Anti-Corruption in Spain

By Rafael Jimenéz-Gusi* ,Cecilia Pastor* and Diego Pol* (Baker McKenzie Spain)

1. Domestic bribery (private to public)

1.1 Legal framework

The Spanish Criminal Code has seen significant amendments since 2010, when criminal liability of legal entities for bribery and other crimes was introduced in Spain.

The present overview of Spanish anti-bribery laws reflects the amendment of the Spanish Criminal Code that entered into force on 1 July 2015.

Bribery of public officials (cohecho) is regulated under the Spanish Criminal Code, Sections 419 to 427.

1.2 Definition of bribery

Bribery can be committed by private individuaBribery can be committed by private individuals who try to corrupt a public official (active bribery) and by the corrupted public officials (passive bribery).

Bribery occurs whenever a public servant or authority receives or is offered a reward to: (1) carry out an act or omission breaching the duties required of his or her position; or (2) carry out any act relating to the performance of his or her duties. The offense can take the form of ‘passive bribery,’ where the initiative to commit the offense originates with the public official or authority (i.e., soliciting a bribe), or ‘active bribery,’ where the bribe is offered at the initiative of the individual paying it. To be punishable, it is necessary that such acts be committed maliciously, that is to say, intentionally.

1.3 Definition of public official

The Spanish Criminal Code has a broad definition of “public official” and “authority.” Section 24 of the Criminal Code defines an ‘authority’ as one who, either himself or herself, or as a member of an agency, tribunal or collective body, has the power to give orders or who exercises his or her own jurisdiction. Meanwhile, a ‘public official’ is one who, either by operation of law or by appointment of the relevant authority, participates in the discharge of public duties.¹

Additionally Section 427 of the Spanish Criminal Code expands the concept of public official to those public officials of the European Union or foreign countries (including elected officials and individuals carrying out public duties on behalf of an international organization or a public company of a foreign government).

Section 423 of the Spanish Criminal Code states that the offense of bribery can also be committed by juries, arbitrators, experts and ‘any person participating in the performing of a public service.’

1.4 Consequences of bribery

(a) For individuals

The Spanish Criminal Code foresees the same penalties for corrupted public officials and for private individuals that corrupt public officials.

Passive bribery is regulated under Sections 419 to 423 of the Criminal Code. There are four different types of conduct that constitute passive bribery:

Those that consist in carrying out an act or omission breaching the duties required of the public servant or authority’s position (Section 419)

This is punishable by imprisonment for a period of three years to six years, a daily fine (from EUR 2 to EUR 400 per day) the amount of which will depend on the accused party’s wealth and which may apply for 12 months to 24 months, and specific disqualification from holding public office or employment for a period of seven years to 12 years, in addition to the penalty for committing the act or omission breaching the required duties, if this constitutes a separate crime.

Those that consist in carrying out an act relating to the performance of the public servant or authority’s duties (Section 420)

This is punishable by imprisonment for a period of two years to four years, a daily fine (from EUR 2 to EUR 400 per day) the amount of which will depend on the accused party’s wealth and which may apply for 12 months to 24 months, and specific disqualification from holding public office or employment for a period of three years to seven years.

Those that have as an intended purpose the reward of an act that has already been carried out (Section 421)

This is punishable by the same penalties referred to in the aforementioned Sections 419 and 420.

• The acceptance of a reward offered to an authority or public servant in view of his or her office or duty (Section 422), even if he or she is not asked to carry out any act

This is punishable by imprisonment for a period of six months to one year and specific disqualification from holding public office or employment for a period of one year to three years.

Active bribery is regulated under Sections 424 and 425 of the Criminal Code and punishes a private individual for the commission of the following:

The offer or delivery of a gift or remuneration of any kind to an authority or public servant: (i) for the latter to perpetrate an act that is against the duties inherent in his or her office or an act inherent in his or her office; or (ii) to delay what he or she should carry out, or in consideration of his or her office or duty
The delivery of a gift or remuneration following solicitation by the authority or public servant

The penalties imposed on private individuals who commit active bribery are the same as those imposed on the public servant or authority to whom the reward is offered (Articles 419 to 422 of the Criminal Code).

(b) For legal entities

A daily fine the amount of which will depend on the legal entity’s assets and which may apply from six months to five years (from EUR 30 to EUR 5,000 per day), or up to five times the profit obtained, if such amount is higher
Additionally, the court can impose any of the following discretionary penalties:
- Dissolution of the legal entity
- Suspension of its activities up to five years
- Closure of premises and establishments up to five years
- Temporary (up to 15 years) or indefinite prohibition to carry out the activities that have led to a crime
- Prohibition (up to 15 years) to benefit from public subsidies, enter into contracts with the public sector, or benefit from tax and social security incentives or benefits
- Judicial intervention for an unlimited time of all or part of the activities of the legal entity to protect general interest and employees

1.5 Political contributions

Contributions to political parties are currently regulated by Organic Law 8/2007 of 4 July 2007, on financing of political parties (Ley Orgánica de Financiación de Partidos Políticos) (as amended by Organic Law 5/2012 and by Organic Law 3/2015). In general terms, contributions by individuals to political parties are allowed if they do not exceed EUR 50,000 per year. Anonymous contributions and contributions made by legal entities are forbidden.

1.6 Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, among others)

The Criminal Code does not establish quantitative nor qualitative limitations on hospitality expenses. Case law has established two criteria to determine whether a hospitality payment could be considered private bribery:

The hospitality offered or received is not “socially acceptable.”
The hospitality offered or received could affect the judgment of the receiver

In addition, Spanish courts have consistently demanded the existence of a causal link between the delivery of the gift, hospitality or remuneration and the public office of the public servant. That is to say, the reason for the gift must be the status or condition of authority or public servant of the individual receiving the gift.

There is no legal guidance as to the value of any benefit and its capacity to influence a public servant’s decision. Whether a hospitality expense could be considered bribery will need to be determined on a case by case basis, taking into account all the facts and circumstances surrounding the case and applying the two criteria referred to previously.

2. Domestic bribery (private to private)

2.1 Legal framework

Bribery of private entities or individuals is regulated under Section 286-bis of the Spanish Criminal Code. Such crime was introduced ex novo by amendment of the Criminal Code of December 2010,² fulfilling the mandate contained in Framework Decision 2003/568/JAI to prevent acts intended to corrupt company management in a similar way to those of bribery.

2.2 Definition of private bribery

As in the case of public bribery, the offense requires the act of offering, promising, giving, soliciting, accepting or receiving an unjustified benefit or advantage that, in this case, must be intended to secure preferential treatment in the acquisition or sale of goods or in hiring professional services, in breach of the recipient’s obligations.

2.3 Consequences of private bribery

Section 286-bis of the Criminal Code punishes this conduct with the following penalties:

(a) For individuals

Imprisonment (for six months to four years)
A fine amounting from the value of the illicit benefit or advantage to three times the said value
Disqualification from the right to carry out an industrial or commercial activity (from one year to six years)

(b) For legal entities

Daily fine of up to five years (please see first bullet point of Section 1.4 (b))
Publication of the court judgment in the corresponding official gazettes and, if the victims so request, in the general newspapers
Dissolution of the legal entity
Suspension of the activity of the legal entity for up to five years
Close-down of the legal entity’s facilities for up to five years
Temporary (up to 15 years) or indefinite prohibition to carry out the activities that have made it possible for the crime to be committed
Prohibition of up to 15 years to benefit from public aid, enter into contracts with the public sector, or benefit from tax and Social Security incentives or benefits
Judicial intervention for an unlimited time of all or part of the activities of the legal entity to protect the interest of the general public and the employees of the legal entity in particular

2.4 Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, among others)

The hospitality offered or received is not “socially acceptable.”
The hospitality offered or received could affect the judgment of the receiver.

Whether a hospitality expense could be considered bribery will need to be determined on a case-by-case basis, taking into account all the facts and circumstances surrounding the case and applying the two criteria referred to previously.

3. Corruption of foreign public officials

3.1 Legal framework

The regulation of domestic bribery (see Section 1 above) encompasses corruption of foreign public officials, since these are considered public officials as well for these purposes, pursuant to Section 427 of the Spanish Criminal Code.

Additionally, Section 286 ter of the Spanish Criminal Code sets out a specific offense of bribery of foreign public officials when committed with the objective of obtaining or retaining a contract or business, as well as any other competitive advantage in the context of international economic activities.

3.2 Definition of corruption of foreign public officials

See Section 1.2 above in relation to the general crime of corruption of public officials.

The offense of Section 286 ter of the Criminal Code requires the offer, promise or giving of any undue benefit or advantage to a public official so that the public official acts or omits to act in relation to the exercise of his or her public duties, to obtain or retain a contract or business, as well as any other competitive advantage in the context of international economic activities.

3.3 Definition of foreign public official

See Section 1.3 above.

3.4 Consequences of corruption of foreign public officials

See Section 1.4 above in relation to the general crime of corruption of public officials.

In relation to the offense set out in Section 286 ter of the Spanish Criminal Code, the following may be imposed, unless the author has received a more severe punishment for the same conduct pursuant to another section of the Criminal Code:

(a) For individuals

Three months’ to six months’ imprisonment
A daily fine (from EUR 2 to EUR 400 per day) the amount of which will depend on the accused party’s wealth and which may apply for three months to six months, or if the benefit obtained is higher than said fine, thrice the value of the benefit or advantage obtained
Prohibition to contract with the public sector, disqualification from receiving public subsidies, contracting with public entities, obtaining tax or social security benefits, and prohibition from participating in transactions of public importance for seven to 12 years

(b) For legal entities

Same as in Section 2.3(b)

3.5 Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, among others)

The hospitality offered or received is not “socially acceptable.”
The hospitality offered or received could affect the judgment of the receiver.

4. Facilitation payments

The Spanish Criminal Code does not recognize so-called facilitation payments, and consequently, quantitative or qualitative limitations as established by case law (see Section 3.5) should apply for this purpose.

As a matter of principle, however, cash payments to public officials are very likely to be considered as corruption payments since the first criteria (i.e., be considered “socially acceptable”) will not be met.

5. Compliance programs

5.1 Value of a compliance program to mitigate/eliminate the criminal liability for legal entities

Compliance programs are regulated under Section 31 bis paragraph 2 of the Spanish Criminal Code. In accordance to such section, the effective adoption of an organization and management model implementing supervision and control measures capable of preventing offenses (the “Compliance Program”) is expressly deemed to exempt liability. To benefit from such exemption of liability, the legal entity will need to prove the following:

The directors have adopted and executed in an efficient manner a Compliance Program.
The functioning and supervision of the Compliance Program have been bestowed to a body of the legal entity with independent powers of initiative and control, or which has legally entrusted with the power to supervise the internal controls of the entity.
The individual authors have committed the criminal offense while fraudulently eluding the Compliance Program.
There has been no omission or insufficient exercise of the supervision and control functions by the abovementioned body.

Additionally, Section 31 quáter considers as mitigating circumstance the adoption by the legal entity (once the offense has been committed) of one or more of the following actions:

Confession to the criminal offense to the relevant authorities before any investigation is initiated
Collaboration with the investigation by providing key evidence or information to solve the case
Mitigation of damages caused as a consequence of the offense before the trial hearing takes place
Implementation of a Compliance Program before the trial hearing takes place

5.2 Absence of a compliance program as a crime

The Spanish Criminal Code does not deem the absence of a Compliance Program itself as a crime of the directors of the entity.

5.3 Elements of a compliance program

(a) Legal framework

The Spanish Criminal Code defines the content of a Compliance Program that every legal entity must have to avoid criminal liability. A Compliance Program must:

Identify the activities in which the offenses to be prevented can happen (risk assessment).
Establish the protocols or procedures defining the legal entity’s decision-making process and the execution of such decisions.
Implement adequate financial management models.
Impose the obligation to report potential risks and breaches to the body in charge of supervising compliance with the prevention model and its functioning
Establish a disciplinary system to appropriately punish any breaches of the measures established by the model
Impose a periodic verification and, if necessary, amendment to the model when there have been significant violations of its provisions, or when organizational changes take place in the control structure or activity developed by the entity.

On 22 January 2016, Spain’s State Prosecutor³ issued a 65-page memorandum providing guidance to Spanish prosecutors on criminal prosecution of legal entities and detailing how prosecutors can assess a Compliance Program to determine whether a particular program would warrant allowing a company to avoid or reduce its corporate criminal liability.

The evaluation guidelines include nine criteria with which the Public Prosecutor could evaluate the program.

1. No “off the shelf” programs

The adoption of a Compliance Program is not by itself sufficient to exclude the criminal liability of the legal entity. Companies should avoid adopting a standard Compliance Program that is not tailored to the company’s needs and risks. “Off the shelf” Compliance Programs will not be considered as a valid defence to criminal prosecution.

1. Programs should reflect an actual culture of compliance

Companies should not adopt Compliance Programs merely as an instrument to avoid criminal liability. Compliance Programs should rather reflect the true compliance culture of the company.

1. Compliance certifications not per se evidence of compliance

The so called compliance certificates issued by consultants, certification companies or any third party may be taken into account as additional evidence to determine the suitability of the Compliance Program, but said certification: (i) will not be deemed sufficient per se to prove the existence of an effective Compliance Program; and (ii) will not be a substitute of the judgment of its sufficiency to be made by the court.

1. Tone from the top is key

The “tone from the top” is critical. Public prosecutors will closely look at the attitude and involvement of the directors and managers of the company in the design, implementation, observance and monitoring of the Compliance Program. Indications of ambiguity on the implementation, contradictory messages about the importance of respecting the compliance program, or the involvement of a director or executive on a specific violation of the Compliance Program under investigation will be critical to judge whether the company has adopted a robust Prevention Program.

1. Benefit obtained as a result of the crime will be considered

The benefit obtained by the company as a result of the crime committed will be a critical factor that prosecutors will consider when assessing the Compliance Program as a defence. If the company has obtained a direct benefit from the crime committed by its directors or employees, the public prosecutor will be more strict when evaluating the sufficiency of the Compliance Program than if the director or employee is the primary beneficiary of the crime whereas the company only benefits indirectly from it. In this case, the prosecutor will analyse the ethical standards used by the company in the hiring and promotion of the directors and employees involved in the case.

1. Detection capabilities earn extra credit

Despite the fact that the detection of the commission of crimes by directors or employees is not a formal requirement of a an effective Compliance Program, it is an essential part of it, jointly with its ability to prevent crimes. Consequently, the prosecutors will give extra credit to those Compliance Programs that are capable of detecting when a director, manager or employee may have committed a crime. When a company has detected a crime, and has disclosed it to the public prosecutor, prosecutors will take that as evidence of the existence of a robust Compliance Program and the company’s uncompromised internal culture of compliance.

1. Commission of a crime does not invalidate a compliance program

The commission of a crime by itself does not automatically disqualify the effectiveness of a Compliance Program. To conclude if a Compliance Program should be considered sufficient to exclude the criminal liability of a company, prosecutors will take into account the rank of the persons involved in the commission of the investigated crime (directors, managers or employees), the number of individuals involved, the number of times that the crime was committed, and for how long the criminal conduct occurred.

1. Previous remedial measures considered

To evaluate the culture of compliance of a company and consequently the effectiveness of the Compliance Program, prosecutors will take into account the manner in which the company has reacted in previous instances of potential violations of the Compliance Program. A timely reaction and the imposition of serious sanctions to the wrongdoers will be considered evidence of an uncompromised commitment of the company to compliance.

1. Investigation and remedial measures in the current case also considered

The specific actions (remedial and otherwise) taken after a company has detected a violation of the Compliance Program, including its review to improve it, its immediate and effective investigation, its disclosure and cooperation with the prosecutor and the judge, will be critical indicators to be appreciated by the prosecutor to assess the effectiveness of the Compliance Program and the existence of a true compliance culture in the company.

(b) Recommended practice

The adoption of a robust Compliance Program is the only valid defence to prevent criminal liability of the legal entity.

6. Regulator with jurisdiction to prosecute corruption

The Spanish legal system does not have a specific regulator with exclusive responsibilities to prosecute corruption. Any public prosecutor could request a judge to start a corruption investigation

However, the Spanish system has a group of public prosecutors that specializes in prosecuting corruption. In this sense, the Spanish government created an Anti-Corruption Prosecution Office, whose main purpose is to investigate and become party to all major cases related to financial offenses or any offense that constitutes bribery committed by public officials or authorities.

The Anti-Corruption Prosecutor’s Office has been strengthened with real criminal investigation groups, including public officials, special police forces and other civil servants.

The judicial police units have also been strengthened, with their investigations carried out in criminal proceedings under the authority of a judge.

¹ ^{– As Spanish courts have consistently held, the concept of public servant contained in the Criminal Code is only applicable for criminal law purposes, as is clear from Article 24, and that it is different from the term used in the administrative sphere. – Back}
² ^{– Organic Law 5/2010, 22 June, which amends Organic Law 10/1995, 23 November, of the Criminal Code. – Back}
³ ^{– Note that since the issuance of this memorandum, the Spanish government has replaced the State Prosecutor. The new prosecutor, appointed on 29 November 2016, is a former member of Spanish Supreme Court who wrote the majority opinion in a leading case on criminal liability of legal entities, which departs from the guidelines set out in this memorandum. Thus, it remains to be seen how the 2016 memorandum is followed under the new leadership. – Back}

Baker McKenzie Barcelona S.L.P. Avda. Diagonal, 652
Edif. D, 8th Floor Barcelona 08034
Spain

Rafael Jimenez-Gusi

Rafael Jiménez-Gusi is a partner of the Corporate Group and co-chair of the Spanish Compliance & Investigation Practice. He is also a member of the Firm’s Compliance & Investigations Steering Committee in EMEA. Rafael advises companies from different sectors and industries on their compliance issues, programs, policies and in risk analysis. He has organized and conducted numerous national and cross-border internal investigations involving allegations of corruption, company fraud and violation of ethics codes. He serves as secretary of several Spanish corporations, where he regularly advises on corporate and compliance matters.

rafael.jimenez-gusi@bakermckenzie.com

Tel: +34 93 206 08 20

Baker McKenzie Madrid S.L.P. Paseo de la Castellana, 92
Madrid 28046
Spain

Cecilia Pastor

Cecilia Pastor is a partner in the Corporate/Commercial Department of
Baker McKenzie’s Madrid office. She is co-chair of the Spanish Compliance & Investigations Practice, which includes practitioners from all areas of practice. Cecilia has worked extensively with clients in regulated sectors, especially in the healthcare sector. She regularly advises on compliance and has put in place a number of programs and training, primarily working with multinational companies. She has also led compliance audits and participated in cross-border compliance investigations and therefore has a grasp of the wider issues triggered by compliance-related issues.

cecilia.pastor@bakermckenzie.com

Tel: +34 91 230 4500

Baker McKenzie Barcelona S.L.P. Avda. Diagonal, 652
Edif. D, 8th Floor Barcelona 08034
Spain

Diego Pol

Diego Pol is a senior associate in the Corporate Department of Baker McKenzie’s Barcelona office. He is a member of the Task Force of Global Compliance News, a compliance news platform moderated by the Firm. He advises Spanish and foreign clients on acquisitions and investments in Spain, corporate compliance, anti-corruption laws, corporate criminal liability, exports of military and dual use items, and international sanctions. He regularly assists clients in internal investigations.
He is a dual qualified lawyer, admitted both to the Barcelona Bar and the Florida Bar (USA).

diego.pol@bakermckenzie.com

Tel: +34 93 206 08 20