Ecuador is a Latin American jurisdiction where bribes and facilitating payments are often perceived as permissible. Consequently, corruption is undoubtedly acknowledged as a national problem. Despite constitutional provisions, the adoption of international treaties and the existence of dedicated institutions, enforcing anti-corruption laws remains a big challenge. The Law for the Prevention of Money Laundering and the Financing of Crimes, the resolution No. SCVS-DSC-2018-0041 issued by the Superintendence of Companies, Values and Insurances, along with the Comprehensive Organic Criminal Code, in effect as of 2014, provide enforcement stakeholders with all the necessary tools for investigating and processing corrupt schemes nationwide.
The Ecuadorian Constitution, enacted on 20 October 2008, establishes that one of the primary duties of the state is guaranteeing its citizens the right to a culture of peace, integral security and life in a democratic society free of corruption. Likewise, it is also constitutionally recognised as a duty of Ecuadorian citizens to report and combat corruption. Furthermore, citizens are empowered to revoke public officials from office in the event that they are charged with corruption. Similarly, the 'fifth branch' –Transparency and Social Control – is in charge of fighting corruption, investigating corruption complaints and protecting whistle-blowers, among other tasks.
The Financial and Economic Analysis Unit (UAFE) during 2018 and so far in 2019 has been working to contribute to the fight against corruption in Ecuador. Different cooperation agreements have been made, such as with the United Nations Office on Drugs and Crime UNODC, establishing as the goals of institutional strengthening and training, and technical assistance against the current regulatory framework for asset recovery.
In February 2019, the Council of the Judiciary and the Secretariat of the Presidency of the Republic joined the Framework Agreement on Interinstitutional Cooperation to strengthen the fight against corruption and asset recovery. The agreement was signed by the State Comptroller, the State Attorney General and the Director of the UAFE, and aims to 'establish and implement cooperation mechanisms to strengthen the exercise of its constitutional and legal functions, in the fight against corruption and asset recovery'. The agreement establishes several inter-institutional cooperation mechanisms, including the following:
- Training for the investigation and timely processing of criminal cases initiated by the Prosecutor's Office.
- Exchange of information that may be useful for the exercise of the constitutional and legal powers of each of the parties.
- Timely collaboration in the investigations initiated by the State Attorney General.
- Collaboration of the State Comptroller's Office in the establishment of the amounts for the collection of the integral reparation of the patrimonial damage caused to the state.
- Coordinate the actions for the exchange of information in order to recover the assets of the public administration.
- Agile and timely execution of legal actions in defence of the national heritage.
- Development of joint research and innovation projects in sectors of institutional interest.
- Development of professional training programs in institutional interest sectors, among others.
Within its various activities, the UAFE signed a reimbursable technical assistance agreement with the World Bank that will facilitate the use of an analytical tool to create a National Risk Matrix, this document will provide specialised advice to the UAFE.
The National Risk Assessment's main objective is to identify, evaluate and understand the risks of money laundering and terrorist financing in order to take action including the designation of authorities and mechanisms to coordinate actions, distribute resources and ensure that these risks are effectively mitigated.
Among other actions taken this year by the Ecuadorian government is the creation of the International Commission against Corruption. This Commission was formed by five international experts in the field of anti-corruption, and its objective is to give specialised technical attention to strengthening public institutions in this area.
II DOMESTIC BRIBERY: LEGAL FRAMEWORK
i Domestic bribery laws and their elements
The Constitution and the Criminal Code are the primary pieces of legislation criminalising corruption-related crimes. Thus, the Constitution sets forth prohibition and liability warnings to public officials when performing their duties, as well as when handling public goods and resources. The aim is to prevent them from being involved in bribery, extortion, influence peddling, embezzlement and unlawful enrichment.2 In turn, the Criminal Code thoroughly details the provisions for bribery-related crimes, crimes against the public administration, liable subjects, criminal behaviours and aggravating factors. Other laws such as the Organic Law on Public Service, the Public Procurement Law, the Organic Law on the Transparency and Social Control Branch and the Organic Law on the Council for Citizen Participation and Social Control also contribute anti-bribery elements.
ii Prohibitions on payment and reception
Bribery elements include the delivery, transfer, offer or promise of an undue payment, benefit, donation, gift or anything of value with the intent of provoking a positive result, omission, facilitation, conditioning or delay of an official action. In other words, a bribe induces, or intends to induce, an alteration of the normal course of administrative or public diligences and processes, or rewards improper performance. Facilitating payments are not allowed. A third party may perform or ease the illicit or improper benefit. Sanctions may be imposed on either the accepting party (public official) or the offering party (individual).3
Pursuant to Ecuadorian criminal law (Comprehensive Organic Criminal Code), corporate liability does not apply to bribery-related crimes. Therefore, liability is strictly applicable to natural persons and does not apply to domestic or foreign companies. There are many debates about whether or not to include corporate liability in the Ecuadorian criminal law, but for now, there is no formal project on this matter.
iii Other corruption-related crimes
The key element of extortion is the abuse of power of a public official or individuals acting under state authority on behalf of a public institution. The crime consists of ordering or demanding the delivery of rights, quotas, contributions, income, interests, salaries or gratification in their favour. A third party or private individual may carry out the extortion, and when it involves violence or threats the penalty is higher.4
Regarding trafficking of influence, also known as influence peddling, this crime happens when a public official or individuals acting under state authority on behalf of a public institution influence other public officials to achieve a favourable result, either for their own benefit or in favour of a third party. An aggravation circumstance takes place when the ultimate intention is to favour private individuals to illegally obtain a public contract award or another kind of business with a state entity. The mere offer of performing trafficking of influence is already deemed a crime. Any individual can be liable for such conduct; that is to say, a third party may act on behalf of or inappropriately using the name of people acting under state authority.5
Embezzlement consists of a public official or individuals acting under state authority on behalf of a public institution, who for their own benefit or on behalf of third parties appropriate, abuse or arbitrarily use public property. This includes real estate, money, securities or any other goods or documents under their control.6
Illicit enrichment for public officials or individuals acting under state authority on behalf of a public institution applies to those who have an unjustified increase in assets. The benefit could be under their name or a third party. The enrichment may not only consist of increased assets, but also payment or extinction of debts.7
iv Definition of public official
Public officials are defined at the constitutional level as 'all persons that, in any way or under any form of work, provide services or hold a position, post or office in the public sector'.8 The Organic Law on Public Service, which was enacted two years after the Constitution, has the same definition for a public official, but clarifies that public service workers are regulated under the Labour Code.
In general, all people related to the public sector are considered public officials, including elected officials, the President, mayors, etc. Thus, the public sector encompasses the executive, legislative, judicial, electoral, transparency and social control branches, municipalities, and entities created by the Constitution, law or municipalities to exercise state powers or the provision of public services.9
With regard to employees of state-owned companies or public companies, Article 3 of the Organic Law on Public Service, in accordance with Article 18 of the Organic Law on Public Companies, also defines them as public officials; the same is true for employees of the public companies' subsidiaries.
v Public officials' participation in commercial activities
The general rule is that public officials are free to participate in commercial activities provided they are not related to their official functions, or if no specific legal ban exists. A public official may not maintain direct or indirect commercial, corporate or financial links with taxpayers or contractors if the public official has to deal with them as part of his or her normal duties.10
In this sense, the Public Procurement Law provides a specific ban on bidding by a contracting entity when a public official participates in the bid or has direct influence over it. The ban applies to close relatives too, even by means of corporate structures. The public procurement rules strictly prohibit the president, vice president, ministers, members of congress, majors and other authorities (including their close relatives) from entering into any public contract.11
Judiciary branch public officials, who are also lawyers, cannot practise law privately. No judiciary official can have a second job in the private or the non-judicial public sector.
vi Gifts and gratuities, travel, meals and entertainment restrictions
Specific regulations on gifts and hospitality are vague. Public officials are not allowed to request, accept or receive any gifts, money, rewards or privileges. The basis for whether a public official receives an administrative sanction or whether they are subject to being charged for criminalised bribery is the intention behind the gift request or acceptance. In other words, if a gift delivery takes place without the objective of getting a specific benefit or reward in exchange, then it could only lead the public official to an administrative sanction, holding the private individual harmless. On the contrary, a bribery-focused gift delivery may lead to criminal liability for all individuals involved.12
The only parameter regarding the valuation of a gift is established for gifts received from public authorities during official events in Ecuador or overseas. If the value of the good exceeds the value of a monthly minimum wage,13 this gift must become part of the inventory of the public institution to which the public official belongs.
vii Political contributions
Private sector contributions permitted to political campaigns are limited to Ecuadorian citizens and foreigners residing in the country. Private sector contributions must be delivered within the legal limits established for the specific election season.14
viii Private commercial bribery
Civil law protects abusive relationships between private parties, which could include fiduciary or trust breaches, as well as commercial civil collusion. These wrongdoings are subject to legal claims before civil courts. Compensation may include damages, provided the action is not considered a crime, such as commercial or civil fraud.
The Companies Law, which regulates corporations and other legal entities, forbids them to act against the law, public policy and good behaviour. This means that, ultimately, corporations should meet constitutional standards with regards to anti-corruption.
The Labour Code regulates employees in the private sector. It establishes that an employer is prohibited from demanding or requesting any money or benefit from a worker or employee in exchange for obtaining a position or for any other reason.15
Having referenced the specific penalties, it is worth noting that because of the severity of the offence, the bribery, embezzlement, extortion and illicit enrichment of a public official does not have a statute of limitations. This is because it is considered a crime against the state. The absence of a statute of limitations applies to both the indictment and the handing down of the sentence. Finally, it is provided that a trial may take place without the accused party being present.16
Pursuant to the Criminal Code, corruption-related crimes are subject to the following prison sentences:
- bribery: between one and five years, and if the bribery was to lead to another crime, up to seven years;17
- extortion: from three to five years, and if it involves violence or threats, up to seven years;18
- trafficking of influences or influence peddling: three to five years, and if it was committed for illegally obtaining business with a public entity, up to five years;19
- embezzlement: 10 to 13 years;20 and
- illicit enrichment of a public official: this depends on the enrichment value, calculated based on the monthly minimum wage.21 Up to 200 – from three to five years; between 200 and 400 – five to seven years; and over 400 – up to 10 years.22
The Organic Law on Public Service clearly establishes a prohibition on acting as a public official for those who have been convicted of embezzlement, bribery, extortion or illicit enrichment, and, in general, for those who, acting under state authority, have been convicted of a crime related to their services. This Law also establishes that getting convicted of the above-mentioned crimes is cause for being removed from office.23
Accordingly, Article 77 of the Organic Code of the Judiciary Branch bans individuals convicted of corruption-related crimes from holding a position in the judiciary branch. Moreover, Article 57 states that for someone to apply for a position within the judiciary branch, they must issue a sworn statement declaring that they have not been convicted of a corruption-related crime.
Finally, there is another penalty established in Article 113 of the Constitution, which bans those who have been convicted of bribery, illicit enrichment or embezzlement from running as a candidate for public office.
III ENFORCEMENT: DOMESTIC BRIBERY
Domestic bribery crimes are pursued by the State Prosecutor's Office. Its actions receive collaboration from supporting entities such as the Council for Citizen Participation and Social Control, and the State Comptroller's Office. These two, jointly with the Ombudsman Office and the superintendencies, are part of the Transparency and Social Control Branch.24
The State Comptroller's Office is entitled to audit, oversee and control actions of public entities and officials, as well as private entities and officials handling public resources. It is also entitled to impose sanctions, remove public officials from office and report findings that may lead to a criminal investigation to the State Prosecutor's Office.25
The Financial and Economic Analysis Unit is a key stakeholder in corruption-related crime enforcement. Complementarily, corruption crimes are investigated and processed based on peer entities' reports, international cooperation, investigative journalism (local and foreign) and citizen complaints.
Ecuador has been experiencing what appears to be the longest period of corruption in its history, there is the Petroecuador case (see subsection i, below) and the Odebrecht case where several public figures have been indicted in Ecuador according to local criminal procedure.
On 8 August 2019, a prison order was issued to Rafael Correa, the former President of Ecuador (a previous prison order was issued on 3 July by the same judge for Corea's alleged participation in the kidnapping of the former opposition assemblyman, Fernando Balda). The judge ratified the request for pretrial detention against Correa and said that the prison will be 'legal, constitutional and conventional' and therefore 'non-arbitrary'.
The Prosecutor's Office accused Correa of leading an 'illegal network' to raise funds from state contractor companies for Alianza País26 campaigns and then award them infrastructure works contracts.
Similarly, the judge also asked for preventive detention for four other former ex-collaborators of the Correa government (2007–2017), including former Vice-President Jorge Glas, who has been in prison for almost two years for illegal association in another case related to the Odebrecht matter.
The prosecution is also investigating a plot known as 'bribes 2012–2016' (formerly 'Green Rice'), in which four other former senior collaborators of the Correa government (2007–2017) are allegedly involved, to which it also applied caution.
The Prosecutor's Office suspects that the investigation will shed light on approximately a dozen elements of conviction that point to the commission of the crimes of bribery, illicit association and influence peddling, in the alleged irregular financing of the Alianza País. To date, Correa, who has more than a dozen open files, has not been convicted by a court in Ecuador, and refuses to return to the country because he believes he is the victim of political persecution by his successor, Lenin Moreno.
In addition, Rafael Correa and his former Vice-President Jorge Glas are identified in 26 cases. These include peculation, organised crime, bribery, abuse of authority or power of his charge as President and Vice-President, influence peddling, laundering, forgery of signatures and illegal association.
i Oil sector scandal
The alleged corruption-related crimes involved Petroecuador, the state-owned oil company that has full administrative autonomy to manage all phases of exploration, exploitation activities and commercialization. Public procurement legislation allows a state-owned company to directly award contracts for all types of works, goods and services when these are necessary for performing its core business activities. Theoretically, the direct awarding does not have a cap or other limitation.27
Petroecuador's main refinery, located in Esmeraldas, entered into a comprehensive restrengthening and maintenance phase, initially budgeting for approximately US$180 million. Based on the ability to directly award contracts, the refining unit awarded over 400 contracts between 2008 and 2016. These were allegedly overpriced, and resulted in several modifications to the scope of work and term extensions. The State Comptroller announced that the audit comprises a spent budget of US$2.2 billion.28
Although several journalists and activists denounced alleged irregularities, it was not until the Panama Papers disclosure that the authorities acted. In May 2016, the first person to be arrested for investigation purposes and indicted was Alex Bravo, former Petroecuador general manager, who previously acted as refining manager and has worked for the company since 2006. Initial findings showed he owned several offshore companies and was investigated for influence peddling, allegedly by awarding contracts to companies linked to his close relatives. He was later charged for illicit enrichment.29
In June 2016, the State Prosecutor's Office requested from the Financial and Economic Analysis Unit a report that was drafted with international cooperation and was presented in August 2016. Findings show several unusual money transfers from Esmeraldas refinery contractors to close relatives and friends of Alex Bravo. The mentioned offshore entities include a company that is linked to former Hydrocarbons Minister, Petroecuador general manager and refining manager, Carlos Pareja.30
In August 2016 a second indictment was initiated on the grounds of the alleged existence of a whole bribery scheme. The prosecution initiated the investigation based on the Alex Bravo investigation. Likewise, the prosecutor initially linked some local contractors who allegedly made improper payments to bank accounts linked to public officials. It was not until early October 2016 that the Vice President and the President's Secretary of Legal Affairs made public statements. The two key points of the press conference were that Alex Bravo would accept the bribery charges and request a quick trial to get a reduced sentence, and that the prosecutor should indict Carlos Pareja. In the middle of the ongoing investigations, Carlos Pareja and other potential participants in the scheme left the country, several weeks before the announcement.31 Carlos Pareja then returned to Ecuador and turned himself in.
On 21 October 2016, the prosecutor of the Crimes against the Public Administration Unit presented the investigation findings to a criminal judge. The outcome of this public hearing consisted of the indictment of 17 people. Arrest orders were issued against nine people, including Carlos Pareja and Alex Bravo. The other eight indicted individuals were forbidden to leave the country and were subpoenaed to appear before the judge three times a week. Later that day, the Prosecutor's Office, along with the Ecuadorian police, executed several seizures of real estate properties owned by Carlos Pareja, Alex Bravo and others.32
On 15 February 2017, 10 people, including Carlos Pareja and Alex Bravo were found guilty of bribery and sentenced to five years' imprisonment and a fine of US$4,500 each. Another six people were declared accomplices and sentenced to two-and-a-half years' imprisonment and a fine of US$3,750. In addition, those convicted as the main perpetrators are obligated to pay a total of US$25 million in damages.33 Two businessmen were found not guilty. Additional convictions for related crimes and several appeals have been taking place during 2018.34
This case has provoked cross-border consequences; in the United States several former Petroecuador executives and individuals related to contractors have been sentenced based on the Foreign Corrupt Practices Act and money laundering offences.35
ii Attempt to establish corporate liability
In 2015, a bribery case attracted public attention because of two unusual situations. First, a congresswoman was involved and was arrested on the day of the annual presidential speech outside Congress. Second, the prosecutor initially indicted the subsidiary of a Spanish company for bribery.
A US$23 million public contract for the provision of water pipes was awarded to the company. The award was linked to an US$800,000 bribe that was requested by both the congresswoman and the contracting entity, and paid by the legal representative of the awarded company. The final judgment handed down a three-year sentence for the three accused parties. Given that there is no corporate liability for bribery crimes, the court dismissed the charges against it.36
IV FOREIGN BRIBERY: LEGAL FRAMEWORK
Ecuador has not enacted specific provisions with regards to foreign bribery; nevertheless, the Criminal Code establishes that crimes committed overseas may be subject to Ecuadorian law if the crime causes consequences in Ecuador, if the crime is committed by a public official while on duty and the crime has not been prosecuted in the other jurisdiction, or if the crime affected international conventions, provided that no prosecution has started in the other jurisdiction.37
V ASSOCIATED OFFENCES: FINANCIAL RECORD-KEEPING AND MONEY LAUNDERING
i Financial record-keeping laws and regulations and disclosure of violations or irregularities
The Companies Law establishes that all corporate entities under the control of the Superintendence of Companies must keep accurate books and records. Entities must also maintain effective internal control, issue periodical financial statements, and in some cases, have external auditing. Accounting must be maintained in Spanish and according to the Superintendence regulations, the law and International Financial Reporting Standards. It is not required that companies, their legal representatives or employees disclose violations or irregularities on their books and in records.38
As for banks and other financial institutions, the Monetary and Financial Organic Code requires them to keep accurate books and records. Financial institution regulations do not require regulated entities to disclose violations or irregularities on their books and in records.39
ii Prosecution and sanctions under financial record-keeping violations
Pursuant to Article 457 of the Companies Law, corporate entities are subject to fines equivalent to 12 times the minimum monthly wage.40 As for financial institutions, not complying with the accounting, financial or internal audit regulations is a serious infringement. Likewise, if case documents or information regarding the entity's status are partial or totally false or hidden, this could be considered a very serious infringement.
Where civil penalties are disregarded, any wrongdoing can be reported to the State Prosecutor's Office for investigation under criminal legislation. Although there are no specific sanctions for failures regarding bookkeeping and records, the Criminal Code establishes sanctions when these are related to tax fraud. If accounting books and records are altered or destroyed, or there is double accounting, a prison sentence of one to three years may be imposed.41
iii Tax deductibility of domestic or foreign bribes
Tax legislation does not consider a bribe-related payment a deductible expense or cost.
iv Money laundering laws and regulations
The main regulations are contained in the Law for the Prevention of Money Laundering and the Financing of Crimes, its regulations, the Financial and Economic Analysis Unit guidelines, the resolution No. SCVS-DSC-2018-0029 issued by the Superintendence of Companies, and the Criminal Code. The anti-money laundering rules mainly set forth reporting duties for financial institutions and other entities such as stock exchanges and brokerage companies, trust fund administrators, car, ship and plane dealers, money transfer, real estate and construction companies.42
v Prosecution under money laundering laws
Money laundering provisions and the UAFE contribute directly to prosecuting corruption-related crimes. One of the main purposes of the UAFE is to report suspicious transactions to the State Prosecutor's Office and produce reports if specifically requested. As stated in Section III, the UAFE's report became a key element in initiating a major bribery case.
vi Sanctions for money laundering violations
Article 317 of the Criminal Code provides that a prison sentence for money laundering should be determined according to the amount involved in the crime, and in relation to some other parameters, such as:
- if it involves less than 100 times the minimum monthly wage: from one to three years;
- if there was no criminal association: from five to seven years;
- when the amount is between 100 and 200 monthly minimum wages, when there was criminal association but without using corporate structures, when using financial institutions or insurance companies, public entities or positions: from seven to 10 years; and
- if it exceeds 200 monthly minimum wages,43 when the criminal association included corporate structures, when using public entities or positions: between 10 and 13 years.
For all cases, a fine will be imposed that is equivalent to twice the amount subject to the infringement.44
vii Disclosure of suspicious transactions
Article 356 of the Monetary and Financial Organic Code mandates that if control authorities, shareholders, administrators or employees of a financial institution learn of a crime linked to the entity's activity, they must report it immediately to the State Prosecutor's Office. Accordingly, financial institutions are required to notify the UAFE of unusual and unjustified transactions within four days of the compliance committee learning about the operation. Furthermore, other obligated entities and any citizen that learns about an unusual, unjustified or suspicious transaction must inform the authorities.45
VI INTERNATIONAL ORGANISATIONS AND AGREEMENTS
The Constitution's provisions are at the top of the legal hierarchy in Ecuador. These are followed by international treaties, agreements and conventions, organic laws, regular laws and secondary legislation. When Ecuador ratifies an international convention, it is automatically incorporated into the legal framework.46
The Organisation for Economic Co-operation and Development Anti-Bribery Convention is the only major anti-corruption convention that Ecuador is not a signatory to. It is a part of the Andean Plan of Action Against Corruption, enacted by way of Andean Community Decision 668.47
Ecuador signed the United Nations Convention Against Corruption (UNCAC), and ratified it without any reservations on 28 November 2005. The UNCAC is the main international regulation on foreign bribery, including the definition of a foreign public official. Even though Article 16 of the UNCAC encourages state parties to adopt the legislative measures mentioned above, Ecuador has not adopted them in its local legislation.48
The United Nations Convention against Transnational Organised Crime was signed by Ecuador on 13 December 2000 and ratified on 17 September 2002. The country made reservations with regard to Articles 10 and 35, paragraph 2. The first reservation points out that the concept of criminal liability of legal persons is not currently embodied in Ecuadorian legislation. When legislation progresses in this area, this reservation will be withdrawn. The second reservation relates to the settlement of disputes.49
Finally, Ecuador is one of the original signatories of the Inter-American Convention Against Corruption (IACAC). It was ratified by the Ecuadorian Congress on 29 March 1996. As of 26 May 2009, the Council for Citizen Participation and Social Control was appointed as the central authority for the IACAC.50
VII LEGISLATIVE DEVELOPMENTS
During the past three years there is the expectation that a single law can be enacted to combat corruption, which may be named the Anti-Corruption Law.
In fact, there have been several bills intending to reform not only the Comprehensive Organic Criminal Code, but the Public Procurement law and the State Comptroller's Office are also necessary to be amended. The problem is that the initiatives are diverse and often politically influenced. For instance, in early September 2018 President Moreno vetoed a bill already approved by the National Assembly, which was promoted by congressmen aligned to former President Correa. The National Assembly President is unsuccessfully promoting an asset recovery bill and there are at least other three bills.
On 6 February 2019, President Lenín Moreno ordered the creation of the Anti-Corruption Secretariat through Decree 665.51 This new entity will be attached to the Presidency of the Republic and will generate public policies and actions to facilitate the reporting of acts of corruption. It will also be responsible for coordinating cooperation between government institutions, control bodies and judicial entities involved in the investigation, prosecution and punishment of these crimes. To date, the Anti-Corruption Secretariat has:
- recovered US$13.5 million, money that was handed over to the Ecuadorian state, as a result of the Odebrecht corruption scheme linked to senior government officials;
- presented information to the State Prosecutor's Office to investigate the undeclared apartment of former director of the Ecuadorian Institute of Social Security (IESS), María Sol Larrea, located in the United States and valued at US$440,000;
- advanced the creation of the Commission of International Experts against Corruption that will strengthen the ability of the country's institutions to prevent and punish criminal acts;
- provided documentation related to acts of destabilisation, to the Eloy Alfaro Foundation, State Prosecutor's Office and the Foreign Ministry;
- denounced alleged crimes related to customs, tax, labour and money laundering in the Xinglong SA Chinese Steelworks, located in the Milagro–Guayas canton;
- asked the Prosecutor's Office to investigate payments of premiums for US$9.1 million by Constructora OAS SA , which led strategic projects under the previous government;
- worked on the incorporation of anti-corruption units in public companies to consolidate preventive, corrective and investigative actions of possible illegal acts; and
- strengthened relations with justice and control authorities in Brazil and Peru, in order to speed up investigations in corruption cases involving the two nations.52
There are no legal provisions with respect to compliance programs, although, under the Criminal Code, there are two mitigating circumstances that could contribute positively towards a defendant:
- voluntary disclosure before the justice authorities; and
- effective collaboration within the investigation of a criminal infringement.53
Consequently, under the guidelines of a compliance programme, disclosure or cooperation could take place throughout the case, opening the door to beneficial treatment, such as a reduced sentence.
Over the past decade, corporate compliance has gained the attention of business people and corporate counsel in Ecuador. This mostly originates from the influence of multinational corporations operating in the country. Compliance programmes, training for third parties and compliance clauses are becoming familiar to local businesses. Therefore, the private sector, with proper legal guidance, is expected to contribute significantly to a culture of compliance, which will help it to take hold.
IX OUTLOOK AND CONCLUSIONS
Ecuadorian legislation has the tools to punish and prevent bribery, but there is still a long way to go towards generating substantial improvements. Anti-corruption regulations are spread throughout different statutes. The benefits of enacting specific anti-corruption legislation include boosting citizens' awareness and increasing commitment from enforcement institutions. This law may include regulations on compliance programmes and effective first-tier administrative oversight. Since Ecuador has signed and ratified relevant international conventions, foreign bribery will also need to be legislated on.
Ecuadorians and the media are demanding results in the most high-profile corruption investigations every time new information on these cases comes to light, which is why the President of Ecuador has created the Anti-Corruption Secretariat and the Commission of International Experts – both institutions with the sole purpose of combating corruption and creating a culture of prevention in government institutions.
From the previous pronouncements of certain assembly members, we expect that changes in criminal regulations will be included, in fact it has been suggested that penalty mitigation will be allowed if it is demonstrated that compliance processes have been put in place in companies, but nothing has been published yet. We hope these will be included to continue the fight against corruption in public and private institutions.
In any case, we expect that there will be significant results from the ongoing investigations and that real action will be taken to prevent corruption in the private sector, since the existing regulations, as discussed in this chapter, are very weak. There is still much to be done regarding anti-corruption regulations in Ecuador.
1 Javier Robalino Orellana is a partner and Mareva Orozco Ugalde is a senior associate at Ferrere.
2 Constitution, Article 233.
3 Criminal Code, Article 280.
4 id. Article 281.
5 id. Articles 285 and 286.
6 id. Article 278.
7 id. Article 279.
8 Constitution, Article 229.
9 Constitution, Article 225.
10 Organic Law on Public Service, Article 24(i).
11 Public Procurement Law, Articles 62 and 63.
12 Organic Law on Public Service, Article 24(k).
13 Equivalent to US$394 for 2019.
14 Organic Electoral Law, Democracy Code, Article 216.
15 Labour Code, Article 44(d).
16 Constitution, Article 233, and Criminal Code, Article 16.
17 Criminal Code, Article 280.
18 id. Article 281.
19 id. Articles 285 and 286.
20 id. Article 278.
21 Equivalent to US$394 for 2019.
22 Criminal Code, Article 279.
23 Organic Law on Public Service, Articles 10 and 48.
24 Organic Law on the Transparency and Social Control Branch, Article 5.
25 Organic Law on the State Comptroller's Office, Articles 2, 3, 4, 5 and 31.
26 Alianza País, now officially named Movimiento Alianza País – Patria Altiva i Soberana, is a left-wing Ecuadorian political movement, founded by former President Rafael Correa.
27 Public Procurement Law, Article 2 and Regulations on the Public Procurement Law, Article 104.
29 Based on information available from the public judiciary database: http://consultas.funcionjudicial.gob.ec/informacionjudicial/public/informacion.jsf; and media report: www.eluniverso.com/noticias/2016/05/16/nota/5584383/exgerente-petroecuador-alex-bravo-espera-audiencia-unidad.
30 Based on information available from the public judiciary database: http://consultas.funcionjudicial.gob.ec/informacionjudicial/public/informacion.jsf; and media report: www.expreso.ec/actualidad/el-puzle-familiar-en-la-trama-de-corrupcion-DF601063.
31 Based on media reports: www.elcomercio.com/actualidad/alexismera-carlosparejayannuzzelli-millon-dolares-cuenta.html; and www.lahora.com.ec/index.php/noticias/show/1101990246/-1/Carlos_Pareja_Yanuzzelli_sali%C3%B3_del_pa%C3%ADs_hace_una_semana.html#.WA0jKxArL6Y.
32 Based on media reports: www.cnbc.com/2016/10/21/reuters-america-ecuador-judge-orders-jail-for-ex-minister-in-petroecuador-bribery-case.html; www.fiscalia.gob.ec/index.php/sala-de-prensa/5405-otras-17-personas-fueron-vinculadas-por-presunto-cohecho-en-petroecuador.html; and www.fiscalia.gob.ec/index.php/sala-de-prensa.html.
34 Based on media reports: https://www.elcomercio.com/actualidad/seguridad-tribunal-penal-condena-carlosparejayanuzzelli.html.
35 Based on media reports: www.bizjournals.com/southflorida/news/2017/11/02/money-laundering-indictment-of-former-oil.html.
http://www.fcpablog.com/blog/2018/9/11/ money-laundering - plea-in - petroecuador-bribery -case.html
36 Based on media reports: https://www.elcomercio.com/actualidad/asambleista-alianzapais-detenida-corrupcion.html.
37 Criminal Code, Article 14.
38 Companies Law, Articles 289, 290 and 293.
39 Monetary and Financial Organic Code, Articles 71, 218, 220, 225, 230 and 232.
40 Equivalent to US$394 for 2019.
41 Criminal Code, Article 298.
42 Law for the Prevention of Money Laundering and the Financing of Crimes, Articles 4 and 5.
43 Equivalent to US$394 for 2019.
44 Criminal Code, Article 317.
45 Law for the Prevention of Money Laundering and the Financing of Crimes, Articles 4(d), 5 and 7.
46 Constitution, Articles 417 and 425.
51 Executive Decree 665
53 Criminal Code, Article 45 (5) and (6).