, provided that the legal entity shows that it has no economic resources to pay for one or is unwilling to name one, there shall not be judicial discretion with the Specialized knowledge criminal Judge. Ideal public defenders will be created to defend a legal entity. The justice administration shall regulate this public defenders.

Article. 24. Writ of summons.

A legal entity will be notified in its personal address or in any of its venues, if it has one. If it were not possible it shall be summoned through edicts of three (3) days in the biggest nation wide newspaper where the legal entity has its address. In not a single case can the legal representative, even if it is a lawyer, can exercise the defense of the legal entity.

Chapter 16

Implementation of this Law

Article. 25. Implementation.

This Law modifies the Criminal and Criminal Procedural code, the respective special laws, provided that they are compatible with the special nature of legal entities.

Article. 26. Extraterritoriality.

Colombian Judges shall be competent to know about the criminal liability of legal entities when all or part of the felony is committed in Colombian territory, or when legal entities have Colombian nationality.

Article. 27. Entry into force

The present law will enter into force six (6) months after its publication in the Official Diary, with the exception of Art. 21 that shall entry into force the day after its publication.

 

[1]Expert lawyer in enterprise criminal law. Corporate defense. President and Director of the Colombian Association of Enterprise Criminal Law. ASCOLDPEM.

[2] International norms such a as the Anti-bribery management system ISO 37001, the UK Bribery Act or the US Foreign Corrupt Practices Act 1977 establish an application beyond their borders. This way whether it be a Spaniard, British or American businesses all are required to have a compliance program to trade or work between them.

[3] www.eltiempo.com , marzo 17 de 2017.

[4] Claus Roxin en entrevista con el periódico el tiempo de Bogotá D.C., 17 de marzo de 2017. www. eltiempo.com