The International Investigations Review: Portugal
Corporate liability for criminal and regulatory offences has a long tradition in the Portuguese jurisdiction. In the past, Portuguese companies have become more concerned with proper corporate governance and more aware of the importance of effective and fully enforced compliance programmes, a fact that has led to an increasing relevance of internal mechanisms of control and supervision, as well as whistle-blowing channels and internal investigations.
According to Portuguese law, there are basically two types of possible offences: crimes and regulatory offences.
Crimes are investigated and prosecuted by an independent public prosecutor and judged in criminal courts. During the investigation stage, the Public Prosecutor's Office will attempt to discover whether a crime was indeed committed, who were its agents, and to gather conclusive evidence of the existence (or not) of criminal liability. The Public Prosecutor's Office is aided by a police force or, exceptionally, by an administrative authority (e.g., tax authorities in tax crimes, and the Portuguese Securities Market Commission in crimes against the securities market), to collect evidence of a possible criminal offence. However, some judicial diligences and acts must be ordered or authorised by a judge; namely, those acts or diligences that may affect fundamental rights.
During an investigation, a person against whom a criminal complaint is filed or who is a suspect will be named as the defendant and will have a privilege against self-incrimination; namely, the right to remain silent and also the right to request any measures to further the investigation. However, the public prosecutor is not obliged to pursue any of the measures requested except the defendant's right to be heard.
At the conclusion of the investigation, the public prosecutor decides whether to indict the defendant or to dismiss the case.
In either an indictment or a dismissal, there is an optional stage in the criminal proceeding that is entirely conducted by a pretrial judge. This optional stage is to decide whether the case should go to trial or not. A decision by the judge confirming the public prosecutor's indictment cannot be appealed, and the trial will proceed.
Therefore, if there is an indictment by the public prosecutor or if a decision from the pretrial judge finds sufficient evidence that the defendant has committed a crime, the case goes to trial. This is the most important stage in criminal procedure, with full respect for the adversarial principle. At the end of the trial, the defendant will either be convicted or acquitted. It is possible, in certain circumstances, to appeal to a higher court the lower court's decision.
Regulatory offences, conversely, are investigated and prosecuted by administrative entities, with varying degrees of independence. These entities or regulators can apply fines that are binding and enforceable unless the decision to apply the fine is contested in court by the defendant. Most regulatory offences, when appealed, are decided in criminal courts. However, regulatory offences can also be decided in administrative courts (e.g., tax offences and offences related to urban planning) or in a specialised court (e.g., competition, energy, and financial offences). Regulatory offences have, in general, more flexible substantive and procedural requirements and some legal frameworks index the applicable fine to a company's turnover and establish collaboration and leniency programmes. These factors incentivise and reward internal investigations and self-reporting.
A new Legal Framework of Economic Regulatory Offences (Decree-Law No. 9/2021, of 29 January) was recently approved that establishes new common rules and regulatory procedures in several economic sectors, such as sports, consumer sector, health, pharmaceutical sector, copyright, gambling and even anti-money laundering offences.
Under Portuguese law, there is no general duty to self-report. However, there are certain sectors, subject to supervision, where entities are required to report wrongdoing.
Specifically, the Portuguese Securities Code (Decree-Law No. 486/99, of 13 November) requires financial intermediaries to report any facts that are connected to financial crimes. The Legal Framework of Credit Institutions and Financial Companies (Decree-Law No. 298/92, of 31 December) establishes a similar duty, requiring the management and supervisory bodies of credit institutions to notify the Bank of Portugal of possible fraud, both internal and external, which may produce adverse effects on the institution's results or capital. Failure to notify the authorities when required to do so is a regulatory offence.
In addition, self-reporting criminal or regulatory offences committed in a corporate context to authorities, as well as cooperating with authorities in general, allows a company to reap certain benefits, depending on the legal framework applicable to the offence in question.
Article 71, No. 2, Subparagraph e, of the Portuguese Criminal Code, establishes that an offender's conduct after the fact is considered when fixing the applicable penalty, especially if that same conduct consists in repairing the consequences of the crime committed. In addition, the offender's conduct after the fact may be used to assess whether the criminal procedure should be suspended under Article 281 of the Portuguese Criminal Procedure Code (one of the possible negotiated solutions under Portuguese Criminal Law).
The offender's conduct after the fact is also relevant when fixing the applicable fine in various sectors of regulatory offence law, namely, under the Legal Framework of Credit Institutions and Financial Companies, the anti-money laundering legislation, the General Framework on Environmental Regulatory Offences and the General Framework on Regulatory Offences for the Media Sector.
Furthermore, certain laws establish specific regimes for self-reporting.
Under Article 405-A of the Securities Code, if the offender confesses and collaborates with the Portuguese Securities Market Commission on the collection of evidence, the applicable fine is lower, and its upper limits are halved.
Furthermore, pursuant to Articles 75 through 82 of the Portuguese Competition Law, a company that self-reports a cartel or a concerted practice may benefit from leniency, which may entail immunity from fines or the reduction of their amount. An amendment to the Portuguese Competition Law, which would transpose the ECN+ Directive, was proposed by the Portuguese Competition Authority to the government and is currently under discussion.
Articles 40 to 44 of Law No. 9/2013, of 28 January, establishing the legal framework for regulatory offences in the energy sector2 also establish a leniency programme similar to the one set out in Portuguese Competition Law.
ii Internal investigations
Internal investigations in a criminal context do not have a general framework in the Portuguese jurisdiction.
However, internal investigations are not a common practice within the Portuguese jurisdiction to internally investigate the possible commitment of an offence, except in some specific areas, like labour law or competition law, where internal investigations are more common.
One of the reasons for the absence of more internal investigations in connection with possible criminal offences is probably the absence of plea bargaining in Portuguese criminal law and the strict limits within which a negotiated solution is allowed (there is no possible negotiated solution if the specific crime committed by the agent is punishable with imprisonment for more than five years). Because there are no plea bargains, there are significant limits to the effectiveness of internal investigations within the context of criminal liability and, therefore, companies do not feel encouraged to carry out those investigations.
However, when these investigations take place, there are different possible approaches, but they usually focus on analysing documents (on paper or digital documents) and on conducting interviews with some of the employees or members of the company.
Any internal investigation must follow the procedural guarantees set out in the Portuguese Labour Code, otherwise any sanctions applied against an employee may be invalid. Furthermore, under the General Data Protection Regulation, the Portuguese Personal Data Protection Law (Law No. 58/2019, of 8 August) and the Portuguese Safety in Cyberspace Law (Law No. 46/2018, of 13 August), all entities subject to their scope must implement adequate and appropriate measures to ensure the safety of stored data.
In the context of anti-money laundering legislation, namely Law No. 83/2017, of 18 August, obliged entities are required to examine and report activities that may be connected to possible money laundering or financing terrorism. Obliged entities must also record all filed complaints, and they must immediately proceed with the implementation of new due diligence measures whenever the complaint gives the obliged entity reasons to doubt the accuracy of the data provided by a client.
Internal investigations will most often start after someone within the structure reports facts or suspicions related to some possible wrongful activity inside the company. Usually, these investigations aim to identify the responsible party for the possible wrongful actions and therefore to protect the company from possible legal consequences, mainly criminal or regulatory. Therefore, the purpose of these investigations is to cooperate with the public authorities responsible for the investigation, providing some evidence or mitigating the company's own liability.
Most legal scholars in Portugal believe that, to use the evidence collected in the internal investigation in the following legal procedure, it is important to assure that the rights foreseen in the legal procedure are also respected in the internal investigation. This means that there is a common concern not to convert internal investigations into pre-criminal or pre-regulatory procedures, benefiting from the absence of legal regulation on the matter. In this context, some of the evidence collected in the internal investigation may not be allowed in the criminal procedure if it has been obtained without complying with the legal requirements, particularly evidence that in a criminal procedure can only be obtained with a judge's authorisation.
Once the company is named as a defendant, it has a privilege against self-incrimination. Therefore, the company has a right to remain silent, which means that the company's legal representative has a right to refuse to answer questions and, within a criminal procedure, not to provide any evidence that may be used against the company in a criminal case.
However, in regulated activities, entities are bound to comply with a series of rules and duties. These duties may embody collaboration duties with the supervision authorities. These duties imply, essentially, the delivery of documents that certify whether the entity is complying with the rules of the sector. Therefore, within a supervision proceeding, performed by the supervisory authority of the relevant market or economic sector, entities may be obliged to deliver certain documents to those supervisory authorities (namely those documents that the entity is legally bound to prepare and maintain), even though those proceedings may end with an accusation and condemnation for a regulatory offence.
Law No. 93/2021, of 20 December, transposed into the Portuguese jurisdiction Directive (EU) 2019/1937 of the European Parliament and of the Council, of 23 October 2019, on the protection of persons who report breaches of Union law.
Given this new legal framework, legal entities, including the state and public entities with 50 or more workers, shall establish an internal channel for reporting and for follow-up of internal reports. However, private entities with between 50 and 249 workers may share resources regarding the receipt of the reports. Those internal channels shall enable the entity's workers to report information on breaches and shall preserve the integrity and conservation of the report, as well as the confidentiality of the identity of the reporting person. It is also important to note that Portuguese legal framework also allows anonymous reporting. Once the written or oral reporting has been received, the legal entity shall follow up that report.
There are also external channels for reporting, in the following entities:
- Public Prosecutor's Office;
- criminal police bodies;
- Bank of Portugal;
- the independent administrative authorities;
- public institutes;
- general inspections, similar entities and other central services of the direct state administration endowed with administrative autonomy;
- local governments; and
- public associations.
These external channels shall be independent and autonomous from other communicating channels and, similar to private entities' channels, it is mandatory to follow up the reports.
The identity of the whistle-blower and all information that may help to identify the whistle-blower shall remain confidential. Furthermore, the identity of the whistle-blower may only be revealed by a court's decision.
The received reports shall be preserved by the obliged entities for five years and, regardless of that period of time, they shall be preserved as long as a legal or administrative proceeding takes place regarding a certain report.
The Portuguese legal framework also establishes a general principle of prohibition of retaliation.
Whistle-blowers may participate in criminal proceedings as a witness or even as a defendant and both have different legal status. A witness must answer every question truthfully during examination, while a defendant has a right to remain silent.
Although in the Portuguese jurisdiction there are no incentive programmes for whistle-blowing or specific rewards for whistle-blowers, if the whistle-blower reports some relevant facts or information to the competent public authorities, mainly to the Public Prosecutor's Office, that conduct may help mitigate a penalty if the whistle-blower is a defendant in a criminal case and indicted by the public prosecutor. As mentioned above, Article 71 of the Portuguese Criminal Code establishes that, when determining a criminal fine, the court must consider the conduct of the defendant after the illegal fact, which may help whistle-blowers to mitigate their possible penalties by cooperating with the public authorities.
i Corporate liability
The rule in Portuguese criminal law is that only natural persons (individuals) are subject to criminal liability. However, the law establishes some exceptions (restricted to a range of crimes) that allow the extension of criminal liability to legal persons (companies).
Article 11 of the Portuguese Criminal Code establishes that companies, except for the state or organisations acting within public authority, may be held liable for the crimes listed in Paragraph 2, which include, among others:
- trading of favours;
- violation of prohibitions or restrictions;
- money laundering;
- unlawful offering of an advantage;
- corruption; and
However, companies can only be held liable if a crime is committed on behalf of the company and for the company's direct or indirect benefit or interest:
- by an individual in a leadership position; or
- by someone acting on behalf of the company and for the company's direct or indirect benefit or interest, under the authority of an individual in a leadership position because of their lack of surveillance or control duties incumbent upon the latter.
An individual in a leadership position is a member of a governing body, a representative or someone who has the power to control the activity of the company, including non-executive directors and members of the supervisory body.
The main exception to this regime is established for the specific case of tax crimes, where a company is held liable for actions performed on its behalf and for the company's benefit or interest, by governing bodies and any representatives (Article 7 of Law No. 15/2001, of 5 July).
A company can exclude its liability by evidencing that an individual has acted against its concrete orders and instructions. Corporate liability does not exclude individual liability and does not depend on it.
Other crimes can be committed by companies as per specific legislation (for instance, Law No. 20/2008, of 21 April, regarding corruption in international trade and in the private sector, and Law No. 52/2003, of 22 August, regarding counterterrorism).
In addition to criminal liability, companies can be held liable for regulatory offences. The legal requirements are similar to the ones mentioned above regarding criminal liability. The main difference is that, although the General Framework on Regulatory Offences (Decree-Law No. 433/82, of 27 October) determines that companies should be held liable for the offences committed by their governing bodies (Article 7), most courts have broadly interpreted said principle to include in its scope actions performed by workers, members of the board or any representatives. Once again, if the company is able to demonstrate that an individual's actions are a result of a violation of express orders or instructions, its liability can be excluded.
Other specific legal frameworks, namely the energy sector, the securities market sector and the banking sector, have adopted the same criteria followed by case law regarding the General Framework for Regulatory Offences.
Conversely, for instance, the Competition Legal Framework has adopted a similar provision to the one established in the Portuguese Criminal Code.
If there are no incompatible positions between the company and its members or employees, it is not strictly forbidden that both the company and the individuals are represented by the same counsel. Furthermore, if the company's defence strategy also includes the defence of its employees, a joint legal representation or, at least, a closely coordinated defence is advisable. In that case, there is no issue regarding a company's paying the individual's legal fees connected to the case.
However, if the company argues that the individual's actions were committed against its orders or instructions, the defence shall be separately conducted. In such case, any counsel who represents both parties will be acting under a professional conflict of interest. In this regard, Article 99, No. 3, of the Code of Practice of the Portuguese Bar Association (Law No. 145/2015, of 9 September), establishes that a lawyer shall not represent two or more clients in the same matter or a related matter, if there is a conflict of interest between those clients. If that is the case, it is not advisable for the company to pay the individual's legal fees.
The new Legal Framework of Economic Regulatory Offences (Decree-Law No. 9/2021) also expands the model of corporate liability for administrative offences in several economic sectors. Pursuant to that new Decree-Law, the legal person may be held liable for regulatory offences committed on behalf of the legal person and for the legal person's benefit or interest, by its governing bodies, representatives and even workers when they act within the scope of their duties.
Companies may also be held civilly liable for the conduct of their employees. According to Article 500 of the Portuguese Civil Code, companies are strictly liable for all damages caused to third parties by an individual acting in its name (even if the damages are unintentionally caused or against the company's orders or instructions). Nevertheless, companies have a right of recourse against said individual unless it is demonstrated that the company itself has contributed to those damages.
Under Portuguese Criminal Law, there are two kinds of criminal penalty that may be imposed on companies: main penalties and ancillary penalties. Pursuant to Article 90-A of the Portuguese Criminal Code, companies may be punished by penalties of a fine or with a judicial winding-up order.
The winding up shall only be ordered if the company was incorporated with the exclusive or predominant intention to commit crimes, or if it is being used, exclusively or predominantly, to commit those crimes by those who have a leadership position.
The concrete application of a criminal fine depends on the decision of the court. Under Article 90-B of the Portuguese Criminal Code, fines are determined in two steps:
- establishing the number of days that compose the fine, which may never be less than 10 and that is determined in accordance with the gravity of the offence; and
- defining the monetary value of each day in accordance with its economic and financial situation as well as any obligations to workers; in each case, the monetary value of each day shall correspond to an amount between €100 and €10,000.
In cases in which the rule of criminal law does not set a day rate system, but solely a prison sentence, the corresponding penalty for a company will still be a fine, in which a month in prison will be equivalent to 10 days of fine.
If the applicable fine is not higher than 240 days, the court is entitled to condemn companies by a simple admonition, as set forth in Article 90-C of the Portuguese Criminal Code.
Under Article 90-D of the Portuguese Criminal Code, if the applicable fine is not more than 600 days, the court is entitled to replace it for a good behaviour bail, from €1,000 up to €1 million. This bail will be retained by the court for one to five years. If the company, in that period, commits the same crime, the bail reverts to the Portuguese state.
Furthermore, the Portuguese Criminal Code sets forth the following ancillary penalties:
- adopting necessary procedures to cease the unlawful behaviour;
- prohibition of exercising a certain activity, from three months up to five years, if the crime was committed within the scope of the company's activity;
- prohibition of engaging in certain agreements;
- prohibition of the right to receive public grants or subsidies;
- closing down of the business, from three months up to five years, if the crime was committed within the scope of the company's activity; and
- advertisement of the condemning decision.
In sectorial areas of criminal law, namely the Criminal Framework for Corruption in the International Trade and in the Private Sector (Law No. 20/2008, of 21 April) and the Anti-Money Laundering Legislation (Law No. 83/2017, of 18 August), the company will be punished with a fine according to Article 90-B of the Portuguese Criminal Code.
As foreseen in criminal law, under Decree-Law No. 433/82, of 27 October, establishing the general legal framework for regulatory offences,3 there are two kinds of regulatory penalties that may be applied to companies: main penalties and ancillary penalties. The main penalty applicable is also a fine.
Regarding companies' concrete penalties, in some areas of regulatory offences, namely, inter alia, the Anti-Money Laundering Legislation and the Legal Framework of Credit Institutions and Financial Companies, the maximum limit of the fine is aggravated up to the following amounts:
- 10 per cent of the annual business turnover of the financial year before the condemning decision; or
- double the amount obtained as a result of the offence.
Similarly, the Portuguese Securities Code sets forth, in Article 388, No. 2, that the maximum limits of applicable penalty may be aggravated up to the following amounts:
- 10 per cent of the annual business turnover according to the latest consolidated accounts approved by the board of directors in the financial year before the condemning decision; or
- triple the amount obtained as a result of the offence committed.
Moreover, pursuant to Article 68, Nos. 3 and 4, of the Portuguese Competition Law, the amount of the fine shall not exceed 10 per cent of the annual business turnover of the financial year before the condemning decision.
The main ancillary penalties applicable to companies, under the General Framework for Regulatory Offences, are the following:
- loss of the benefit obtained as a result of the offence;
- prohibition of exercising activities that depend on any authorisation granted by administrative agencies or other administrative authorities or bodies;
- prohibition of the right to receive public grants or subsidies;
- prohibition of the right to enter into public agreements;
- closing down businesses whose operations depend on an administrative business licence;
- the suspension of administrative authorisations and licences; and
- advertisement of the condemning decision.
These ancillary penalties shall only be applied in a limited period of time set forth in each sectorial legal framework. In general, Article 21, No. 2, of the General Framework of Regulatory Offences establishes that the ancillary penalties, except for loss of benefit, shall not be applied for longer than up to two years.
In some cases, taking into consideration, inter alia, the ne bis in idem principle, companies may be held both criminally and regulatorily liable. If these offences are in relation to consumption, the main penalty for the offence should be the one applicable to the crime, together with possible ancillary sanctions established for the regulatory offence. However, it is possible for the authorities to design the indictment as both offences (criminal and regulatory) being concurrent, therefore requesting the application of the penalties and sanctions foreseen for both offences.
iii Compliance programmes
The existence of a compliance programme may be an important defence tool when a company faces a criminal or regulatory proceeding related to a possible offence.
However, it is mandatory that a company's compliance programme is not only approved but also fully enforced within the company's structure, with express statements and specific orders or instructions. It is not enough that the compliance programme defines the internal policy of the company, with a description of the company's values and mission. A compliance programme, to be effective or legally relevant, must establish specific guidelines concerning the company's activities, services and internal proceedings and mechanisms, and clearly state what is forbidden according to the company's policy. It is not enough to have a programme only written on paper or with general recommendations.
In order to establish and define such a programme, it is important that the company conducts a very careful risk assessment, taking into consideration its activity, business sector and the already adopted internal proceedings. That risk assessment should also analyse the country's main features and the features of the countries where the company has commercial activities or trade relationships. This due diligence should also identify people and services that may represent a higher risk of disrespecting the rules and internal proceedings. And that due diligence and risk assessment must always be carried out regarding a counterpart in a business or contract, before initiating a formal relationship with that other company.
When it is defined and approved, the programme should be presented and explained to all members and employees and always accessible to be read and consulted. And it is advisable that the company develops and maintains an internal compliance department, working closely with management and several departments. The compliance department and the compliance officer shall be responsible for establishing rules, improving the internal proceedings and mechanisms, and for the constant updating of the internal programmes and duties. The company may also request an external and independent auditor to analyse its compliance programmes and internal proceedings, therefore granting an additional note of adequacy and sufficiency for those programmes and proceedings.
It is also important to have internal training sessions to explain the programme to all members and workers within the company's structure. Some compliance programmes may also include a disciplinary system in case of its violation, as well as a system for protection of whistle-blowers, to assure and protect their anonymity and the confidentiality of the reported information.
Following Decree-Law No. 109-E/2021, of 9 December, legal entities with headquarters in Portugal with 50 or more workers, as well as branch offices in Portugal of foreign legal persons with 50 or more workers, shall adopt a compliance programme that includes:
- a plan for preventing risks of corruption and other connected offences;
- a code of conduct with the values, principles and rules of the company on professional ethics; and
- a training programme that trains directors and workers on the internal programmes and policies on preventing corruption and other connected offences.
Those legal entities shall also appoint a compliance officer who will oversee and control the implementation of the compliance programme. They shall also create an evaluation system of the internal control mechanisms and control the implementation of the plan to prevent corruption and other connected offences.
As explained before, according to Article 11, No. 6, of the Portuguese Criminal Code, a company may not be held criminally liable if it is able to prove that the individual, who adopted a certain conduct or behaviour, acted against concrete orders or instructions from someone who has the authority within the company.
The same rule applies to certain regulatory offences, namely in the context of the energy sector (Article 37, No. 3, of Law No. 9/2013, 28 January), the banking sector (Article 203, No. 2, of Decree-Law No. 298/92, of 31 December) and also offences regarding anti-money laundering (Article 162, No. 2, of Law No. 83/2017, of 18 August). In what concerns the securities market legal framework, the company may not be held liable if the individual acted against express, specific and individual orders or instructions provided to them, before committing the offence (Article 401, No. 3, of Decree-Law No. 486/99, of 13 November).
However, in criminal law, the court may specially mitigate the criminal penalty if the company has adopted and implemented a compliance programme that is able to prevent such crimes before the offence has been committed. The fine may also be replaced by another penalty if the company has adopted and implemented a compliance programme that is able to prevent such crimes. If the convicted company does not have a compliance programme, the court may impose an ancillary penalty on the company.
iv Prosecution of individuals
As mentioned before, according to Article 11, No. 7, of the Portuguese Criminal Code, a company's liability does not exclude an individual's liability and does not depend on it.
In most legal cases investigated and ruled in Portugal, companies and some of their individual employees were simultaneously considered liable or, at least, simultaneously investigated. The Portuguese model of corporate liability is not strictly an example of personal liability, meaning that it is grounded on the wrongdoing of specific individuals that represent the company. Therefore, it is important to identify the individuals or group of individuals who committed the offence (or omitted a required conduct) on behalf of the company and for the company's benefit or interest.
This is also the rule in regulatory offences, namely in offences set forth in the energy sector (Article 37, No. 5, of Law No. 9/2013, of 28 January), in the banking sector (Article 204, No. 1, of Decree-Law No. 298/92, of 31 December) and in the securities market sector (Article 401, No. 5, of Decree-Law No. 486/99, of 13 November).
As mentioned above, if there is no conflict of interest between a company and its members or employees, they can be represented by the same counsel.
i Extraterritorial jurisdiction
Article 4 of the Portuguese Criminal Code establishes that Portuguese criminal law shall be applied to the offences committed:
- in the Portuguese territory, regardless of the offender's nationality; and
- in Portuguese ships or aircrafts, unless international treaties and conventions to which Portugal is a party provide otherwise.
However, Article 5 mentions several cases in which Portuguese criminal law is also applicable, even though the offence is committed abroad. They are mostly related to:
- certain types of crimes, such as crimes concerning counterfeiting of currency, debt security and sealed values; crimes against national independence and integrity; crimes against the constitutional state; sexual crimes; kidnapping; slavery; female genital mutilation; forced marriage; human trafficking; and crimes against nature, as long as the offender is found in Portugal and cannot be extradited; or
- the nationality principle, considering that the offence is committed by or against a Portuguese person, if:
- the offender is found in Portugal;
- the offence is also punishable under the law of the state where it was practised; and
- it is possible to extradite for such crime, but extradition is not granted in that case.
As for companies, according to Article 5, No. 1, Subparagraph g of the Portuguese Criminal Code, Portuguese criminal law is applied when an offence is committed abroad by or against a company that has its registered office in Portugal.
In relation to crimes concerning corruption in the international trade and in private sector, the above-mentioned general rule provided by Article 4 is also applicable. Nevertheless, under the terms of Law No. 20/2008, of 21 April, Portuguese law shall also be applicable in cases:
- of active corruption affecting international trade, in connection to offences carried out by Portuguese or foreigners who are found in Portugal, regardless of where the offences were committed; or
- of active or passive corruption in the private sector, regardless of where the offences were committed, when whoever promises, requests or accepts an advantage or promise is a national official or holder of a national political load or, being Portuguese, is an employee of an international organisation.
Specifically concerning terrorism, Law No. 52/2003, of 22 August, provides that, in addition to the general rule, Portuguese law is applied to offences committed abroad in cases:
- that constitute a crime of terrorist organisations or terrorism; or
- that constitute crime of other terrorist organisations, international terrorism or terrorism financing, provided that the offender is found in Portugal and cannot be extradited or handed over in execution of a European arrest warrant.
Concerning drug trafficking (Decree-Law No. 15/93, of 22 January), Portuguese criminal law is still applicable to offences committed outside the national territory when they are carried out:
- by foreigners, provided that the offender is in Portugal and is not extradited; or
- on board a ship against which Portugal has been authorised to take the measures provided for in Article 17 of the UN Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances of 1988.
In what concerns regulatory offences, the general rule is the same as provided for criminal offences.
However, there are some exceptions to this general rule provided by specific regulatory regimes. For instance, in what concerns the Legal Framework of Credit Institutions and Financial Companies, in addition to the general rule, Portuguese law is applicable to offences committed abroad by credit institutions or financial companies having their registered office in Portugal and operating there through branches or by providing services, as well as by individuals who represent those entities or are their shareholders. However, Article 2 of the Competition Law establishes that Portuguese law is applied to the prohibited practices and concentration of undertakings that take place in Portuguese territory or whenever these practices have or may have an effect there, provided that international obligations assumed by the Portuguese state are met.
ii International cooperation
Portugal has ratified numerous international instruments – bilateral and multilateral – that simplify the cooperation between states.
Being part of the Community of Portuguese-Speaking Countries, Portugal also participates in several conventions that ease the cooperation between those countries. These conventions cover specific terms for extradition, mutual assistance in criminal matters and the transfer of sentenced persons.
Moreover, as a European Union Member State, Portugal has a closer cooperation with other Member States. For instance, Law No. 65/2003, of 23 August, which implemented the European Arrest Warrant, is of utmost importance in EU cooperation, by eliminating the use of extradition, so the proceedings are swifter and with shorter time limits, albeit the rights of defence are respected. Moreover, Law No. 88/2017, of 21 August, establishes a regime for the enforcement of a decision rendered by a judicial authority of an EU Member State in another Member State concerning specific investigatory measures, to obtain evidence. The exchange of data and information between EU Member States in the context of an investigation is also eased by Law No. 74/2009, of 12 August. However, Law No. 36/2015, of 4 May, provides a regime for the recognition and supervision of the enforcement of decisions on constriction measures as an alternative to pretrial detention, as well as the surrender of a person between EU Member States in the event of non-compliance with the measures imposed. Law No. 158/2015, of 17 September, is also of maximum importance once it is concerned with the recognition of judgments rendered in the EU context, establishing a legal regime for the transmission and enforcement of decisions in criminal matters imposing prison or other custodial measures for the purposes of enforcing those decisions in the European Union. Finally, worth noting is Law No. 88/2009, of 31 August, which provides the legal framework for the issuance and transmission by a competent court in criminal matters, of decisions on the confiscation of property, or other products of crime, in the context of criminal proceedings, concerning their recognition and enforcement in another EU Member State.
Alongside international and European instruments, multiple national instruments have been approved to ensure international cooperation. The International Judicial Cooperation Law in Criminal Matters (Law No. 144/99, of 31 August) is the most relevant instrument, because it establishes a comprehensive regime concerning extradition, transfer of criminal procedures, enforcement of criminal judgments, transfer of sentenced persons, supervision of conditionally sentenced or conditionally released offenders and mutual assistance in criminal matters.
In relation to extradition, Portugal has signed a large number of bilateral treaties. According to those treaties, the principle of reciprocity is the basic principle that provides the possibility of extradition, subject to certain exceptions. Furthermore, as a matter of principle, Portugal does not extradite its own nationals. Furthermore, for Portugal to grant extradition it is necessary that the offence at stake is considered a crime both in Portugal and in the requesting state and that such offence is punishable with a minimum of one year of imprisonment.
Finally, the extradition request shall be refused if:
- there are grounds to admit that such request is based on any form of discrimination or for political reasons;
- the offender's procedural guarantees are diminished because of any discriminatory factor; or
- the offence at stake is punishable by death, irreversible injury or with life sentence in the requesting state, unless it ensures that such penalties will not be applied.
The Cybercrime Law (Law No. 109/2009, of 15 September) establishes some rules regarding international cooperation. Under the terms of that law, among other rules and measures, the criminal police assures that a contact point is permanently available to provide expert advice to other contact points and to preserve data, to collect evidence and to locate suspects in case of urgency.
iii Local law considerations
Regarding bank secrecy, Portuguese authorities may refuse to provide information in the context of an international investigation grounded on Article 78 of Decree-Law No. 298/92, of 31 December. However, Article 81 of the same Decree-Law provides a comprehensive regime not only concerning cooperation with other EU Member States but also in relation to non-EU Member States, on a reciprocity basis, within the scope of cooperation agreements, regarding the information required for supervision on an individual or consolidated basis of credit institutions having their registered office in Portugal and of similar institutions having their registered office in those countries.
As regards data privacy, recently approved Law No. 58/2019, of 8 August, which alongside Regulation (EU) 2016/679 of the European Parliament and of the Council, of 27 April 2016, limits the possibility of exchanging information regarding personal data. In relation to third countries, pursuant to Article 22 of Law No. 58/2019, of 8 August, the transfer of data to non-EU Member States or international organisations, carried out in compliance with legal obligations, by public entities in the exercise of authority powers, are deemed to be in the public interest for the purposes of Article 49, No. 4, of Regulation (EU) 2016/679.
Finally, regarding letters rogatory, Article 232 of the Portuguese Procedural Criminal Code establishes that Portuguese authorities can refuse to comply with those letters if:
- the requested judicial authority is not competent to perform the act;
- the request concerns an act prohibited by law or if it violates the Portuguese public order;
- the execution of the rogatory affects the sovereignty or security of the state; and
- the act entails the execution of a foreign court decision subject to review and confirmation and the decision is not revised and confirmed.
Year in review
In recent years, there have been some high-profile cases where a company's liability has been analysed.
For instance, in the E-toupeira case, the criminal liability of Benfica SAD (a Portuguese football club) was dropped because the court ruled that the individual offender did not occupy a leadership position within the company and that the offence had not been committed on behalf of the company nor was it committed for its benefit or interest. The court also ruled that the company did not violate any surveillance or control duties, through someone occupying a position of leadership, pursuant to Article 11 of the Portuguese Criminal Code.
Portugal has also fully transposed Directive (EU) 2019/1937 of the European Parliament and of the Council, of 23 October 2019, on the protection of persons who report breaches of Union law and it has imposed new obligations on companies regarding the adoption and full implementation of compliance programmes, which may even mitigate the company's criminal penalties if it is criminally convicted.
Furthermore, Portugal has been working on new anti-bribery legislation for several years, including the regulation of lobbying activity and alternatives to the criminalisation of unlawful enrichment. There was a draft law on that matter that was dismissed as unconstitutional by the Portuguese Constitutional Court. However, that issue is once again being discussed in the Parliament and it is possible that a new draft law is presented in the coming months.
Regarding the regulation of lobbying activity, the statute approved by the Portuguese Parliament on this subject in July 2019 was vetoed by the Portuguese President for having some insufficiencies that have yet to be rectified. The discussion on the regulation of lobbying activity, namely in what concerns the rules of transparency applicable to private entities that carry out legitimate representation of interests before public entities, is expected to proceed during the following months.
Moreover, Law No. 52/2019, of 31 July, introduced the exclusivity obligation in the exercise of public office and the obligation to present, in a single document to be accessible online, all the income and asset declarations issued by holders of political positions and high public offices. This declaration shall also include every act and activity that may lead to incompatibilities and impediments of the holder of political position or high public office. In addition, under the Organic Law No. 4/2019, of 13 September, the Entity for Transparency of Holders of Political Positions and High Public Offices was officially created as the body responsible for monitoring and assessing the truthfulness of the income and asset declarations issued by public officers.
Conclusions and outlook
In the near future, some major criminal and regulatory cases in Portugal will have relevant developments. In particular, a Portuguese court recently ruled a pretrial decision in a case known as Operação Marquês, where a former Portuguese Prime Minister was accused, among others, of the crime of corruption by a political office holder. The court ruled that the limitation period of the crimes of corruption was already reached when the defendants were charged by the Public Prosecutor's Office. Therefore, the former Portuguese Prime Minister was only submitted to criminal trial under charges of money laundering and document forgery. However, the Public Prosecutor's Office appealed to the Lisbon Court of Appeals in order to submit that former Prime Minister and other defendants to trial under the former charges of corruption and other crimes, namely money laundering, tax fraud and document forgery. That appeal has not yet been admitted.
Furthermore, some relevant decisions are also expected regarding criminal and regulatory investigations in the resolution of BES, one of the biggest banks in the Portuguese financial system. This occurred in 2014 and the Public Prosecutor's Office has already criminally charged several defendants. The pretrial stage has recently begun.
From a different perspective, it is expected that the Public Prosecutor's General Office and the regulatory authorities of the financial system will continue to tighten their supervision on operations that may reveal evidence of money laundering – a trend that started in 2017, with the new law on the prevention and prohibition of money laundering and a possible increase of money laundering cases.
Finally, since the Portuguese indicators on public perception of transparency and illicit practices within the state administration are still not favourable, the discussion about new measures to fight against corruption is likely to continue, and new forms of leniency practices and agreements will be implemented.
1 João Matos Viana is a partner, João Lima Cluny is a managing associate and Tiago Coelho Magalhães is an associate at Morais Leitão, Galvão Teles, Soares da Silva & Associados.
2 Law No. 9/2013, establishing the legal framework for regulatory offences in the energy sector.
3 Decree-Law No. 433/82, of 27 October, establishing the general legal framework for regulatory offences.