I. Corporate liability deriving from criminal activity
1. Nature of the liability (criminal, administrative) and basis (crimes committed by directors or representatives, in the interest of or for the advantage of the company)
In Colombia, legal entities are not criminally liable but are civilly liable within the criminal process. This means that a legal entity is not the direct subject of the criminal action because the process cannot be initiated or conducted against the company. Moreover, it is not the direct counterpart of the Attorney General’s Office.
However, the legal entity might be affected by the decisions taken during the criminal process, and this occurs when its employee or executive is tied to the criminal process for having committed public or private corruption offenses. In consequence, the employee has a direct criminal liability and the legal entity has an accessory civil liability. That civil liability exists within the criminal process and it is an accessory because it depends on the judgment against the employee or executive.
Within that scope, corporate liability requirements vary depending on the scenario and sanctions that apply:
- Into a criminal procedure: Firstly, cancellation of legal status requires a demonstration that the legal entity was used, totally or partially, to commit crimes. It must be solicited by the prosecutor, and it proceeds regardless of who uses the legal entity for crimes. Secondly, civil liability (torts) requires a demonstration of the relationship between the person who committed the crime and the legal entity (director or employee), and of the damage caused by the crime. Likewise, the activity done must be related to the convicted person’s role, duties or position in the legal entity. Finally, debarment applies ipso iure after directors or controller partners are criminally convicted.
- Into an administrative procedure: The legal entity may be sanctioned with fines in cases of local corruption only if there is consent or tolerance by the directors. Meanwhile, if the case involves transnational bribery, the action can be done by the directors, employees and contractors. Furthermore, debarment, prohibition to receive governmental subsidies and publication of the sanction on press proceed on the same threshold.
This legal base is mainly found in: a) Law 599/2000, Art. 96; b) Law 600/2000, Arts. 46 and 65; c) Law 906/2004, Arts. 91 and 107; d) Law 1474/2011, Art. 34; and e) Law 1778/2016.
2. Types of crimes/administrative offenses from which, according to the legislature, corporate liability may arise
The answer depends on the kind of sanction or legal consequence to legal entities:
- Cancellation of legal status and civil liability (torts) may arise from any crime.
- Fines and publication of the sanction on press may only arise from crimes against Public Administration (Criminal Code, Title XV) or any other crime if public money or assets are affected.
- Debarment may only arise from crimes against Public Administration (Criminal Code, Title XV) or other crimes included in Law 1474/2011 (Corruption in Private Sector, Illegal Administration, Mistreatment of Privileged Information, and Market Manipulation crimes related to medicines).
- Prohibition to receive governmental subsidies may only arise from the Bribery of Foreign Public Officials crime.
3. Identification of companies and entities to which liability may apply
The answer depends on the kind of sanction or legal consequence to legal entities:
- Cancellation of legal status and civil liability (torts) may apply for any kind of legal entity (profit and non-profit).
- Fines, publication of the sanction on press, and prohibition to receive governmental subsidies may only apply for profit legal entities under vigilance of the Corporations Superintendence.
- Debarment may only apply for profit legal entities.
4. Corporate liability for crimes committed abroad by its representatives or subsidiaries
The answer depends on several criteria:
- If a case of Bribery of Foreign Public Officials arises: For this crime, which is typically committed abroad, corporate liability may arise regardless of any other fact or legal condition; in this event, the Corporations Superintendence may sanction legal entities under its vigilance with fines, debarment, publication of the sanction on press, and prohibition to receive governmental subsidies. However, in order to proceed with the cancellation of legal status and civil liability (torts), a criminal procedure and a criminal conviction against persons related to the legal entity are required.
- If other crimes are committed abroad in which Colombian criminal law may apply: Colombian criminal law applies and, therefore, a criminal procedure may be initiated in some cases that occurred abroad, and in general terms, those are: (i) under Criminal Code, Art.16 – Crimes against the State Security (Criminal Code, Title XVII), Crimes against Economic Regime (Criminal Code, Tittle X) and Crimes against Public Administration (Criminal Code, Title XV); (ii) Money Falsification crime (Criminal Code, Art. 273); (iii) Financing and Administration of Terrorism Assets (Criminal Code, Art. 345); and (iv) any crime committed abroad by Colombian citizens or foreigners, if they are in Colombia after the crime commission and other legal conditions are fulfilled. In these events, corporate liability may arise if a criminal procedure and a criminal conviction against persons related to the legal entity occur.
5. Corporate liability in the case of transactions taking place after the commission of a crime (acquisitions, mergers, demergers, etc.)
The new legal entity (if a merger), the new legal entities (if a demerger) or the new owner or controller entity must assume the corporate liability of the merged, demerged or acquired legal entity (Law 1778/2016, Art. 6; Commerce Code, Arts. 167-180).
II. Applicable sanctions
1. Types of sanctions applicable to the company
The sanctions or legal consequences are those previously indicated:
- Civil liability (torts) — The legal entity responds to all the damages caused by the punishable act once the sentence is issued.
- Piercing the corporate veil — This measure seeks to identify the natural persons who form the legal entity and can thus be direct subjects of the criminal action. This measure is taken by the Attorney General of the Nation at the beginning of the investigation or at any stage of the process.
- Suspension and cancellation of legal status — At any stage of the criminal process and before indictment, the prosecutor may request the suspension as a preliminary measure, generating the temporary closure of commercial establishments when it is proven that the offense was committed through the legal entity.
- Fines — These derive from the existence of an enforceable final judgment issued against the legal representative or administrator of the legal entity when they have been convicted of bribery for giving or taking. The Superintendence of Companies may impose fines of up to two hundred thousand (200,000) legal minimum monthly wages if the legal entity benefited from the commission of that offense.
- Publication of the sanction on press — This reputational penalty consists of the publication of an extract from the decision of the Superintendence of Corporations in the media of wide circulation and on the website of the legal entity for a period of one year.
- The prohibition to receive governmental subsidies incentives will last for five years.
- Finally, the legal entity (matrices, subordinates, in which they are administrators, legal representatives, members of the board of directors or of the controlling shareholdings) is disqualified from contracting with the state for a term of 20 years when one of its employees or officials is convicted for public corruption, private corruption, unfair administration, misuse of privileged information and transnational bribery, among others. This inability is not given as a penalty in the criminal process but is a general disqualification for the legal entity on state procurement (Law 1474 of 2011 and Law 1778 of 2016).
2. Interim measures, cease and desist orders, bans and confiscatory measures
Below are some of the possibilities:
- Into an administrative procedure before the Superintendence of Corporations, it can order any precautionary measure when formulating charges to guarantee the payment or execution of future sanctions (Law 1778/2016, Art. 13).
- Into a criminal procedure, only precautionary measures put in place after the criminal conviction proceed in the compensation hearing (Criminal Code, Arts. 102-108).
- Into a Special Confiscation Procedure (Law 1708/2014), any money or asset belonging to a legal entity may be confiscated if it is the profit or revenue of a criminal activity.
3. Liability of directors or managers for not having adopted (intentionally or negligently) measures for the prevention of the crime
From a criminal law perspective, directors or managers are not liable for not having adopted measures for the prevention of the crime.
III. Measures and “models” of prevention and effects of the same on corporate liability and applicable sanctions
1. Consequences of the adoption of a compliance “model” and effects on corporate liability for crimes committed by the company’s managers, directors or representatives (cases in which it is possible to obtain an exemption from liability or a mitigation of the sanction)
The adoption of a compliance model and its effectiveness is a criterion for mitigation of sanctions. There is no exemption from liability on that ground.
2. Modality according to which a compliance “model” must be adopted in order to benefit from the exemption from responsibility or mitigated punishment (codes of ethics, procedures, etc.)
There is no special structure, modality or content indicated in the law.
3. Monitoring: independent person or body to control/supervise, with the purpose of verifying the correct application of the “model”; mode of operation of such person or body
There are no provisions regarding monitoring indicated in the law.
IV. Judicial proceedings to determine corporate liability
1. Court competent to decide on the liability of and penalties applicable to the company
- The criminal judges decide on:
- Suspension and cancellation of legal status
- Civil Liability (torts)
- Debarment applies ipso iure as a consequence of the criminal conviction against persons related to the legal entity
- The Attorney General’s Office decides on:
- Piercing the corporate veil
- The Superintendence of Corporations decides on:
- Publication of the sanction on press
- Prohibition to receive governmental subsidies
The procedure before the Superintendence of Corporations is not judicial but administrative. Therefore, there are judicial actions against the decisions by that authority.
2. Possibility of the application of interim measures
Interim measures will proceed as it was explained in Section II, 2.
3. Plea bargains and related effects on the corporate liability
- In the administrative procedure before the Superintendence of Corporations, if a legal entity pleads guilty, its sanction may be mitigated, but it is not specified as to what extent.
- Into the criminal procedure, there is no possibility of plea bargains with legal entities and those reached with persons related to them do not have effects with regard to legal entities.
4. Imposition of sanctions against the company
It was explained in Section II, 1.
5. Permanence of corporate liability if the crime is extinguished
There is no possibility of corporate liability if the crime is extinguished except if a case of bribery of foreign public officials arises, in which the Superintendence of Corporations may proceed against legal entities regardless if the persons related to them are convicted or not.
V. Corporate liability in multinational groups
1. Liability of parent companies located abroad in the case of offenses committed by directors, managers or representatives of the local company
There is no possibility to proceed against legal entities located abroad.
2. Basis of liability and applicable sanctions
VI. Significant case law concerning corporate liability arising from crimes and draft laws under discussion
1. Significant case law, if any
2. Proposed or contemplated new legislation
No current, proposed or new legislation is in course.