Colombia Fights Back Against Corporate Corruption

by Michael Diaz Jr. - Diaz Reus International Law Firm
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Corruption is prevalent in the global marketplace. Colombia is not an exception. It currently scored 94 in the Corruption Perceptions Index of 2012 - the 36th most corrupt of 176 countries measured. However, in order to fight corruption, Colombia has recently adopted a set of anti-bribery provisions to be applied in local business transactions, as well as in international business transactions. On the domestic front, Colombia enacted Law 1474 of 2011 that focuses on corrupt transactions between Colombian or foreign individuals, companies, and Colombian public entities and their employees. Internationally, Colombia joined the Convention on Combating Bribery of Foreign Public Officials in International Business Transaction (OECD Anti-Bribery Convention) on January 19, 2013, to prevent and deter corruption in international business transactions. Because the implementation of this Convention will have significant impact within the country, this article briefly explains the provisions of the OECD Anti-Bribery Convention.

Scope

The Organization for Economic Cooperation and Development (OECD) is an intergovernmental organization that seeks to help governments foster economic growth, prosperity, and employment through co-operation and policy dialogue among its members.

Focus

The OECD Anti-Bribery Convention mainly focuses on bribe givers to promote fair competition in international business transactions. Parties to the OECD Anti-Bribery Convention are committed to combat the supply of bribes by their nationals—individuals as well as companies—to any foreign public official. However, the OECD Anti-Bribery Convention is not self-executing. Members must enact relevant local laws.

Most Significant Compromises

According to the main provisions of the OECD Anti-Bribery Convention, the parties are required to:

a. criminalize bribery of foreign public officials in international business transactions;

b.  define “foreign public official;”

c. establish the bribery of foreign public official as a predicate offense of money laundering;

d. strengthen accounting and auditing standards;

e. exclude political and economic considerations in prosecuting the offense; and,

f.  facilitate mutual legal assistance.

The OECD Anti-Bribery Convention also contains a set of recommendations to help members deter and combat corruption in international transactions. Among those recommendations, the Convention encourages the companies of member nations to adopt strong internal controls.

Compliance

Members of the OECD Anti-bribery Convention are subject to periodic compliance reviews conducted by the OECD Working Group on Bribery in International Business Transactions. The OECD Working Group is a peer-review monitoring system. Its mission is to ensure that all members meet the commitments established in the Convention, as well as the OECD’s 2009 Anti-Bribery Recommendations.

Peer-review monitoring has three steps. First, the OECD Working Group reviews the member’s legislation to determine if that country must change or enact new legislation in order to implement the Convention. Second, the OECD Working Group evaluates if the member is effectively applying the legislation. Third, the OECD concentrates on enforcement efforts and on additional recommendations.

Recommendations

The OECD Working Group issued its first report about Colombia in December 2012. The Working Group’s recommendations for Colombia include:  

a. Define more clearly “foreign official” in its legislation. The Foreign Corrupt Practices Act (FCPA), for example, defines “foreign official,” as “any officer or employee of a foreign government or any department, agency, or instrumentality thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of any such government or department, agency, or instrumentality, or for or on behalf of any such public international organization.”

b.  Make legal persons liable when lower level persons engage in foreign bribery. This recommendation should cover cases where the highest level managerial authority directs or authorizes a lower level person to offer, promise or give a bribe to a foreign public official; or when the highest level managerial authority fails to prevent a lower level person from bribing a foreign public official, including through a failure to supervise him or her or through a failure to implement adequate internal controls, ethics, and compliance measures.

c. Clarify that it is not necessary to establish the corrupt act of a natural person in order to establish the corrupt act of the legal person.

d. Increase sanctions.

e. Make explicit the applicability of territorial and nationality jurisdiction. Nationality jurisdiction means that the anti-bribery provisions will apply even if the conduct at issue has no Colombia nexus. Thus, to Colombian companies the anti-bribery provisions should have extraterritorial jurisdiction—the law can be violated if an improper payment scheme is devised and executed entirely outside of the Colombia. As to foreign companies, the anti-bribery provisions should apply only to the extent there is territorial jurisdiction.

f.  Clarify its commitment to mutual legal assistance (MLA). MLA in criminal matters is a formal process to obtain and provide assistance in gathering evidence for use in criminal cases.

g. Explicitly disallow the tax deductibility of bribes to foreign officials. The OECD believes that such express prohibition of the tax deductibility of bribes serves as a strong and politically visible symbol of the common international commitment to combat bribery.

Despite the complexities associated with proscribing foreign bribery, it is clear that Colombia is on its way towards implementing a strong, effective legal framework.  All companies doing business in Colombia should ensure compliance with these evolving standards in order to safeguard themselves from sanctions. To do so, companies should strongly consider retaining the assistance of legal counsel to establish sound, workable anti-corruption compliance programs. An effective anti-corruption compliance program needs to be risk-based, to ensure that it is properly designed to mitigate the most substantial risks of corruption and bribery within the company.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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