Compliance & Investigations

Legal entities criminal liability for corruption crimes against public administration

The Argentine Anti-Corruption Office recently submitted to Argentine Congress a law proposal (“Anticorruption Bill”) providing criminal liability for legal entities regarding crimes of corruption against public administration and foreign bribery. The purpose of the Anticorruption Bill is to encourage legal entities to prevent the commission of corruption related crimes by implementing integrity programs and by cooperating with the authorities in order to provide more efficiency in law enforcement. 


The implementation of an adequate compliance program may prevent the legal entity from being held liable under the Anticorruption Bill. The Anticorruption Bill generally describes the most relevant elements that the compliance program needs to cover. Sanctions to be applied to legal entities involved in corruption activities will include fines between 1% and 20% of the gross incomes obtained by the company in the year prior to the crime, suspension of its activities and the use of its brands and patents, loss or suspension of state benefits; inability to participate in public bids or any other activity related to the government, and even the cancellation of the legal entities’ capacity. Legal entities may also be fined when the illegal act has been committed by related third parties, such as suppliers, agents, or distributors.

The controlling shareholder of the legal entity shall be jointly liable for the payment of the economic sanction. In cases of M&A transactions or corporate restructurings, the successor entity shall be liable for the corrupt acts committed by the legal entity, unless an adequate due diligence procedure was followed prior to the M&A.

The Anticorruption Bill establishes that it will be in force 180 days after its publication in the Official Gazette. If the Anticorruption Bill is enacted, it will be even more important for legal entities doing business in Argentina to:

(i) have an adequate compliance program in place

(ii) control the anticorruption programs applied by their business partners

(iii) conduct serious anticorruption due diligence process when doing M&A transactions in Argentina.

We will keep you informed about the progress of the process for the enactment of the Anticorruption Bill.

Argentine Anticorruption Bill
Key provisions summary 

Legal entities are liable for criminal offenses against public administration and foreign bribery when such acts: (a) are committed directly or indirectly on their behalf, interest or benefit; (b) are the consequence of an inadequate control or supervision from the legal entity; and (c) such acts are performed by: (i) the legal entity’s owners, shareholders or associates that have influence in the decision making process of the legal entity; or (ii) any of the legal entity’s attorneys, representatives, directors, managers or employees; or (iii) any of its representatives in business association contracts, agency, concession or trust agreements.
The legal entity is also liable for illegal acts committed by suppliers, agents, distributors or other business partners related to the legal entity when such legal entity has not performed due diligence procedures implemented to confirm the integrity and reputation of third parties and business partners, prior and during the commercial relationship.
The legal entity is not liable when there is evidence that the representation invoked by third parties is false or the illegal acts have been committed in the exclusive interest or benefit of such third parties or business partners. 
The control and supervision of the legal entity shall be considered adequate under the law when, prior to the commitment of the offense, the legal entity had a compliance program in place.
The compliance program shall be in accordance with the legal entity’s specific corruption risks, size and economic capacity: the compliance program shall be appropriate to prevent, detect, correct and report any corruption offense to the respective authorities. 
The compliance program shall have, among others, the following elements: (a) a code of con-duct or policies and procedures applicable to directors, administrators and employees; (b) spe-cific policies and procedures issued to prevent illegal acts related to public tender and bids, administrative contracts or any other relationship with the public sector; (c) when applicable, the code of conduct and the policies and procedures shall be also applied to third parties or business partners; (d) periodic training programs addressed to directors, administrators, em-ployees, third parties and business partners; (e) periodic analysis of corruption risks to adapt the compliance program accordingly; (f) senior management support of the compliance pro-gram; (g) internal hot-lines to receive complaints available to third parties too; (h) a non-retaliation program to protect whistleblowers; (i) an adequate internal investigation system which imposes effective sanctions in cases of deviation from the code of conduct’s policies; (j) due diligence procedures in place to confirm the integrity and reputation of third parties and business partners, both prior and also during the commercial relationship; (k) due diligence procedures in place for M&A and corporate restructuring processes; (l) periodic monitoring and evaluation of the compliance program; and (m) the appointment of a compliance officer to develop, coordinate and review the compliance program.
The controlling shareholder or the holding company shall be jointly liable for the payment of the economic sanctions applied to the local legal entity and of the indemnification of the damages caused by the corrupt acts of the local legal entity. 
In cases of mergers, acquisitions and corporate restructurings, the successor is liable for the corrupt acts committed by the legal entity. Successor is not liable if an adequate due dili-gence procedure was followed prior to the M&A process or the corporate restructuring and corrective measures were adopted to prevent the occurrence of similar offenses.
Sanctions imposed and investigations conducted against individuals do not affect the pro-ceedings pursued in accordance to the law.
The following sanctions may be imposed to the legal entities found guilty of corrupt acts or conducts: (i) fines between 1% and 20% of the gross incomes obtained in the year prior to the crime; (ii) suspension of its activities and the use of its brands and patents (maximum of ten years suspension); (iii) publishing of the judgment in the Official Gazette and in newspapers; (iv) loss or suspension of state benefits; (v) inability to participate in public bids or any other activity related to the government (maximum of ten years suspension); and (vii) cancellation of the legal entities’ capacity. 
The following rules shall apply to determine the sanction’s quantum: (a) the amount and hierarchy of the managers, employees and staff involved in the wrongdoing; (b) if the illegal act was directly committed by the owners, directives or board members, or if the wrongdoing was committed through representatives, attorneys or suppliers; (c) the nature, size and economic capacity of the legal entity; (d) the severity of the corrupt act or conduct; (e) the chance that the application of a sanction may cause damage to the community or to a public service; (f) the existence and scope of the legal entity’s compliance program; (g) self-reporting of the corrupt act to the authorities by the legal entity; (h) the cooperation of the legal entity with the authorities to investigate and clarify the alleged illegal act and the con-duct adopted by the legal entity thereafter, including the willingness to mitigate or to repair the damages caused.
The penalty imposed shall be of 10% to 20% of the previous year legal entity’s gross income if one of the following requisites are met: (a) if the illegal act was committed by the senior management of the company, or if they were aware of the illegal act, or if they permitted the illegal act to occur; (b) if the illegal act caused serious damage to the public, or if it caused environmental damages or if it affected a public service; (c) if the illegal act was a continuous or on-going crime; or (d) in cases of recidivism.
The penalty imposed shall be reduced in one third to half of the original amount if the legal entity self-reports the illegal act and submits information and evidence appropriate to identify the individuals or legal entities involved and to recover the funds.
The Public Prosecutor and the legal entity are entitled to execute a cooperation agreement di-rected to suspend the criminal proceedings. Cooperation agreements are subject to confirma-tion by the court. Under a cooperation agreement, the legal entity is obliged to submit useful evidence to clarify the case, to identify the individual involved in the crime and to recover the monies and profits illegally obtained thereof, and to comply with the conditions set forth in the respective cooperation agreement as explained below. The execution of a cooperation agreement does not imply an acknowledgment of liability by the legal entity. A cooperation agreement shall be kept confidential until the court confirms it and then it becomes public. If the court rejects a cooperation agreement, the Public Prosecutor may not use the information and evidence submitted by the legal entity during the judicial proceedings.
Under a cooperation agreement, the legal entity shall commit itself to comply with at least three of the following conditions: (a) pay a penalty equivalent to 1% of the gross income obtained in the year prior to the occurrence of the illegal act subject to investigation; (b) return the goods or profits derived from the illegal act; (c) repair the damages caused; (d) provide a specific service to the community; (e) apply sanctions to the individuals involved in the wrongdoing; (f) put a compliance program in place or improve its current compliance pro-gram.
The above described law shall be complementary to the Argentine Criminal Code. The exist-ing criminal courts shall take care of the enforcement of the law -no new courts shall be cre-ated.
Foreign corrupt practices committed by individuals or legal entities domiciled in Argentina shall be punished by the Argentine criminal legislation and by this specific law. 
The law shall be in force 180 days after its publication in the Official Gazette.