Anti-Corruption Compliance Risk in Argentina

Expert article by Pedro Serrano Espelta and Gustavo Luis Morales Oliver. Originally published on marval.com.ar in June 2013. Republished with the permission of Pedro Serrano Espelta. Brazil enacted Law No. 12,489 which sanctions acts of corporate corruption occurring abroad. This new law follows the trend of the US FCPA, the UK Bribery Act, and other foreign regulations. Therefore, companies doing business in Argentina and having specific connections with certain foreign jurisdictions may be exposed to sanctions under broad local and foreign anti-corruption regulation. Such risk should be addressed by strong compliance programs. Corporate / M&A Last August Brazil enacted Law No. 12,846, a new anti-corruption regulation that includes sanctions –among others– to corrupt corporate acts occurring abroad, following the trend of the US FCPA, the UK Bribery Act, and other foreign regulations. This new Brazilian law, which will enter in force in January 28, 2014 and has not yet been regulated by the Executive Branch, sets forth strict liability for companies breaching its provisions. Companies doing business in Argentina and having specific connections, for instance, with Brazil, the US or the UK may be exposed to sanctions under such foreign anti-corruption regulation. Additionally, corrupt acts taking place in Argentina will be subject to Argentine anti-corruption regulation including international conventions. Recent anti-corruption violations in Argentina, for instance, generated fines abroad for Ralph Lauren in excess of US$ 1.5 million. Other companies have suffered higher and lower fines but in all cases the existence of an appropriate compliance program has been most relevant in the final calculations of the fines. This is why companies that are subject to investigation or that have already been sanctioned strongly embed their compliance programs in their daily business operations. Indeed, the new Brazilian law specifically sets forth that the existence of a compliance program will be considered when imposing sanctions. Considering that increasing government intervention forces companies to deal with public officials in every step of their businesses, internal anti-corruption compliance programs are the most effective tool for appropriately addressing compliance risks in Argentina, both under local and foreign anti-corruption regulation. According to applicable regulation, guidelines and precedents, such programs need to meet the international standards and be appropriately adjusted to the Argentine legal and cultural environment (a classic mistake is failure to make such adjustment), involving the appropriate drafting of Compliance Codes, the design and implementation of policies that pre-establish how to proceed in every relevant case, training to employees and, in some cases, training and due diligence of third party contractors.   Pedro will speak at ACI’s Inaugural Miami Anti-Corruption Boot Camp, October 15-16, 2014: What’s Happening in the LATAM Region? Detecting Recent Corruption Schemes in Brazil, Venezuela, Colombia, Argentina, and Mexico To learn more about the event click on the image below:

Anti-Corruption Boot Camp

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Tags: Anti-corruption, FCPA