Anti-Corruption in Colombia

By Carolina Pardo* and Bibiana Cala * (Baker McKenzie Colombia)

1. Domestic bribery (private to public)

1.1       Legal framework

The Colombian Criminal Code applies to any public officer and to any individual who engages in corrupt practices with public officers.

Furthermore, in July 2011, the Colombian Congress approved the Anti-Bribery Statute in an effort to reinforce the prevention, investigation and penalty mechanisms against private and public corruption. With this enactment, various provisions contained in the Criminal Code, the Public Procurement Statute, the Health Law and the Disciplinary Statute were amended, imposing more drastic measures to companies and individuals that commit corruption-related crimes. More recently, the Colombian Congress approved an amendment to this statute to enhance the application of anti-corruption laws to legal entities and regarding their liability for transnational bribery.

The Colombian Criminal Code defines the offenses of domestic bribery (proper, improper and by giving or offering), corruption and transnational bribery.

1.2       Definition of bribery

Bribery can be committed both by public officials and by private individuals.

The Colombian Criminal Code prohibits government officials from requesting, receiving or accepting money or any other benefits/gifts, or from accepting promises of benefits, for their own benefit or for the benefit of a third party to undertake their duties (improper bribery) or to delay or omit something related to their duties or to carry out an action that contravenes their official duties (proper bribery).

The Colombian Criminal Code further prohibits any individual from giving or offering money or other illegal profit (bribery by giving or offering) to a public servant for his or her benefit or that of a third party to: (i) unduly influence the performance of duties that the public servant must comply with; (ii) to influence the servant to delay or omit the performance of his or her duties; or (iii) to unduly influence the public servant to carry out an action that contravenes his or her official duties.

1.3       Definition of public official

Article 20 of the Colombian Criminal Code defines, for the purpose of criminal law, public servers as all the members of public corporations and employees of the state and of all of its decentralized (by territory or services) entities. Furthermore, public servers are all members of the public force; officers of private entities that perform permanent or transitory public functions; functionaries and employees of the Central Bank (Banco de la Republica); members of the Citizens National Commission for the Fight against Corruption; and persons that administer resources enshrined in Article 123 of the Constitution.

1.4       Consequences of bribery

(a) For the individuals involved

Depending on the type of criminal offense (as previously described), sanctions imposed by the Colombian Criminal Code are imprisonment from 6 years to 12 years; fines ranging from 66 to 150 minimum monthly legal wages (i.e., from approximately USD 13,000 to approximately USD 30,000 at rates applicable as of the date of edition of this publication); and, if applicable, incapacity from exercising public rights and functions from six years to 12 years.

(b) For the company/legal entity

The Colombian Criminal Code provides for corporate liability for bribery acts, and hence would be responsible for compensating all the damages caused by a crime.

In addition to these, companies may be subject to the following:

(i) Fines

Companies found guilty of incurring in or benefiting from corruption can be subject to fines of up to 200,000 times the value of the minimum monthly legal wages (i.e., approximately USD 40 million at rates applicable as of the date of edition of this publication), imposed by the Superintendence of Companies.

(ii) Debarment on their ability to contract with the government

Companies and individuals seeking state contracts can be debarred from public procurement contracting if the companies or individuals have committed crimes against the public administration (i.e., bribery or other corrupt actions or omissions) or have been sentenced for crimes related with the promotion, financing and affiliation with illegal groups, crimes against humanity, drug trafficking in Colombia or abroad, and transnational bribery.

This debarment applies not only to companies in which its shareholders are those who have committed the aforementioned crimes, but also to its parent companies and subordinates, with the exception of open stock corporations. The duration of the term of debarment was increased from five years to 20 years.

(iii) Debarment on their ability to contract with the government for those who finance political campaigns

Companies or individuals that have financed political campaigns for presidential, gubernatorial or mayoral elections with contributions that exceed 2.5% of the maximum amounts permitted by law, may not enter into contracts with government entities, even those decentralized, of the respective administrative level for which the candidate was elected and for the period for which the candidate was elected.

This prohibition also applies to existing companies or companies that are to be incorporated (other than open stock corporations) where its legal representatives or any of its shareholders have directly or indirectly financed said political campaigns.

(iv) Liability of statutory auditors

The Anti-Bribery Statute included an additional circumstance that would result in the cancelation of the registration as a public accountant. According to the statute, the professional license of a public accountant shall be cancelled when, acting as a statutory auditor, the accountant does not report before the competent prosecutor or disciplinary authorities corruption acts that he or she becomes aware of while carrying out his or her duties.

1.5       Political contributions

Article 14 of Law 130 of 1994 establishes that political parties, movements and candidates may not receive from entities and individuals, six months prior the election, economic contributions or donations exceeding the amounts fixed by the National Electoral Council. Regarding donations made by entities, Law 130 of 1994 requires that the donation be approved by no less than 50% plus one of the members of the board of directors, or the general assembly of shareholders or the board of trustees.

Regarding presidential campaigns, Law 996 of 2005 establishes that 20% of expenditures of a presidential campaign may be financed by individuals, taking into account that these campaigns cannot receive single contributions from individuals for amounts greater than 2% of the top fixed amount of the campaign. Regarding the contributions of entities to presidential campaigns, the Constitutional Court declared that these were not in accordance with the constitution.

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

In principle, Colombian regulations prohibit private and public parties from offering or giving something of value to any Colombian government agency or officials as this may trigger a violation of anti- bribery rules, even in the absence of corrupt intent.

However, Supreme Court Rulings have indicated that there may be situations in which private parties could extend very moderate and reasonable invitations to certain public officials, since those moderate invitations do not have the potential of influencing the officer to whom the invitation is extended.

It is advisable to extend these invitations only in cases in which there is no pending decision from said public officials, and the invitation is made with a very clear purpose. Offering or granting any lavish or luxurious hospitality to Colombian public officers should be avoided at all times.

In general, Colombian regulation does not have specific mandatory procedures that can be followed in order to determine whether a sponsorship or hospitality offered or extended to a government’s agency or its officials is appropriate or not. A good reference in determining the value of the invitations is the regulation that the Colombian government publishes on a yearly basis, containing the capped values that the public servants will receive as per diems when travelling on official matters.

2. Domestic bribery (private to private)

2.1       Legal framework

The Anti-Bribery Statute added the crime of private corruption to the Colombian Criminal Code. Furthermore, there are certain provisions in the Colombian Criminal Code that provide for punishment whenever certain specific conducts such as disloyal administration, insider trading and bid rigging in procurement contracting are carried out by individuals.

2.2       Definition of private bribery

Private bribery may be committed by any individual who directly or indirectly offers or grants to directors, administrators, employees or consultants of any company, association or non-profit corporation, gifts or any unjustified rewards, for his or her own benefit or for the benefit of a third party, in detriment of the company, association or non-profit corporation.

It may be also committed by the directors, administrators, employees or consultants of any company, association or non-profit corporation that, directly or indirectly, receive, request or accept gifts or any unjustified reward, in detriment of said company, association or non- profit corporation.

2.3       Consequences of private bribery

(a) For the individuals involved

For the individual and the directors, administrators, employees or consultants, the Criminal Code imposes a sanction of imprisonment from four to eight years, and fines that may reach 1,000 minimum monthly legal wages (i.e., approximately USD 200,000 at current rates). When the conduct results in economic damage to the company, association or non-profit corporation, the sanction will be imprisonment for six years to 10 years.

(b) For the company/legal entity

A company / legal entity could be responsible for compensating the damages caused by the crime.

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

See Section 1.6.

3. Corruption of foreign public officials

3.1       Legal framework

The Colombian Criminal Code, in its recently amended Article 433, proscribes the crime of transnational bribery. Additionally, Colombia ratified the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

3.2       Definition of corruption of foreign public officials

Transnational bribery is any action preformed by any individual or legal persons acting through one or more employees, contractors, managers or partners, or those of any subordinate entity, to directly or indirectly give, offer, or promise to a foreign public official bribes in the form of money, benefit, profit or something of value in exchange for the foreign public official’s undertaking, omitting, or delaying any act related to the exercise of his or her functions with the purpose to retain or obtain business.

3.3       Definition of foreign public official

In line with the definition of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, Law 1778 defines “foreign public official” as any person who occupies a legislative, administrative or judicial position in a foreign country, either by election or by appointment; any person that exercises public functions for a foreign country, such as in a public dependency or in a public enterprise; and any other functionary or representative of a public international organization.

3.4       Consequences of corruption of foreign public officials

(a) For the individuals involved

Imprisonment from nine years to 15 years and fines from 650 to 50,000 minimum monthly legal wages (i.e., approximately USD 130,000 to USD 10 million at rates current as of the edition date

(b) For the legal entity

Fines of up to USD 40 million and debarment from participating in any public procurement for up to 20 years

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

See Section 1.6.

4. Facilitation payments

Facilitation payments are not permitted under Colombian law. Therefore, any such payments will be considered illegal and subject to the same provisions as the ones indicated in Section 1 (domestic bribery).

5. Compliance Programs

5.1       Value of a compliance program to mitigate/eliminate criminal liability for companies

With the enactment of Law 1778 in February 2016, Congress introduced the concept of mitigation of criminal liability of legal entities for implementing adequate compliance programs.

Pursuant to Law 1778, adopting efficient transparency and business ethics programs or anti-corruption mechanisms (the “Program”), and complying therewith, are relevant criteria for calculating penalties for transitional corruption among the entities under its surveillance (the “Entities”).

5.2       Relevant Regulations

The Superintendence set forth the triggers for identifying Entities who shall adopt the Program within the deadline provided (Resolution No. 100-002657 of July 2016):

Any Entity that as of 31 December 2015, was subject to the surveillance of the Superintendence of Companies and meets the criteria as indicated in sections 5.3. (a) and (b) below must implement and comply with the Program by 31 March 2017, at the latest.

Likewise, the Authority issued some guidelines regarding the content that the Programs should include (External Circular 100-000003 of 26 July 2016, or the “Guidelines”).

5.3      Criteria to determine when a company is obliged to implement compliance programs

Entities undertaking businesses or transactions of any nature with foreign individuals or legal entities, either public or private, on a regular basis during the previous year (hereinafter “International Business”), are required to adopt the Program if they meet any of the following criteria:

(a) Entities undertaking international businesses, through an intermediary or contractor, or through an affiliate or branch incorporated abroad.

(b) Entities that exceed the below mentioned asset or income thresholds or the number of employees for each one of the mentioned economic sectors as of 31 December of the previous year where the obligation must be satisfied (Since the thresholds are provided in statutory monthly minimum wages (SMMW), please be informed that, as of 2017, 1 SMMW is approximately USD 245.1)

ECONOMIC SECTORSGross IncomeTotal AssetsEmployees
Pharmaceuticals≥75.000   SMMW*
(i.e.,approximately
USD 18 million at rates
current as of the edition date)
≥75.000 SMMW≥2.000
Infrastructure and construction≥150.000   SMMW
(i.e., approximately
USD 36 million at rates
current as of the edition date)
≥150.000 SMMW≥2.000
Manufacturing≥150.000   SMMW
(i.e., approximately
USD 36 million at rates
current as of the edition date)
≥150.000 SMMW≥2.000
Mining and energy≥150.000   SMMW
(i.e., approximately
USD 36 million at rates
current as of the edition date)
≥150.000 SMMW≥2.000

5.3      Elements of a compliance program

The elements of any compliance program should include the framework established in the Colombian Criminal Code, the Anti- Bribery Statute, the Public Procurement Statute, the Health Law and the Disciplinary Statute, in addition to international standards that are applicable, such as the ones encompassed in the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

The Guidelines enacted by the Superintendence, underline that the Program should: i) describe specific bribery risks that the legal entity may be exposed to, as well as its mitigation plan; ii) specify the duties that all employees, partners and senior executives will perform with regard to the correct implementation of the Program; and iii) list internal auditing policies.

The Guidelines enacted by the Superintendence listed eight guiding principles to be included in the Program, in order to mitigate the risk of performing transnational corruption practices.

5.4.1      Eight Guiding Principles

  1. Duties imposed for senior executives: Senior executives must create within the entity a culture of zero tolerance to transnational bribery. Amongst other actions, they shall impose internal sanctions to employees if they participate in such conducts. Senior executives shall issue an internal manual that contains anti-bribery mitigation guidelines as well.
  2. Transnational bribery risk assessment: The entity shall make a risk assessment, considering the country where the business or transaction is being carried out (i.e., a country with high levels of corruption), the economic sector and the totality of contractors hired by the entity as relevant factors to determine the level of risk.
  3. The compliance program: The compliance program (the “Program”) shall contain at least: i) a description of the specific bribery risks that the legal entity may be exposed to, as well as its mitigation plan; ii) duties that all employees, partners and senior executives will perform with regard to the correct implementation of the Program; and iii) a list of all internal auditing policies.
    The Program should also adopt rules on gifts, hospitalities, travel expenses and donations, among others. The Guidelines also suggest to include in all agreements with contractors, relevant provisions for preventing transnational corruption, and impose economic penalties if such duties are breached.
    The Program shall be in writing, in a Compliance Manual.
  4. Program management: The Program must be dynamic and structured, in such a way that it can be easily modified, in order to fit new risks and/or new business activities that the entity may venture in. The entity shall appoint an internal compliance officer; the officer shall have a certain level of autonomy to implement the Program and shall also have direct access to the entity’s senior executives.
  5. Due diligence: Through due diligence, the entity shall identify and mitigate risks related to transnational bribery, specifically concerning contractors.
  6. Program’s monitoring: The entity shall identify the most appropriate technique to monitor the effectiveness of their anti-bribery procedures (i.e., audits, due diligence and/or communication channels though which confidential information are provided by employees).
  7. Disclosure: The entity shall disclose the Program’s content and shall train all employees and individuals that provide any service to contractors.
  8. Communication channels: The entity shall develop communication channels for employees to report violations, to both the Program and provisions of the Anti-bribery Law. Likewise, the entity must ensure easy access to these communication channels, manage incentives to denounce these violations, and ensure channel’s confidentiality

The relevant regulations do not require for the content of the Programs to be literally satisfied, as presented in the Guidelines, by the parties obliged to implement them. Such Guidelines should be taken as parameters for the establishment of the Program.

5.5      Liability for non-compliance with the Program

Non-compliance with the obligation of implementing the compliance program may cause the imposition of fines of up to 200 SMMW by the Superintendence of Companies, According to article 86 of Law 222 of 1995.

As previously stated, the adoption and compliance with an efficient Program is a relevant criteria for calculating penalties for charges regarding transnational corruption. Penalties for such charges can be as high as 200,000 SMMW.

6. Regulator with jurisdiction to prosecute corruption

While the Transparency and Anti-bribery Observatory is in charge of developing and coordinating programs for enhancing transparency in Colombia, the criminal authorities (i.e., the Attorney General´s Office and criminal judges) are in charge of the actual enforcement of the Criminal Code, including in meting out certain sanctions against legal entities. The Superintendence of Companies is the authority in charge of imposing administrative sanctions and monetary fines against entities for their corporate liability in acts or omissions of public bribery.


1 For illustrative purposes only, we use this conversion rate: USD 1=COP 3,000 – Back


Baker McKenzie S.A.S
Avenue 82 No. 10-62
6th Floor
Bogota , Columbia

Carolina Pardo

Carolina Pardo advises clients on general compliance matters related to transactional, general commercial and regulatory issues. She has conducted several compliance investigations and has trained subsidiaries of global companies in Colombia, Peru and Central America on competition, anti-corruption, data protection and regulatory matters. She has participated as speaker in Colombia and abroad in events related to these matters.

She has actively advised and represented national and multinational clients in investigations and in the implementation of internal procedures to comply with the applicable regulations on anti- corruption, competition, data protection, consumer regulation and compliance matters in general. She was part of the panel of experts that assisted the Colombian government in the design of the leniency program on competition matters. She has also coordinated and prepared submissions containing input from industry group members to the Colombian authorities regarding their consumer protection, competition and data protection initiatives.

carolina.pardo@bakermckenzie.com

Tel: +57 1 634 1559

Baker McKenzie S.A.S
Avenue 82 No. 10-62
6th Floor
Bogota , Columbia

Bibiana Cala

Bibiana Cala is an associate in Baker McKenzie’s Bogota office. She has worked in criminal litigation for more than 12 years and has served as an adviser to the Vice-Minister of Justice in Colombia. Her main areas of practice are economic criminal law, criminal litigation, and intellectual property. She advises clients on general criminal matters and has actively advised and represented national and multinational clients in criminal proceedings before the Attorney General´s Office.

bibiana.cala@bakermckenzie.com

Tel: +57 1 634 1565/p>