- Two new crimes, among others changes, were established with Law 21.121, which was enacted, on November 20th: corruption between private individuals and businesses as well as fraudulent administration.
- Companies will have to adapt their risk management and compliance policies and procedures to a new higher standard.
- Failure to comply could even amount to criminal liability of the companies that the offenders belong to.
Recently, an amendment to the Chilean Criminal Code came into force regarding business to business bribery and abuse of discretion, increasing penalties and criminalizing corruption and unfair administration affecting private individuals and companies, among other matters.
For the first time, our legislation criminalizes the behavior of private businesses with the aim of regulating transparency between them, without the need for a public official to participate in the crime, and with a very wide range of alternatives that could configure the crime. Thus, among others, it punishes anyone who “offers, accepts, or consents to give an employee or agent an economic benefit to favor a particular bidder over others.”
In this way, for example, dishonest conduct in connection with a private bidding process for the supply of products or services, in any field, could amount to a criminal offense subject to jail terms. In the case of a bidding process for a supply contract, the employees or agents of both the offeror company and the awarding entity, as well as these same companies involved, could be subject to criminal sanctions in the event that any of these were to offer, require or agree to the payment of a monetary sum in order to favor one bidder over the rest.
With respect to the crime of unfair administration, an additional numeral is included to article 470 of the Criminal Code – in relation to the crimes of fraud and misappropriation. This article incorporates the penalty for anyone who, being responsible for the management of third party assets, commits abusive acts or omissions that damage the owner of those assets.
Some examples of conduct that could be caught by the new provision would be the payment of surcharges in purchase and sale transactions; the exercise of powers by agents beyond the scope of their authority; in the provision of false or altered information that misleads the market; the presentation of false statements by the administration of the company, etc.
Thus, the most relevant consequence of this recent modification is the necessary adaptation of risk management and compliance policies and procedures of companies, issuers and asset managers, to a new higher standard, in light of this additional exposure to criminal liability for directors and officers and the companies that they belong to.
Felipe Cousiño, socio
Luis Fuentes, asociado