First.- The Attorney General's Office issued Circular 1 / 2016 on criminal liability of legal persons (compliance) as a result of the legislative amendment of the Penal Code, in force since June 2.015.

This Circular establishes different guidelines to be considered by prosecutors in those criminal proceedings that may follow against legal persons in order to assess the effectiveness of the plans of compliance that currently are configured as a defense to criminal liability (compliance), also the only frame of reference (to date) interprets the Penal Code.

For the Attorney General, the prosecution must prove the criminal conduct of representatives of the legal person or breach of the obligations of control over subordinates. For its part, the legal entity must demonstrate that control programs were effective in preventing crime.

At the discretion of the prosecution will be no criminal liability of the legal person if (even relying on the corporate structure) behavior is performed by the individual in its sole and personal gain (or third) and does not report any benefit for society, fitting into this consideration also obtained through other legal entities, the benefits of strategic nature, those involving Deduction of production costs, competitive advantages or even the reputational type.

Second.- compliance programs should not be understood as a "business insurance" or as a formal performance but must seek a corporate culture of respect for the law.

He must prove that the compliance program is suitable for specific crime prevention and, therefore, programs must clearly realize business risks, having made a judgment of suitability between program content and the offense.

For the prosecution, the Compliance Officer (or "Compliance Officer") should be an organ of the legal person, although tasks compliance can be performed by other structures (unit risk, internal control, service risk prevention labor or prevention of laundering) or even proceed to outsourcing.

It must also emphasized the fact that, for the prosecution, the fact that the Compliance skip their control obligations need not assume that the legal person is exempt from criminal liability.

Third.- Regarding the "small business", it appears that the prosecution will be prudent in their complaint because its structure can not amount to more complex organizations ("... they may prove their ethical commitment by reasonable accommodation to their own dimension of formal requirements, Enabling them to prove their compliance culture, beyond the literalness of the precept and consistent with the requirements under these societies also have from the accounting point of view, commercial and tax ... ").

Fourth.- The essential aspects that can be drawn from this Circular are:

1. In order to proceed with the attribution of criminal liability to the legal entity, a criminal act is required by a natural person in the specific circumstances established, either by those who have greater corporate responsibilities, or by individuals unduly controlled by those.

However, progress is made in recognition of the autonomous responsibility of the legal person through the regulation of organization and management programs, which exculpatory value is attributed under certain conditions.

2. The circle of subjects included under the concept "Who hold corporate responsibilities" It allows to include those who, without being properly administrators or legal representatives of the company, are part of social bodies with decision-making capacity, as well as the middle managers, singular attorneys and other persons in whom certain functions have been delegated, including those of control of risks held by the compliance officer. In short, everyone who is not subordinate.

3. When the expression is collected "In its direct or indirect benefit", the achievement of the same is not demanded, being sufficient that the action of the physical person is directed directly or indirectly to benefit the entity. Only those conducts that, carried out by the individual in its exclusive and own benefit or in that of third parties, are inidonized to report to the entity benefits will be excluded.

4. The only reckless behavior committed by natural persons in the circumstances regulated by the Criminal Code susceptible of generating criminal blame to the legal entity are those related to punishable insolvencies, natural resources and the environment, money laundering and financing of terrorism .

5. The amendment to the Criminal Code has replaced the condition that the offense may have made by the author "... for having not exercised upon him the proper control ..." the less demanding requirement "... the duties of supervision, monitoring and control have seriously failed ...". This reduction of the punitive intervention leaves out of the penal sphere those breaches of small entity (not serious) against which only administrative or mercantile sanctions that discipline some of the matters related to the infractions for which the Penal Code contemplates the responsibility of the legal person.

6. For the legal person is criminally liable for acts of "subordinate persons" requires a breach of the duties of supervision, monitoring and control of a serious nature by those who have the indicated duty.

7. The requirement that the breach of the duty of control has been serious can determine, in addition to the transfer of responsibility to the legal entity for the crime committed by the uncontrolled subordinate, that the same omitted subject of control also responds to an offense, which opens the way of the criterion of attribution of responsibility of the persons with power of decision. In these cases, the Circular of the General Prosecutor of the State considers that both imputations must be maintained, in addition to that of the legal entity itself.

8.- The subjects included in article 31 bis 1 b) of the Criminal Code (subordinate persons) must operate in the field of direction, supervision, surveillance or control of the natural persons mentioned in letter a) of the same section, not being necessary to Establish a direct link with the company, including self-employed workers, subcontracted workers and employees of subsidiary companies, provided that they are integrated in the perimeter of their social domain.

9. Although the violation of the duty of supervision, monitoring and control has not occurred or has been slight or the legal entity has not obtained any benefit, it is possible in the criminal jurisdiction to declare the civil liability subsidiary.

10.- The grave breach of the duties of supervision, monitoring and control must be valued, "... addressed the specific circumstances of the case ..."And this inevitably refers to the organization and management programs, which will be subject to an initial assessment in relation to this attribution criterion to assess the scope and the actual content of the mandate of the persons who seriously breached such duties. Any time that the models of organization and management can come to exempt the company from liability under certain conditions, el object of the criminal proceedings now extends also to assess the suitability of the model adopted by the corporation.

11. The organization and management models must observe the legally established conditions and requirements (Article 31 bis, second and fifth sections of the Criminal Code) and the interpretation of the Prosecutors will attend to the necessary adaptations to the nature and size of the specific legal entity. In this sense, legal persons of small dimension will be able to demonstrate their ethical commitment ma reasonable adaptation to its own dimension of the formal requirements of section 5 of article 31 bis of the Criminal Code, consistent with the lower requirements that these companies also have from the accounting, commercial and fiscal point of view. The Prosecutors, taking into account the special characteristics of these societies, will exercise prudence in their accusation, in avoidance of an unconstitutional situation of bis in idem.

12. Without prejudice to take into account the many different circumstances in each case, the Prosecutors will observe the following guidelines of a general nature to assess the effectiveness of the organization and management models:

A) The regulation of organizational and management models must be interpreted in such a way that the criminal liability regime of the legal entity is not empty of content and impossible to assess in practice.

B) The object of the models of organization and management is not only to avoid the penal sanction of the company but to promote a true corporate ethical culture, in such a way that its true effectiveness lies in the importance that such models have in the decision-making of the leaders and employees and to what extent they constitute a true expression of their compliance culture. The Prosecutors will analyze whether the established prevention programs express a corporate commitment that really discourages criminal behavior.

C) The certifications on the suitability of the model issued by companies or associations evaluators and certifying compliance with obligations, by means of which it is stated that a model meets the legal conditions and requirements, may be seen as an additional element of the adequacy of the model but in no way they prove their effectiveness, or substitute the valuation that exclusively belongs to the judicial body.

D) Any effective program depends on the unmistakable commitment and support of top management to move a compliance culture to the rest of the company. If the entity's main responsible are those who fail to comply with the organization and prevention model or reward or incentivize, directly or indirectly, employees who fail to comply with it, it is difficult to admit that there is an effective program that reflects a true culture of respect for the law in the company, in such a way that, in these cases, the Prosecutors will presume that the program is not effective.

E) Corporate responsibility must be more demanding in cases where criminal behavior resulting primarily for the benefit of society than in those where such benefit is secondary or merely tangential to directly and personally persecuted by the delincuente. In these cases, it require the legal person hiring or promotion of the individual who committed the offense will adapt to protocols and procedures to ensure high ethical standards in hiring and promotion of managers and employees.

F) The Prosecutors will attach special value to the discovery of the crimes by the corporation itself, so that, once the criminal conduct detected by the legal entity and brought to the knowledge of the authority, they should request the exemption from the legal entity's penalty, as not only the validity of the model but its consonance with a corporate compliance culture.

G) Although the commission of a crime does not automatically invalidate the prevention model, it can be seriously questioned according to the seriousness of the criminal behavior and its extension in the corporation, the high number of employees involved, the low intensity of the fraud used to circumvent the model or the frequency and duration of criminal activity.

H) The Prosecutors will attend to the behavior of the corporation in the past. The firmness of the response in previous situations will be positively valued and negatively the existence of previous criminal procedures or in process, even if they refer to criminal behaviors different from the one investigated, or previous administrative sanctions.

I) The measures taken by the legal entity after the commission of the offense can prove the commitment of its leaders to the compliance program. The imposition of disciplinary measures on the authors or the immediate review of the program to detect possible weaknesses, the restitution and immediate reparation of the damage, active collaboration with the investigation or the contribution to the procedure of an internal investigation, without prejudice to the attenuating value that may have any of these actions. They will operate in the opposite direction, the delay in reporting the criminal conduct or its concealment and the obstructive or non-collaborative attitude with justice.

13. The clause exempting the liability of the legal person that incorporates the Criminal Code constitutes a cause of exclusion of the punishability, as an excuse for acquittal, whose evidentiary burden rests with the legal person, who must prove that the models of organization and management they met the legal conditions and requirements.

Five.- In conclusion, we should note the following considerations:

  1. Compliance Programs (compliance) should not be considered as an "insurance company" but must be incardinated in the "corporate ethical culture" that should prevail in legal persons;
  2. Although the legal obligations are identical, the "formal" requirements to entities of small size will be laxer adapting to their own corporate structure;
  3. A greater business benefit with criminal conduct adopted more criminal reproof;
  4. Active collaboration to clarify the facts will be beneficial to the Company;
  5. Each company must have a Compliance Program (compliance) and individualized itself, must be constantly evolving; Y
  6. Compliance Programs (compliance) must be known and applied by all sectors linked to the Company, the conviction of its necessity to be essential by the top business rectors, who should be its main supporters and advocates.

About the Author:

Daniel Vigo, dig advocats

Daniel Vigo

DiG Lawyers