In the last decade, Colombia has introduced several legislative measures against corruption. In 2011, Congress enacted the Anti-Corruption Statute, which amended the Criminal Code, introduced harsh sanctions against corrupt individuals and increased the term of debarment preventing former public officers from interacting with state-owned entities. In 2013, Colombia joined the OECD Anti-Bribery Convention. In 2016, Congress enacted one of the most recent legislative efforts against corruption, which included the recommendations from the OECD on corporate responsibility and effective prosecution against legal entities, leniency programmes and the obligation to adopt compliance programmes. Yet corruption levels have not appeared to decrease.
After completing the negotiations that resulted in the peace process in Colombia, there was an expectation that the Colombian government would focus on increasing and enhancing measures to combat corruption. Unfortunately, these efforts have been erratic. A report from 2016 concluded that in at least 43 per cent of the cases, participants in public bids in Colombia lost against unethical companies according to circumstantial evidence. This is 10 points higher than the global average.2 This scenario, coupled with recent corruption scandals in institutions such as the national police, former presidents and the courts, has reduced the expectations of a dramatic change in the corruption perception of the country.
Many maintain that the problem is not the legislation but the lack of effective enforcement. Some officers consider that implementing successful measures against corruption requires a multinational cooperation effort.
In Colombia, the laws assign responsibility for enforcement related to compliance matters to different authorities. The General Prosecutor's Office (GPO) is in charge of criminal anti-money laundering and anti-corruption investigations against individuals, and the Superintendence of Companies is in charge of investigations against legal entities. The Superintendence of Industry and Commerce (SIC) is responsible for the administrative prosecution of cartels, and can impose significant fines against individuals and legal entities.
II DOMESTIC BRIBERY: LEGAL FRAMEWORK
i Criminal law
In Colombia, legal entities cannot be direct subjects under criminal investigations. Only individuals are subject to such procedures. However, a legal entity could be held jointly and severally liable for any damage caused by its employees and executives, duly demonstrated during the criminal process followed against such individuals.3 This includes those cases in which an employee or executive is tied to the criminal process for having committed public or private corruption offences.
As a result, employees or executives as individuals have direct criminal liability. Legal entities for which those individuals work, have accessory civil liability. This civil liability is part of the criminal process and it is accessory because it depends on the judgment against the employee or executive.
Bribery of domestic officials offences
In Colombia, criminal liability for domestic bribery is set forth in the Colombian Criminal Code in multiple conducts.
Bribe solicitation4 takes place when a public official abuses his or her position, constraining or inducing someone to give, or promise to give, money or other undue profit.
Bribery5 takes place when a public official receives, directly or indirectly, money or other undue profit, or the simple acceptance of its promise, to delay or avoid an official act.
Indirect bribery6 takes place when a public official receives, directly or indirectly, money or other undue profit, or the simple acceptance of its promise, to perform an official act.
Giving or offering a bribe7 is when any person gives or offers money or other profit to a public official.
Definition of domestic public official
The Criminal Code defines 'public official' as any person currently employed by the government, judiciary, legislature, police and military forces, as well as certain officers of government-owned companies and individuals exercising public duties or administering public funds.8
Gifts, gratuities, travel, meals and entertainment
The Criminal Code does not provide quantitative or qualitative limitations on hospitality expenses. However, considering the broad definition of bribery, hospitality could produce a bribery effect when it has the potentiality to influence a public official in any way with respect to a decision that he or she would need to make, that is not in compliance with his or her duties.
The possibility of giving public officials hospitality of low value is based on the rulings of the Colombian courts. However, such rulings do not provide for a minimum or maximum amount for such hospitality. In general, the maximum amount will depend on the hierarchy of the public officer that receives the hospitality. A normal business occasion for a high-ranking officer would not be considered lavish or excessive if the price is not high under regular business custom.
Sanctions or legal consequences of domestic bribery in Colombia for legal entities are:
- Civil liability (torts) – the legal entity responds to all damages caused by the punishable act once the sentence is final.9
- Piercing the corporate veil – this measure seeks to identify the individuals who own a legal entity and can thus be direct subjects of the criminal action. This measure is taken by the Attorney General of the Nation at the beginning of the investigation or at any stage of the process.
- Suspension and cancellation of legal status – at any stage of the criminal process and before indictment, the prosecutor may request the suspension as a preliminary measure, generating the temporary closure of commercial establishments when it is proven that the offence was committed through the legal entity.10
- Finally, the legal entity (including its parent company, subsidiaries and affiliates) is banned from contracting with the state for a term of 20 years when one of its administrators, legal representatives, members of the board of directors or of the controlling shareholdings is convicted for public corruption, private corruption, unfair administration, misuse of privileged information and transnational bribery, among others. This inability is not given as a penalty in the criminal process but is a general debarment for the legal entity on state procurement.11
Commercial bribery offences
Private-to-private corruption is a crime in Colombia, and is included in the Anti-Corruption Statute. This crime is committed when someone, acting to the detriment of the interest of the legal entity where the individual acts as a director, manager, adviser or employee, offers or makes a payment or any other grant to a third party, to benefit himself or herself or any third party different from the legal entity.12
ii Administrative law
Bribery of domestic officials offences
In Colombia, non-public officials are not liable for domestic bribery under administrative law. Public officials are responsible for criminal behaviour under the Disciplinary Code (Law 734 of 2012).13
Penalties include fines, publication of the sanction in the media, being prevented from receiving government subsidies and administrative disciplinary sanctions.
Fines derive from the existence of an enforceable final judgment issued against the legal representative or administrator of the legal entity when they have been convicted of receiving or giving a bribe. The Superintendence of Companies may impose fines of up to 200,000 times the legal minimum wage if the legal entity benefited from the commission of that offence.14 In certain cases, the Colombian Antitrust Authority could see bribery as anti-competitive conduct in the public procurement context. If this is the case, the Superintendence of Industry and Commerce may impose fines of up to 100,000 times the minimum monthly wage on the legal entity involved in the anti-competitive conduct.15
Publication of the sanction on media – this reputational penalty consists of the publication of an extract from the decision of the Superintendence of Companies in widely circulated media and on the website of the legal entity for a period of one year.16
The prohibition on receiving governmental subsidies lasts for five years.17
Public officials are subject to administrative disciplinary sanctions based on the Disciplinary Code.
In Colombia, there are no provisions regarding private-to-private corruption under administrative law.
Public officials' participation in commercial activities
Public officials can participate in commercial activities or in any other activities while serving as public officials, as long as their position does not represent a conflict of interest. The conflict of interest prohibition lasts up to two years after the individual leaves his or her position as a public official.18
Political contributions by foreign citizens or companies
According to the Colombian Anti-Corruption Statute, any entity that makes a contribution to the political campaign of a candidate to the Colombian presidency, governors or mayors, exceeding 2 per cent of the maximum threshold for investment of the candidates in such campaigns, will be debarred or banned from entering into contracts with public entities of the respective administrative circumscription for which the candidate is elected. The prohibition on contracting with the entity will last for as long as the candidate is in office.19
In addition, no political party, movement, significant group of citizens, candidate or campaign will be able to collect contributions and individual donations exceeding 10 per cent of the total value of the expenses that can be made in the respective campaign.20 These values are set forth before the respective election.
Administrative and criminal enforcement
In Colombia, bribery is monitored by different regulators, depending on the matter. In the case of criminal enforcement, the GPO is in charge of criminal investigations against individuals. In the case of administrative investigations, the Superintendence of Companies is in charge of the enforcement of administrative anti-bribery measures. In addition, as mentioned before, in some cases the Superintendence of Industry and Commerce could investigate bribery as part of anti-competitive behaviour in the public procurement context.
Companies that have a statutory auditor appointed are subject to special supervision. Statutory auditors have the legal duty to report to the authority any corrupt practices that they detect in the activity of the companies. This report must be made within the six months following the day on which the auditor was made known of the corrupt act.
Since bribery entails the violation of a public official's independence by offering or delivering something of value, said offering or delivery must have the capacity to corrupt the public official. This implies that the conduct must be materially unlawful, that is, that the offering or delivery must have a real capacity to modify the conduct of the public official.21 This implies that the gift or promise must be sufficiently significant as to serve as a motive for the improper behaviour. Gifts or promises of nominal value, although formally constituting a criminal offence according to the legal definition, should not be considered bribery.22
Legal entities are not subject to criminal liability, as mentioned above. However, employees or executives under a criminal investigation may use various mechanisms to achieve an early termination of a criminal proceeding, such as:
- a guilty plea with the GPO. In this case, the defendants accept the commission of the crime, and their penalty is reduced to half or one-third of the legal penalty. Because of the guilty plea, convictions will be declared against them;
- a settlement agreement with the victim. In this case, there is no conviction but a decision in which the principle of discretionary prosecution is approved. If the individuals persist in this crime, this benefit will not be granted and a conviction will proceed; or
- a non-prosecution agreement.
III ENFORCEMENT: DOMESTIC BRIBERY
Year after year, new corruption scandals are unveiled in Colombia.23 In 2019, the country faced corruption scandals within the military forces, where several generals and individuals in high command have been dismissed for bid rigging in public procurement.24 Likewise, acts of corruption to manipulate the records of entry into the army were found in a plan to obtain early pensions.
Not even the special peace justice (JEP), created as a transitional justice tribunal after the peace process with the FARC, is excluded from this phenomenon. A former prosecutor of this tribunal, along with some other individuals, is being prosecuted for corruption and influence peddling.25
IV FOREIGN BRIBERY: LEGAL FRAMEWORK
i Criminal law
Bribery of foreign officials offences
Transnational bribery is a criminal offence in Colombia. The Transnational Bribery Law modified this criminal offence to meet the commitments to be met by Colombia under the OECD Anti-Bribery Convention.26 This Law sets forth that transnational bribery takes place when someone gives, promises or offers money or anything of value to a foreign public official, in exchange for an omission or delay of any act of that official, and in relation to international business transactions.
Definition of foreign public official
The Colombian Transnational Bribery Law defines 'foreign government officials' as any individual that:27
- holds a legislative, administrative or judicial position in a government, its political subdivisions or local authorities in a foreign jurisdiction, regardless of whether the individual was appointed or elected;
- performs a public function for the state, its political subdivisions or local authorities in a foreign jurisdiction or within a public body;
- is part of a state enterprise or an entity whose decision-making power is subject to the will of the state, its political subdivisions or local authorities, in a foreign jurisdiction; or
- is an officer or agent of an international public organisation.
Penalties are defined as follows:
- Civil liability (torts) – the legal entity responds to all damages caused by the punishable act once the sentence is final.28
- Piercing the corporate veil – this measure seeks to identify the individuals who own a legal entity and can thus be direct subjects of the criminal action. This measure is taken by the Attorney General at the beginning of the investigation or at any stage of the process.
- Suspension and cancellation of legal status – at any stage of the criminal process and before indictment, the prosecutor may request the suspension as a preliminary measure, generating the temporary closure of commercial establishments when it is proven that the offence was committed through the legal entity.29
- The legal entity (including its parent company, subsidiaries and affiliates) is banned from contracting with the state for a term of 20 years when one of its administrators, legal representatives, members of the board of directors or of the controlling shareholding is convicted for public corruption, private corruption, unfair administration, misuse of privileged information and transnational bribery, among others. This inability is not a penalty in the criminal process but is a general debarment preventing the legal entity from being involved in government procurement.30
- Fines – these derive from the execution of the administrative conduct of transnational bribery. The Superintendence of Companies may impose fines of up to 200,000 times the minimum monthly wage if the legal entity is found responsible for that offence.31
- Publication of the sanction in the media – this reputational penalty consists of the publication of an extract from the decision of the Superintendence of Companies in widely circulated media and on the website of the legal entity for a period of one year.32
- The prohibition from receiving government subsidies lasts for five years.33
ii Administrative law
Bribery of foreign public officials offences
The Transnational Bribery Law creates administrative corporate liability. This administrative offence takes place when a director, employee, contractor or controlling shareholder of a Colombian company (whether or not they have the legal authority to bind the entity), commits transnational bribery. This conduct consists in giving, offering or promising, to a foreign public official, directly or indirectly, money or any other benefit in exchange for an agreement from the foreign official to perform, omit or delay any act related to the exercise of their functions in relation to international business transactions.
Companies can reduce or avoid penalties when they self-report.34 To be eligible to avoid a penalty, they must meet two conditions. First, they must come forward before the Superintendence of Companies initiates its own investigation. Second, they must come forward before exercising rights or fulfilling obligations. If these conditions are not met, penalties can still be mitigated by up to 50 per cent when offences are disclosed after they have been committed.35 This reduction of penalties will only apply to administrative fines and not to criminal sanctions.
One of the elements that the Superintendence of Companies must take into account when imposing fines for corruption is the existence of ethics programmes. This type of programmes are not mandatory for all companies in Colombia. Only companies that meet the conditions defined in the regulation should have one.36
Similarly, the Superintendence of Companies does not establish mandatory requirements of a business ethics programme, but the Superintendence issued a guideline37 to be taken into account when implementing it. This guide states that a good business ethics programme must contain, at least, the following:
- a commitment from the management level of the entity in the prevention of bribery;
- evaluation of the risks related to bribery;
- documentation of the business ethics programme;
- appointment of a compliance officer;
- existence of due diligence mechanisms;
- existence of mechanisms for control and supervision of compliance policies and business ethics programme;
- disclosure of compliance policies and business ethics programme; and
- existence of communication channels.
V ASSOCIATED OFFENCES: FINANCIAL Record-keeping AND MONEY LAUNDERING
i Financial record-keeping laws and regulations
In Colombia, merchants must keep their accounting books and records organised in a clear, complete and reliable manner that facilitates their consultation. Such books must allow for a verification of individual entries and of the general state of the business.38
Companies required to adopt a money laundering control system must keep their books and records in accordance with the rules governing the preservation of the merchant's information.
As a general rule, the obligation applicable to the merchants obliges them to keep such information for no less than 20 years unless the company opted for a preservation method, in which case the term will be 10 years.
ii Money laundering laws and regulations
In Colombia, the Criminal Code prohibits money laundering39 and defines it as the acquisition, investment, transportation, custody or administration of funds with the purpose of hiding or concealing its illicit origin. Whoever engages in these activities can be subject to imprisonment from 10 to 30 years and receive fines of up to approximately US$12 million.
The regulation40 provides that companies which assets exceed certain thresholds and are engaged in the financial services, legal services, real estate, mining, accounting and automotive industries, among others,41 must implement a system designed to prevent money laundering activities and terrorism financing.
In addition to implementing a control system, companies must also file periodic reports on suspicious activities with the Information and Financial Analysis Unit (UIAF).42
The UIAF is responsible for investigating and prosecuting money laundering and terrorism financing, and overseeing compliance with the obligations set forth in the anti-money laundering laws. Criminal prosecution requires that the UIAF exercises its investigative powers and subsequently reports the potential misconduct to the Superintendence of Finance, the tax authority and the GPO.
VI ENFORCEMENT: FOREIGN BRIBERY AND ASSOCIATED OFFENCES
Recently, the Superintendence of Companies imposed the first fine for transnational corruption in a case related to Interamericana de Aguas y Servicios SA (Inassa) for corrupt practices in Ecuador. The fine is equivalent to approximately US$1.2 million (after a reduction of the original US$1.7 million following a decision on the reconsideration remedy filed by Inassa).
VII INTERNATIONAL ORGANISATIONS AND AGREEMENTS
Colombia has been accepted as a member of the OECD. Congress passed Bill No. 268 of 2018, which is now being studied by the Constitutional Court before ratification. Nevertheless, Colombia signed the OECD Anti-Bribery Convention in 2013. Colombia is also a member of the United Nations and the Organization of American States and as such signed the United Nations Convention against Corruption and the Inter-American Convention against Corruption.
The UIAF is a member of the Egmont Group, which provides a platform for 164 agencies around the world to exchange expertise and financial intelligence to combat money laundering and terrorist financing.43
VIII LEGISLATIVE DEVELOPMENTS
After being defeated in Congress in June 2019, President Iván Duque introduced the Anti-Corruption Bill again. This Bill44 includes multiple administrative, procedural and criminal modifications.
Administrative measures to discourage and reduce criminal actions related to corruption include the following, among others:
- the creation of permanent debarment from contracting with the government for legal entities related to individuals sanctioned for corruption;
- extension of the debarment from public procurement to private contractual processes;
- exclusion of direct contracting in some cases in which it applies today; and
- the mandatory use of the banking system for certain operations involving public resources.
Punitive measures proposed include:
- excluding the possibility of house arrest for those who have been convicted of corruption behaviours;
- an accessory penalty of debarment for those individuals convicted of corruption for abusing the exercise of their position or functions;45
- punitive aggravation for forgery related to the general social security system (health, pension, etc.); and
- two new criminal offences would be created for public officials who, after having performed illegal acts, induce, constrict or request (bribery request for a completed act) or receive (bribery for a completed act) money or similar, without the need for a prior remuneration promise.
As procedural measures, the bill proposes:
- the extension of the competence of judges to guarantee control;
- the possibility for the Office of the Comptroller General to become a victim in criminal proceedings for punishable conduct affecting public assets, allowing the state to recover some of the resources lost as a result of corruption; and
- additional requirements for possible punitive rebates under negotiations and agreements with the GPO in cases associated with corruption.
An additional bill was introduced to fight against corruption in the judiciary and measures to favour corruption complaints, offering rewards to those who provide information on corruption cases and helping to locate the assets of corrupt people.46
IX OTHER LAWS AFFECTING THE RESPONSE TO CORRUPTION
Data protection is currently governed by the Colombian Constitution, the Statutory Law 1581 of 201247 and Decree 1377 of 2013 (collectively, the Colombian data protection laws).
Entities wanting to process personal data from individuals residing in Colombia must48 obtain prior, express and informed consent49 from those individuals. Silence and tacit and blanket consent are not acceptable.
These entities are required to keep a record of the consent provided by data subjects, as they should be able to prove who has provided consent and, upon request, the record of consents should be made available for data subjects, their successors and the Data Protection Authority.50
Data subjects have the right to revoke or request the suppression of their personal data at any time, except for certain instances in which the data controller (i.e., the entity that collected the personal data and determines the manner in which and the purposes for which it is processed) must preserve the personal data (e.g., fraud prevention).
Sensitive personal data is defined in the Colombian data protection laws as personal data which processing may affect data subjects' intimacy or the wrongful processing of which could lead to discrimination (religious beliefs are expressly cited as an example of this type of data). The Colombian data protection laws provide that consent for the processing of sensitive personal data must also be explicit and that the provision of such type of data must not be a condition for the rendering of any service.
The Colombian data protection laws expressly prohibit entities from transferring personal data across borders unless prior, express and informed consent is obtained from the data subject for this purpose.
The Colombian data protection laws are highly protective of personal data of children and adolescents (minors under the age of 18) and treat this information as sensitive. Article 12 of Decree 1377 prohibits the processing of personal data of children and adolescents, except in the case of data of a public nature, and when such data processing complies with the following parameters: it (1) 'responds and respects the highest interests of children and adolescents'; and (2) 'ensures respect for their fundamental rights'. To mitigate any risks, the entity must have the parent or the legal guardian of the child expressly provide consent, but in addition, when applicable, ensure that the child's right to be heard is respected.51
Entities with total assets over 100,000 units of tax value, equivalent to 3.427 million Colombian pesos in 2019, must register all their databases (not the personal data contained therein but information on how the data is processed) with the National Database Registry.
Recently, the Colombian Constitutional Court has participated in the discussion on the legality of dawn raids conducted by the Colombian administrative authorities.52 The court sets forth that dawn raids conducted by the Superintendence of Industry and Commerce and the Superintendence of Companies are evidentiary proceedings that do not violate the constitutional rights of the individual under investigation, if the specific objective of the visit is linked to their investigative goals and do not intercept separate personal communications.
1 María Carolina Pardo Cuéllar is a principal and Luis Alberto Castell is an associate at Baker McKenzie.
2 See International Business Attitudes to Corruption – a Report from Control Risk (2015 – 2016) https://www.controlrisks.com/-/media/corporate/files/our-services/creating-a-compliant-organisation/ethics-and-compliance-consulting/15-16-control-risks-corruption-survey-2015.pdf
3 Article 96 of the Colombian Criminal Code (Law 599 of 2000).
4 Article 404 of the Colombian Criminal Code.
5 Article 405 of the Colombian Criminal Code.
6 Article 406 of the Colombian Criminal Code.
7 Article 407 of the Colombian Criminal Code.
8 Article 20 of the Colombian Criminal Code.
9 Article 107 of the Colombian Criminal Procedural Code: (Law 906 of 2004).
10 Article 91 of the Colombian Criminal Procedural Code: (Law 906 of 2004).
11 Article 8 literal j) of the Public Procurement Law (Law 80 of 1993), included by Article 1 of the Colombian Anti-Corruption Statute.
12 Article 405 of the Colombian Criminal Code.
13 The actual Colombian Disciplinary Code will be replace by the New Colombian Disciplinary Code (Law 1952 of 2019) from July 1st of 2021.
14 Article 34 of the Colombian Anti-Corruption Statute, modified by the Article 35 of the Colombian Transnational Bribery Law.
15 Article 25 of the Law 1340 of 2009.
16 Article 34 of the Colombian Anti-Corruption Statute, modified by the Article 35 of the Colombian Transnational Bribery Law.
17 Article 34 of the Colombian Anti-Corruption Statute, modified by the Article 35 of the Colombian Transnational Bribery Law.
18 Article 8 literal (f) of the Public Procurements Law.
19 Colombian Anti-Corruption Statute, Law 1474.
20 Article 23 of Law 1475 of 2011.
21 Article 11 Colombian Criminal Code.
22 Supreme Court, Criminal Section, Court Order (auto) of 18 January 1979. Judge: Romero Soto.
27 Paragraph one of Article 2 of the Colombian Transnational Bribery Law.
28 Article 107 of the Colombian Criminal Procedural Code: (Law 906 of 2004).
29 Article 91 of the Colombian Criminal Procedural Code.
30 Article 8(j) of the Public Procurement Law (Law 80 of 1993), included by Article 1 of the Colombian Anti-Corruption Statute.
31 Article 5 of the Colombian Transnational Bribery Law.
32 Article 5 of the Colombian Transnational Bribery Law.
33 Article 34 of the Colombian Anti-Corruption Statute, modified by the Article 35 of the Colombian Transnational Bribery Law.
34 Article 19 of the Colombian Transnational Bribery Law
35 The Superintendence of Companies regulates the application of this program through the resolution 200-000816 of 2018. Essentially, the Superintendence recognizes that the main criteria to define the effectiveness of the collaboration would that the information must be provided timely, being useful and provide high-quality evidence.
36 Resolution No. 100-002657 of 25 July 2016. Modified by Resolution 200-000558 19 July 2018.
37 Externa Circular Number 100-000003 of 26 July 2016.
38 Decree 2649 of 1993.
39 Article 323 of the Colombian Criminal Code.
40 Depending on the specific sector, the regulation setting forth the obligation is the Article 102 of Decree 663 of 1993 (for the financial sector), and the External Circular 100-000006 of the Superintendence of Companies (for the real sector – the threshold for the asset value will vary from industry and industry-).
41 For instance, foreign trade operators are regulated by the customs authority and its regulation on this matter is set forth in the authority's External Circular 170 of 2002.
44 Bill number 5 of 2019, Senate.
45 Bill number 119 of 2019, Senate.
46 Bill number 18 of 2019, Senate.
47 This law regulates privacy rights in respect of personal data of individuals collected and processed in any type of database.
48 Law 1581 provides some exceptions: (1) when the processing is authorised by a Law for historic, statistical, scientific, or other purposes; (2) when the information is of a public nature; (3) when the information is required by a government authority exercising its duties, as explicitly conferred by law; (4) when the circulation of personal information is necessary in the event of a medical or sanitary emergency and (5) information regarding the civil registry.
49 Consent can be granted electronically, since electronic messages have the same legal effect as written documents and therefore in principle they can replace the requirement of the written document.
50 Article 7 of Decree 1377 sets forth the obligations that data controllers must comply with, including the obligation to keep record of the granted consent.
51 Article 12 of Decree 1377 provides that 'the legal representative of the child will grant the child's prior authorization for the right to be heard, an opinion that will be valued taking into account the maturity, autonomy and ability to understand the matter.'
52 Sentence C-165 of 2019.