December 7, 2022

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In evaluation: prison and regulatory enforcement in opposition to firms in Colombia

In evaluation: prison and regulatory enforcement in opposition to firms in Colombia

In evaluation: prison and regulatory enforcement in opposition to firms in Colombia

All questions

Introduction

In Colombia, the authorities empowered to research and prosecute company conducts rely upon the precise matter below investigation. The Basic Prosecutors Workplace (GPO) investigates prison actions carried out by people, the Superintendence of Corporations investigates company exercise associated to transnational bribery and cash laundering, the Superintendence of Trade and Commerce investigates anticompetitive conduct by people and firms and the Monetary Superintendence of Colombia investigates issues associated to securities and banking regulation.

The investigative powers of every authority rely upon whether or not the case is administrative or prison. Nonetheless, completely different authorities can examine the identical celebration on the similar time for a similar conduct if the conduct violates completely different legal guidelines or provisions.

The above-mentioned authorities have particular powers to conduct investigations, together with daybreak raids. The Superintendences have inspection, supervision and management features below which they’ll even carry out daybreak raids on company premises with out a judicial warrant. In distinction, whereas the GPO additionally has the power to conduct daybreak raids, it does so below judicial warrant, as a result of the GPO can search personal domiciles and intercept communications.

Authorities priorities can have an effect on the prosecutorial operate. Although there’s a separation of features between the federal government and every authority, sure investigations have been prioritised upon particular request of the federal government, particularly when there are results on public coverage that it has prioritised.

Companies are legally obliged to cooperate with the authorities conducting company investigations. Nonetheless, authorities should undertake such investigations in compliance with the due course of ideas of the Political Structure of Colombia (the Structure), the Administrative Code and the Code of Civil Process. Authorities can impose important fines on people and authorized entities which can be confirmed to be blocking an investigation, therefore stopping the authority from accessing the data below investigation, by illegitimate means.

Conduct

i Self-reporting

Companies are usually not obliged to self-report inner wrongdoings to authorities in Colombia. Nonetheless, self-reporting to regulation enforcement businesses could also be advisable below sure circumstances. The statutorily required firm auditor does have a authorized obligation to report back to authorities corrupt conduct that it detects in the midst of its auditing actions. Failure to take action will set off authorized penalties for the auditing firm and the auditors themselves.

The directors of an organization (i.e., its administration and the statutory auditor) even have a authorized obligation to tell shareholders and traders as quickly as they change into conscious of inner wrongdoing.

Enterprise firms that self-report can apply for immunity supplied they confess and decide to cooperate with the competent authority till the top of the investigation. First candidates can acquire immunity from the Superintendence of Corporations2 for fines of as much as the best worth between the profit obtained or supposed by the acts of corruption or the equal of roughly US$50 million once they present proof of corruption, confess and cooperate. Relating to antitrust behaviour, first candidates can acquire immunity from the Superintendence of Trade and Commerce3 for fines that may be as much as:

  1. the working revenue of the corporate for the fiscal yr instantly previous the one by which the penalty is being imposed, with a most penalty cap of 20 per cent of such worth;
  2. the fairness of the corporate for the fiscal yr instantly previous the one by which the penalty is being imposed, with a most penalty cap of 20 per cent of such worth;
  3. an quantity set in minimal month-to-month wages, with a cap of roughly US$24.7 million;
  4. the worth of the general public contract in instances of conduct which have affected or might have an effect on public procurement processes, with a most penalty cap of 30 per cent of such worth;
  5. however the foregoing, if the SIC can quantify the earnings acquired by the offender from the conduct, it might impose as a penalty fines for as much as 300 per cent of such revenue; and
  6. within the case of people, roughly US$500,000.

In accordance with provisions of the Felony Code, workers, managers and administrators below investigation for crimes can attempt to mitigate prison sanctions by making use of to the GPO for a discount in penalties and imprisonment; the success of the applying will rely upon the extent and worth of the data that the person gives to the prosecutor and the extent of cooperation.

ii Inside investigations

Corporations can conduct their very own inner investigations and this apply is very beneficial for companies that suspect wrongdoing. An intensive and full investigation ought to present the corporate with the weather crucial to find out the seemingly penalties of the doable violation and to find out whether or not it could actually and will self-report, or not.

Inside investigations can embody the evaluation of paperwork, witness interviews and e-discovery on workers’ working instruments. The regulation grants authorized privilege to work product from each inner and exterior counsel.

If satisfactory protocols are adopted, inner investigations are coated by legal professional–shopper privilege and can be utilized for leniency functions, when there’s proof of wrongdoing. To be privileged, discussions with counsel should correspond to reputable consultations associated to a selected concern of the corporate, not merely of the people, and should correspond in nature to authorized recommendation supplied to the corporate. Corporations don’t usually retain their very own counsel for interviews with workers. Nonetheless, if an allegation in opposition to an worker is made, the corporate should observe particular protocols that enable the worker to submit their defence on the case.

When firms apply for leniency, the process offers with the people concerned. Often these people retain their very own counsel when formal proceedings are began.

On the prison facet, the grant of a request from the GPO for confidential data in the midst of a prison investigation requires prior authorisation from a decide. Administrative authorities such because the Superintendence of Corporations and the Superintendence of Trade and Commerce don’t require a judicial warrant for his or her requests for data (supplied that the data is related for the investigation).

iii Whistle-blowers

In the course of the previous few years, the GPO, the Superintendence of Trade and Commerce and the Superintendence of Corporations have constructed strong programmes for whistle-blowers to report potential unlawful conduct. Therefore, whistle-blower studies of potential unlawful conduct have change into extra widespread and efficient by way of uncovering wrongdoing.

The GPO whistle-blower programme features a witness safety programme. This programme is open to victims and witnesses who’re offering data in prison proceedings. Below the programme, people will be relocated to a different space and granted the monetary and psychological help wanted to provoke a brand new life.

Leniency programmes are operated below administrative guidelines by each the Superintendence of Trade and Commerce and the Superintendence of Corporations. These procedures would not have a witness safety programme. The leniency programmes of those two authorities ponder each full and partial amnesty for fines for companies and people who confess to having participated in illegal conduct and who present well timed, detailed and efficient help to the authority competent for detecting, investigating and prosecuting the conduct concerned.

Leniency advantages can be found even when the authority is already conscious of the conduct and has initiated an investigation.

Corporations ought to ponder nameless inner reporting hotlines, following the rules of the anti-money laundering (AML) and anti-bribery and corruption (ABC) administrative authority, the Superintendence of Corporations, they usually should make sure that whistle-blowers are shielded from retaliation for his or her claims.

Enforcement

i Company legal responsibility

In Colombia, authorized entities can’t be thought-about criminally liable for AML, ABC or antitrust violations. Below Colombian legal guidelines, prison duty is reserved for people. Nonetheless, authorized entities liable for such violations might face consequential civil and administrative legal responsibility. Investigations in opposition to authorized entities will be run in parallel with prison investigations in opposition to their workers and third events performing on their behalf.

The civil legal responsibility of authorized entities entails the duty to indemnify third events for hurt ensuing from torts which can be confirmed inside prison proceedings or as a part of unbiased civil proceedings.

Questions of administrative legal responsibility are decided in administrative sanctioning proceedings carried out by the relevant administrative authority. The Superintendence of Corporations is the regulator answerable for investigating and penalising transnational bribery and even violations of native corruption legal guidelines, in addition to AML and ABC conduct. Moreover, the Superintendence of Corporations can examine obliged entities for not complying with their regulatory requirement to implement AML and ABC programmes. The Superintendence of Trade and Commerce is the regulator that oversees antitrust, information privateness, shopper safety and industrial property issues.

Relying on the defence methods of people and authorized entities, events ought to fastidiously consider the advantages and drawbacks of getting the identical counsel. As an example, throughout a prison investigation in opposition to an worker, the authorized entity could also be recognised as a sufferer; subsequently, having the identical counsel will set off conflicts that may and needs to be anticipated from the outset. Equally, throughout administrative antitrust investigations, by which authorized entities and people will be topic to fines for their very own participation and actions, an worker might base their defence on the existence of company tips whereas the authorized entity might flag up particular person behaviour working opposite to current compliance programmes, coaching programmes and inner controls.

ii Penalties

The Superintendence of Corporations (performing as transnational bribery administrative authority) can impose fines of as much as the best worth between the profit obtained or supposed by the acts of corruption or 200,000 authorized minimal month-to-month salaries (roughly US$50 million on the time of writing). Along with financial fines, the Superintendence of Corporations might request a everlasting debarment of the authorized entity from public procurement proceedings and from eligibility for public subsidies and advantages for as much as 10 years. It could order the publication of the ultimate sanctions on the web site of the authorized entity and within the public commerce file stored by the Chamber of Commerce, for as much as one yr, and the removing of administrators, officers or workers who’ve tolerated the conducts.

The Superintendence of Trade and Commerce (performing because the antitrust administrative authority) can impose on authorized entities that breach the competitors regime particular efficiency orders and fines of as much as:

  1. the working revenue of the corporate for the fiscal yr instantly previous the one by which the penalty is being imposed, with a most penalty cap of 20 per cent of such worth;
  2. the fairness of the corporate for the fiscal yr instantly previous the one by which the penalty is being imposed, with a most penalty cap of 20 per cent of such worth;
  3. an quantity set in minimal month-to-month wages, with a cap of roughly US$24.7 million;
  4. the worth of the general public contract in instances of conduct which have affected or might have an effect on public procurement processes, with a most penalty cap of 30 per cent of such worth;
  5. however the foregoing, if the SIC can quantify the earnings acquired by the offender from the conduct, it might impose as a penalty fines for as much as 300 per cent of such revenue; and
  6. within the case of people taking part within the infringement of the competitors regime, roughly US$500,000. The effective on people can’t be paid, straight or not directly, by the authorized entity.

Equally, the Superintendence of Trade and Commerce (performing as information privateness administrative authority) might impose orders and fines of as much as 2,000 authorized minimal month-to-month salaries (roughly US$500,000 on the time of writing) on authorized entities in breach of the information privateness regime.

In prison proceedings, authorized entities might face oblique prison legal responsibility in Colombia, which incorporates:

  1. civil legal responsibility: the authorized entity could also be required to reply for all damages attributable to the punishable act of a person associated to it, as soon as the sentence is closing;
  2. piercing the company veil: this measure seeks to determine the people who personal the authorized entity and will face duty for the offences. The GPO can take this measure at any stage within the prison course of;
  3. debarment from contracting with public entities or personal authorized entities utilizing public assets: when a person is convicted of crimes in opposition to the general public administration or any of the crimes contemplated in Colombia’s anti-corruption statute,4 that particular person will probably be completely debarred from contracting with the Colombian state. As well as, debarment will apply to the authorized entities for whom the convicted particular person acts (or acted once they dedicated the crime) as administrator, authorized consultant, member of the board of administrators or controlling companion, and to their father or mother firms and subsidiaries; and
  4. suspension and cancellation of authorized standing: at any stage of the prison course of and earlier than indictment, the prosecutor might request the suspension as a preliminary measure, to impact the non permanent closure of business institutions when it’s confirmed that the authorized entity is devoted, partially or completely, to prison actions.

iii Compliance programmes

The duty to implement compliance programmes in Colombia is barely relevant to firms upon the path of the regulators, to mitigate AML and ABC dangers. This obligation applies to any entity within the monetary sector supervised by the Monetary Superintendence, in addition to to entities within the non-financial sector whose monetary statements point out that they meet sure authorized thresholds.

As an example, all entities categorized as international commerce operators have this obligation below the supervision of the Directorate of Nationwide Taxes and Customs. Examples of international commerce operators are customs brokers, port firms, customers of free zones, everlasting customs customers and high-volume exporters, amongst others.

On this regard, authorized entities within the non-financial sector that fulfil the standards outlined in Chapter X of the Fundamental Round of the Superintendence of Corporations should implement an AML system and submit studies of suspicious transactions to the Monetary Evaluation and Data Unit. In 2022, the final obligation applies to entities below everlasting oversight of the Superintendence and reporting complete property or income equal to or higher than 40,000 authorized minimal month-to-month salaries (equal in 2021 to roughly 36 billion Colombian pesos or roughly US$9.12 million). Chapter X consists of different standards that, if met, would set off the duty, together with offering companies for digital property, amongst others.

Equally, authorized entities within the non-financial sector that fulfil the standards outlined in Chapter XIII5 of the Fundamental Round of the Superintendence of Corporations should implement an ABC programme. In 2022, the final obligation applies to entities below everlasting oversight of the Superintendence, performing worldwide transactions or executing contracts with authorities entities, and reporting complete property or income equal to or higher than 30,000 authorized minimal month-to-month salaries (equal in 2021 to roughly 27 billion Colombian pesos or roughly US$6.8 million). Chapter XII consists of different standards that, if met, would set off the duty, together with actions in particular sectors with decrease monetary thresholds.

The information privateness regime doesn’t embody an obligation to implement a compliance programme, however there’s an obligation to have an inner handbook of information safety procedures. Nonetheless, there’s a risk of receiving a lenient therapy from the Knowledge Safety Authority when inner procedures exhibit efforts by the celebration to fulfil necessities in accordance with the accountability precept. Any information controller or processor in Colombia will need to have a privateness coverage, an inner procedures handbook and the capability to exhibit having obtained correct authorisation from information topics to course of their information (consent).

The antitrust regime gives no advantages for implementing a compliance programme (nor does it impose an obligation to have one). Nonetheless, on 24 January 2022, the Colombian President issued Decree 092 of 2022 via which the construction of the Superintendence of Trade and Commerce was modified, creating the Compliance Path, which is a part of the Deputy of Competitors Safety Division. The brand new Compliance Path of the Deputy of Competitors Safety will probably be answerable for the next:

  1. following up the ensures accepted throughout administrative investigations associated to breaches to the competitors safety and illegal competitors regulation;
  2. the surveillance of circumstances set almost about requests of merger management clearances;
  3. enterprise the executive procedures associated to the breach of ensures, circumstances, the obstruction of investigations and the omission of requests of knowledge; and
  4. the efficient implementation of compliance programmes established as a part of the ensures and circumstances.

Contemplating that prison proceedings in Colombia are introduced in opposition to people, the implementation of correct compliance programmes by authorized entities could also be used as an argument for the shortage of company involvement within the prison exercise of an worker. This may occasionally help the victimisation of the authorized entity for each the acts of the worker and the worker’s energetic intent within the wrongdoing.

In accordance with the Superintendence of Corporations regime (for AML methods) and tips (for ABC programmes), the next are the essential parts of appropriate compliance programmes.

For a correct AML system, authorized entities ought to:

  1. appoint a compliance officer;
  2. design an AML system, together with all of the relevant insurance policies, procedures and the creation of a danger matrix;
  3. exhibit approval of the AML programme by the highest company administration physique;
  4. design and implement audit and monitoring mechanisms associated to AML issues;
  5. implement a coaching programme on AML obligations and measures, and publicise the AML system amongst related stakeholders; and
  6. outline correct due diligence procedures and embody standards to use enhanced due diligence procedures when required on account of higher publicity to AML dangers.

For a correct ABC programme, authorized entities ought to:

  1. embody a pledge by senior administration committing to a tradition of compliance;
  2. implement strategies for danger identification, measurement and evaluation for the actions of the corporate and definition of the mechanisms of management for transnational bribery and different types of corruption;
  3. arrange all of the paperwork, protocols, insurance policies and procedures crucial for the programme;
  4. appoint a compliance officer;
  5. outline correct due diligence procedures to determine third-party dangers of corruption;
  6. design and implement audit and monitoring mechanisms to make sure compliance with the programme;
  7. implement an efficient coaching and communication programme for workers and third events;
  8. promote authorities’ official channels to report transnational bribery and different types of corruption; and
  9. arrange satisfactory communication channels to convey the message on compliance and to obtain suggestions, and arrange a whistle-blower hotline.

iv Prosecution of people

Felony proceedings in Colombia are introduced in opposition to people. Because of this, the direct penalties of prison conduct, together with imprisonment and prison fines, are imposed on people.

Authorized entities might cowl the authorized charges of the defence of people associated to the entity. Nonetheless, authorized entities ought to contemplate potential conflicts of curiosity between the defence of the person and the authorized entity’s pursuits, as talked about in Part III.i.

Authorized entities ought to contemplate the character of the prison investigation into people performing as an administrator, authorized consultant, member of the board of administrators or controlling companion of the entity. If the conduct below investigation is said to crimes in opposition to the general public administration or to any of the crimes contemplated in Colombia’s anti-corruption regulation,6 an additional conviction for such crimes will generate a everlasting debarment of the person and the authorized entity from public procurements, as indicated in Part III.ii. The debarment will cowl contracting not solely with public entities, but in addition with personal entities utilizing public assets, and can have an effect on not solely the authorized entity, but in addition its father or mother firms and subsidiaries.

Confirmed prison offences may represent a simply trigger for firing an worker. This resolution should observe the due course of outlined within the Structure, the labour laws and the worker handbook. Disciplining an worker might have an effect on their cooperation throughout an inner investigation and even put leniency functions earlier than the authorities in danger, because the authorities anticipate to obtain full cooperation from the leniency applicant (together with its workers and any people concerned).

Inside investigations should respect and assure workers’ intimacy and privateness. As talked about in Part II.ii, correct information safety measures needs to be taken upfront to grant authorized entities authorized entry to the workers’ sources of knowledge. If this isn’t doable, authorized entities should acquire correct consent and authorisation earlier than accessing data which will include the private information of workers.

Worldwide

i Extraterritorial jurisdiction

Administrative authorities in Colombia solely have powers to conduct investigations in opposition to firms and people for unlawful conduct that has results or violates protected authorized rights or property within the Colombian territory in accordance with the territorial precept.

Colombian prison regulation has extraterritorial impact on individuals within the following circumstances:

  1. individuals who commit a criminal offense overseas in opposition to the existence and safety of the state, the constitutional regime, the financial and social order or the general public administration, or falsify nationwide foreign money or have interaction within the crime of financing terrorism and administration of assets associated to terrorist actions;
  2. individuals who, within the service of the Colombian state, take pleasure in immunity recognised by worldwide regulation and commit a criminal offense overseas;
  3. individuals who, within the service of the Colombian state, don’t take pleasure in immunity recognised by worldwide regulation and commit a criminal offense overseas apart from these talked about in Part I, once they haven’t been dropped at trial overseas;
  4. Colombian nationals, in Colombia after having dedicated a criminal offense in international territory, who’re then punished below Colombian prison regulation with a custodial sentence;
  5. foreigners in Colombia, after having dedicated a criminal offense overseas to the detriment of the state or a Colombian nationwide; and
  6. foreigners who’ve dedicated a criminal offense overseas to the detriment of a foreigner, supplied that these circumstances are met:
    • the crime happens in Colombian territory;
    • the crime warrants a custodial sentence in Colombia the minimal for which isn’t lower than three years;
    • the crime shouldn’t be a political crime; and
    • the request for extradition has not been granted by the Colombian authorities. When the extradition shouldn’t be accepted, there will probably be a prison continuing.7

The Colombian Felony Code additionally has extraterritorial impact for prosecuting cross-border bribery of a international public official in worldwide transactions.

ii Worldwide cooperation

Colombia’s authorities has lately been extra energetic in cooperating with different international locations’ regulation enforcement and prosecutorial features. The current ‘FIFA-gate’ corruption case is an instance of the GPO offering help in a multi-jurisdictional case.

As well as, cooperation of this sort shouldn’t be essentially supplied below treaty obligations – some is carried out below multilateral agreements that don’t present for the potential for extradition however enable for exchanges of related data the place it’s legally permissible to share the data with out violating confidentiality and due course of.

iii Native regulation concerns

Strict information privateness, legal professional–shopper privilege and confidentiality inside every investigation are due course of ideas that needs to be absolutely and correctly thought-about by each authority, as these are elementary values included within the Structure. A breach of any of those ideas containing elementary rights may render an investigation unlawful and proof gathered in breach of due course of can’t be included in an investigation.

Yr in evaluation

The Superintendence of Corporations issued Exterior Round No. 100-000011 on 9 August 2021, by which it created Chapter XIII of its Fundamental Authorized Round and outlined new standards for figuring out whether or not firms should undertake an ABC programme. The adjustments launched elevated the variety of firms obliged to implement this type of programme and embody, as potential obliged entities, branches of international entities. The adjustments prolong the duty to firms in any financial sector, get well the particular sector, which have decrease monetary thresholds, and create separate set off occasions that create the duty of stopping transnational bribery (for entities making worldwide transactions) or native corruption (for entities contracting with authorities entities).

Equally, the Superintendence of Corporations modified the regulation of AML programmes by its Exterior Round 100-000016 of 2020, as amended in April 2021. The adjustments targeted on considerably lowering monetary thresholds and together with sure forms of firms no matter their monetary outcomes; the conduct of actions associated to digital property was additionally included among the many new standards. Equally, the brand new Decision included sure actions, with decrease monetary thresholds, with a view to implementing a regime of minimal prevention measures (like a scaled-down AML system).

The surveillance of the correct implementation of those programmes has been characterised by a strictly formal method. The fines for not implementing an AML system have been based mostly merely on the actual fact of non-compliance with deadlines and formalities, and deep evaluation of the fabric impact of the shortage of such formalities is absent from the reasoning underlying the most recent choices.

Relating to corruption and antitrust, the Superintendence of Trade and Commerce has taken a place in sanctioning acts of corruption similar to restrictions on competitors in state contracting (bid-rigging). To help certainly one of its personal choices, by which it levied a effective of round US$82 million, the executive authority used proof that was furnished as a part of the evidentiary submission in a prison process.8

The Superintendence of Trade and Commerce’s place on information privateness is that it has jurisdiction on information processing carried out by international firms when the processing is carried out, even partially, within the Colombian territory. For this goal, the Superintendence at the moment argues that by putting in cookies on units situated in Colombia, the processing (or at the very least the preliminary assortment) of non-public information takes place in Colombia and the processing of such information should subsequently adjust to the Colombian information safety regime.

As well as, the brand new Compliance Path of the Deputy of Competitors Safety has already issued an order for the implementation of an antitrust compliance programme for a corporation that has violated antitrust provisions, following the Colombian Nationwide Commonplace 6378 of 2020.

Conclusions and outlook

In current choices of the Superintendence of Trade and Commerce in antitrust issues, the present administration determined to certify copies of the submissions filed by the defence attorneys with the Superior Council of the Judiciary (the best disciplinary authority for attorneys). The Council is to rule on the potential for disciplinary offences arising from the vehement tone of the arguments introduced by the defence attorneys. Within the opinion of the Superintendence (‘studying between the traces’), the arguments of the defence attorneys embody accusations of improper behaviour by public officers of the Superintendence, and the Superintendent himself, and for that reason the authority despatched the file to the Superior Council to pronounce on whether or not these arguments embody libellous statements.

This new place adopted by the Superintendence has produced various reactions, between those that argue that it might have an effect on the fitting of defence of people, by limiting the forcefulness of defence attorneys’ statements, and people who help the Superintendence’s place as a result of they imagine that unrestrained arguments of this sort might change into defamatory of public officers.

Additionally of be aware, there was a higher diploma of coordination between the Superintendence of Trade and Commerce and the Superintendence of Corporations. In a current case9 by which a number of firms (together with a international firm) had been fined for bid-rigging, the Superintendence of Trade and Commerce despatched copies of a file to the Superintendence of Corporations to research doable acts of transnational bribery.

The implementation of compliance programmes for antitrust issues is a sizzling matter that we contemplate will probably be trending within the subsequent couple of years. Although, as at in the present day, the implementation of an antitrust compliance programme shouldn’t be obligatory, the Superintendence of Trade and Commerce has began to ship orders to firms which have dedicated antitrust violations as obligatory.

Colombia is electing a brand new authorities in 2022, which can have an effect on the method of these authorities whose chairs are appointed by the President, together with the Superintendence of Corporations (the regulator for AML and ABC issues) and the Superintendence of Trade and Commerce (the regulator for information privateness and antitrust issues).

Content material is supplied for academic and informational functions solely and isn’t supposed and shouldn’t be construed as authorized recommendation. This may occasionally qualify as “Lawyer Promoting” requiring discover in some jurisdictions. Prior outcomes don’t assure comparable outcomes. For extra data, please go to: www.bakermckenzie.com/en/client-resource-disclaimer.