Guidelines for anti-bribery and corruption compliance programmes under Argentine law

November 2018 | EXPERT BRIEFING | FRAUD & CORRUPTION

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Argentina is undergoing a significant overhaul in its fight against bribery and corruption.

In late 2016, Congress passed a law allowing defendants in certain corruption cases to seek a reduction in penalties in exchange for cooperating with investigations. In late 2017, Congress passed another law making legal entities criminally liable for bribery and other forms of corruption. This law also stipulates that anti-corruption compliance programmes are a requirement for any companies engaging in certain major contracts with the federal government and, in all cases, are a key element for companies being investigated and seeking a reduction or exemption from penalties by cooperating with the investigation.

In August 2018, a massive anti-corruption investigation was made public. This investigation is most likely the largest and fastest anti-corruption investigation in Argentine history. It has indentified over 65 defendants in less than two months – and that number is still growing. Among those defendants are former high-ranking public officials and a number of prominent businessmen. Most of defendants have used the 2016 law to seek penalty reductions and avoid preventative imprisonment.

Furthermore, the federal government issued a decree in April 2018, assigning the Argentine Anti-corruption Office with the task of developing guidelines on anti-corruption compliance programmes under the 2017 law. The Anti-corruption Office released an initial draft of the guidelines for public review and comments. Later on, the definitive version of the guidelines was published in early October 2018, with only a few changes from the original draft. The guidelines consist of over 70 pages of useful information for companies seeking to implement and maintain compliance programmes. The guidelines specifically describe numerous issues related to the application of articles 22 and 23 of the 2017 law which regulate compliance programmes.

Although the guidelines follow the basic parameters set forth by the guidelines of other leading legislation, such as the UK Bribery Act and the US Foreign Corrupt Practices Act (FCPA), they are specifically tailored to Argentine law.

As a main principle, the guidelines set forth that a compliance programme must be tailored to “the specific characteristics of the company, the industry/sector in which it operates and the corresponding risk analysis”. Additionally, the guidelines state that the design and implementation of the programme must anticipate that the authorities may require an explanation for the reasons behind the specific structure and elements chosen for the programme, and that this explanation would be most relevant to dictate whether the programme is deemed adequate under applicable law.

The guidelines also set forth that “taking into consideration specialised references” is useful but it must be done “without copying models or resting thoughtlessly on prefabricated recipes or solutions”.

The guidelines identify risk analysis and the ‘tone at the top’ as two key factors in developing and implementing anti-bribery and corruption compliance programmes.

Within different sections in the guidelines, companies may find valuable summaries, bullet points and sample questions that can serve as a quick reference for the main issues at hand. This is aimed at addressing real-life challenges on how to apply the concepts of the guidelines.

In terms of the steps to follow when implementing a compliance programme, the guidelines establish that a commitment from senior management is required to begin with, followed by a risk analysis adjusted to the specifics of the entity, a determination of the risk profile or tolerance level of the company, the components of the programme and its purpose, and assigning sufficient resources for implementation. Subsequently, the entity should monitor the application of the programme and make necessary amendments to keep it up-to-date with the changing risks facing the company. As a final step, the guidelines highlight the relevance of communicating the programme to “employees and relevant commercial partners”. The guidelines specifically state that this is one way to build a compliance programme, but not the only possible method.

The guidelines also address key elements of the compliance programme, such as training and education sessions, the role of the compliance officer and third-party due diligence. They also include a specific section on internal investigations.

The guidelines serve as a reference for all stakeholders to consider, including not only legal entities, but also the authorities who will evaluate corporate compliance programmes. Relevant authorities will be comprised, on one hand, by the judiciary, which will evaluate compliance programmes, among other elements, under applicable laws, to determine whether companies may be granted reductions or even exemptions from penalties, and on the other hand, by administrative authorities which will evaluate compliance programmes in certain major contracts with the federal government.

Although companies may find the guidelines to be similar to guidelines under other anti-corruption regulations such as such as the US Foreign Corrupt Practices Act (FCPA) or the UK Bribery Act, they would be wise to carefully analyse how the guidelines reflect specific issues of Argentine law.

Gustavo L. Morales Oliver is a partner at Marval, O’Farrell & Mairal. He can be contacted on +54 11 4310 0100 ext. 2206 or by email: glo@marval.com.

Gustavo L. Morales Oliver

Marval, O’Farrell & Mairal