Corporate criminal liability in Argentina: a short term to establish a proper compliance program
Law Nº 27,401, establishing a specific regime on corporate criminal liability in Argentina, was published in the Official Gazette on 1 December 2017, and will become effective on 1 March 2018.
Under Articles Nº 1 and 2 of the Law Nº 27,401, private legal entities may be held accountable when either with their direct or indirect involvement, or on their behalf, interest or benefit, one of the following criminal offenses legislated by the Criminal Code of the Nation is committed:
- Local and international bribery, and influence peddling (Articles Nº 258 and 258 bis of the Criminal Code of the Nation);
- Negotiations incompatible with public office (Article Nº 265 of the Criminal Code of the Nation);
- Illegal exactions committed by a public official in his / her benefit, or that of a third party (Article Nº 268 of the Criminal Code of the Nation);
- Illegal enrichment of public officials and employees (Articles Nº 268 (1) and (2) of the Criminal Code of the Nation); and
- Aggravated false balance sheets and reports (Article Nº 268 of the Criminal Code of the Nation).
The liability will remain even though the crimes have been committed by an individual lacking capacity to represent the legal entity, as long as the legal entity has ratified the activity, even tacitly.
Failing to identify or prosecute the individual involved in the criminal offense does not impede to convict the legal entity, provided that the crime could not have been committed without the acquiescence of the legal entity´s bodies (Ley Nº 27,401, Article Number 6). The individuals and companies liabilities are thus independent.
Law Nº 27,401 provides for the following penalties: fines (ranging from two to five times the undue benefit that was obtained or that could have been obtained as a consequence of the crime); full or partial suspension of activities for up to ten years; suspension from participating in public bids of works and services – or in any State-related activity – for up to ten years; dissolution and liquidation of the legal entity if it has been established for the sole purpose of committing the crime, or such acts are the legal entity’s principal activity; loss or suspension of government benefits; and publication of a conviction´s summary (Article Nº 7). Additionally, the forfeiture of the assets that are the outcome of the crime also applies (Law 27,401, Article Nº 10).
Pursuant to Article Nº 9 of Law Nº 27,401, the legal entity shall be exempted from penalties when simultaneously: (i) has spontaneously denounced the crime as a consequence of an internal detection and investigation activity; (ii) has implemented a proper integrity program before the facts under prosecution occur, and the breach of such a program has required an effort by the participants in the offense; and (iii) has returned the undue benefit obtained through the crime.
The statute of limitations to prosecute legal entities is of 6 years (Law Nº 27,401, Article Nº 5).
The Law Nº 27,401, in its Article Nº 22 and following, regulates the characteristics and content of the integrity program, to prevent, detect, and correct the above-explained criminal offenses.
The existence of a compliance program is mandatory for legal entities to engage in certain public procuring (Law Nº 27,401, Article Nº 24). However and in any case, if the legal entity has in place an integrity program, it may be benefited with the exemption of penalties in certain circumstances (see above the explanation on the exemption of penalties).
Under Article Nº 23 of the Law Nº 27,401, the integrity program must include at least the following elements:
- A code of ethics or conduct (or the existence of integrity policies and procedures), applicable to all directors, managers, and employees, regardless of the position or functions held, guiding the planning and enforcement of their duties or tasks, insofar as it prevents the commission of the crimes;
- Specific rules and procedures for preventing unlawful acts within the scope of public tenders, in the performance of administrative contracts, or in any other interaction with the public sector; and
- The performance of regular training for directors, managers and employees about the integrity program.
The integrity program may also contain:
- Periodical risk analysis and the consequent amendment of the program;
- Evident support for the program by the top management;
- Internal reporting channels, opened to third parties and promoted appropriately;
- A whistleblowers´ protecting policy;
- An internal investigation system, respecting the rights of those under investigation and imposing sanctions for the violations of the code of ethics;
- Procedures to check the integrity and history of third parties or business partners, including suppliers, distributors, service providers, agents, and intermediaries, when contracting their services;
- Due diligence during reorganizations and mergers and acquisitions transactions, to evaluate potential illegal actions or vulnerabilities in the legal entities involved;
- Continuous monitoring and evaluation of the integrity program´s effectiveness;
- An internal officer in charge of developing, coordinating and supervising the integrity program; and
- Compliance with the regulations issued on these programs by the federal, provincial, or municipal authorities.
Either their companies have regular business with the government or not, directors and managers in Argentina have a pressing 90-days term to put in place a proper compliance programme, not only to protect their companies but also their own liabilities against potential criminal offenses that partners, directors, managers, employees or any third party – acting on their behalf or not – may commit.
Mario E. Castro Sammartino
 The Civil and Commercial Code of the Nation lists the private legal entities in its Article Nº 148, and regulates them in Articles Nº 151 and following. The criminal liability applies to all private legal entities, even when the State has a participation in them (Law Nº 27,401, Article Nº 1).
 Contracts that must be approved by a public official with a rank equal to or higher than a minister; and contracts that fall under the national public procurement regime (Decree Nº 1,023/ 2001), the public works regime (Law Nº 13,064), the public works concession regime (Law Nº 17,520), and the public-private partnership regime (Law Nº 27,328).
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