Chile Update: New Anti-Corruption Legislation
Recently, Congress approved legislation that seeks to amend certain dispositions contained in the Criminal Code. These modifications are aimed to provide a complete Anti-Corruption Statute by increasing penalties for certain offenses and to broaden criminal liability for legal entities. The legislation is also intended to help Chile comply with international standards set by the OECD regarding anti-corruption policies and to fulfill certain recommendations made by the OECD on Bribery in International Business Transactions.
New Criminal Offenses Introduced
The proposed changes introduce new types of criminal offenses for bribery in relation to public office or posts, corruption between private parties, and false or disloyal public administration. The new legislation will complement the bribery criminal offense already contained in the Criminal Code,
- Corruption between private parties. This modification seeks to protect fair competition in markets. The offense consists of someone infringing a duty of their position, in exchange of receiving any type of benefit to which he or she has no right.
- False administration. This part of the legislation is attempting to penalize offenses committed ‘from the inside’, by focusing on those who have the responsibility of managing another person’s assets. This new criminal offense imposes damages on a person, who while administrating another party’s assets, exceeds their regular faculties, functions, and/or performs actions or omissions which are overtly contrary to the interest of the holder of said assets.
Extension of Criminal Liability for Legal Entities
Regarding the broadening of criminal liability for legal entities, this new legislation introduces various additions and modifications to the Criminal Code:
- Introduction of criminal offenses by which legal entities can be held responsible. Now legal entities can be held accountable and penalized for new offenses added by the legislation (corruption between private parties and false administration, as mentioned above), and also for offenses which are already contained in the Criminal Code, to which they could not, as legal entities, be held accountable before. These offenses are misappropriation, incompatible negotiation, asset laundering, financing of terrorism, bribery, bribery regarding a foreign public official, and receiving stolen goods.
- Increasing penalties for legal entities. Regarding fines, the range by which they can be applied significantly rises, with fines for legal entities offenses changing from a minimum of 200 UTM up to 20.000 UTM, to a new minimum of 400 UTM up to 300.000 UTM (considering the value for the UTM, or Monthly Tax Unit, is CLP$48.000 C as of October 2018, which amounts to $70 USD approximately). The legislation also aims to apply the dissolution of the company as a sanction for more types of offenses, given that they have been committed at least once previously in the last five years.
Changes regarding bribery, misappropriation of public funds, fraud, and other offenses regarding public officials
Regarding these types of offenses, the new legislation plans to increase penalties for crimes committed by public officials, which will now be considered felonies instead of just criminal offenses. The aforementioned bribery in relation to office or post is also added, and the figure of bribery in relation to a foreign public official is modified, mainly by extending its range of application. New regulations regarding offenses committed by public officials, in general, are also set.
Over the last 16 years we have helped foreign companies of all sizes enter Chile and the Region. Often companies will have strong anti-bribery policies in place in their home country but when entering the Region their local staff will not have the same training as employees in the rest of the company. It is particularly important since many subsidiaries will not have the same oversight because there is no formal management team in place in the early days, local policies regarding anti bribery have not yet been put in place, or simply due to the difficulty of monitoring a subsidiary from afar.
Our recommendation is to review and provide resources to local employees. It requires special attention to detail which can be difficult when trying to manage the expansion into another country and the mountain of things that need to be done when growing the business internationally. Yet it is important and changes to Chilean Law will make it even more so.
Harris Gomez Group is an international law firm with offices in Santiago, Bogotá, and Sydney. Our firm has been working with mining equipment, service, technology providers both in Latin America for 16 years. We find that our clients appreciate that we understand the industry, provide fixed pricing, and take the time to learn our clients business.
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