SURVEY OF LATIN AMERICAN ANTI-BRIBERY LAWS

• Jurisdiction: Derecho Internacional

International Mining and Oil & Gas Law, Development, and Investment
(Apr 2013)
CHAPTER 4A
SURVEY OF LATIN AMERICAN ANTI-BRIBERY LAWS
John J. Sardar
Chief Compliance Officer, Noble Energy
Houston

[DRAFT -- April 5, 2013]

I. INTRODUCTION

Efforts to combat bribery of foreign officials (i.e., transnational bribery) began with the enactment of the U.S. Foreign Corrupt Practices Act ("FCPA") in 1977,¹ and after several decades, international governmental organizations promulgated multilateral anti-corruption conventions, which in turn required member states to implement similar legislation to the FCPA.

This paper provides a high level overview of the anti-corruption laws of five Latin American countries -- Argentina, Brazil, Colombia, Mexico, and Venezuela -- enacted following adoption of international conventions. This paper also examines the effectiveness of those laws in combating corruption.

A. History of the FCPA

The United States Congress enacted the FCPA in 1977 in response to revelations of widespread bribery of non-U.S. officials by U.S. companies.² The U.S. Securities and Exchange Commission ("SEC") had discovered that hundreds of U.S. companies had paid millions of dollars in bribes to non-U.S. government officials to secure business overseas. The SEC reported that these U.S. companies were using secret "slush funds" to make illegal campaign contributions in the United States, making corrupt payments to non-U.S. officials abroad, and falsifying their corporate financial records to conceal the payments.³ As enacted, the FCPA prohibited payments to non-U.S. officials, political parties, and officials or candidates for political office, and also imposed recordkeeping and internal controls requirements.⁴

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Under the FCPA, U.S. enforcement officials have jurisdiction over U.S. persons and companies acting anywhere in the world, companies listed on U.S. stock exchanges, and non-U.S. persons and companies whose actions take place in whole or in part while within the territory of the Unites States.⁵ This broad jurisdictional scope can reach Latin American companies. Moreover, U.S. companies operating in Latin America have utilized compliance strategies (such as due diligence, FCPA contract terms, and training) to their relationships with Latin American companies in an effort to comply with the FCPA, and practically extending the influence of the FCPA in the region.

B. UK Bribery Act

The U.K. Bribery Act ("Bribery Act"), which came into force on July 1, 2011, brought the United Kingdom into compliance with the OECD Convention on Combating Bribery of Foreign Officials in International Business Transactions ("OECD Convention"), which is discussed further below.⁶ The Bribery Act also represents an important development in global anti-bribery legislation. While anti-bribery laws are evolving around the globe, the Bribery Act is arguably one of the most significant developments in global efforts to tackle corruption, and in several respects, goes beyond the FCPA. Similar to the FCPA, the Bribery Act criminalizes bribery of non-U.K. officials and holds organizations accountable for bribes paid on their behalf by intermediaries.⁷ In addition, however, the Bribery Act criminalizes passive bribery, commercial bribery, and facilitating payments.⁸ The Bribery Act also allows organizations to assert a complete defense of "adequate procedures" to prevent associate persons from paying bribes on their behalf.⁹ The Bribery Act applies to any company that "carries on a business or part of a business" in the United Kingdom. Like the FCPA, the Bribery Act's aggressive jurisdictional reach will likely impact Latin American companies with U.K. operations or transacting with U.K companies.

C. International Anti-Bribery Conventions

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The FCPA was the first statute in the world to prohibit transnational bribery, and for more than two decades, it was the only statute of its kind. Eventually, however, the member states of several international governmental organizations negotiated and enacted multilateral agreements prohibiting foreign bribery. These international conventions against foreign bribery entered into force in the late 1990s and early 2000s and many Latin American countries subscribed to them.

In 1997, the member states of the Organization of American States ("OAS") successfully negotiated the first international agreement to prohibit transnational bribery, the Inter-American Convention against Corruption ("OAS Convention"). The OAS Convention entered into force on March 6, 1997, and has been ratified by thirty-three member states.¹⁰

The OAS Convention seeks to promote the development and strengthening of legal mechanisms in signatory countries to "prevent, detect, punish and eradicate"¹¹ official corruption and to facilitate cooperation among the signatories to combat official corruption. It is a considerably broader instrument than the FCPA, focusing not solely on criminalization of transnational bribery but also on a host of other corruption-related offenses as well as preventive measures. The OAS Convention requires each signatory country to enact FCPA-type laws criminalizing transnational bribery, although unlike the FCPA, the OAS Convention does not prohibit payments to political parties, party officials, or candidates for political office. The OAS Convention permits countries to take reservations when ratifying it, provided such reservations are not incompatible with the "object and purpose of the Convention."¹² Implementation of the Convention therefore appears to be left largely to the discretion of each state, although at the time of this writing only three¹³ of the ratifying states had taken reservations.

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Also in 1997, the member states of the Organization for Economic Co-operation and Development ("OECD") negotiated and signed the second international agreement prohibiting transnational bribery, the OCED Convention on Combating Bribery of Foreign Officials in International Business Transactions. The OECD Convention entered into force on February 15, 1999, and has been ratified by thirty-four member countries (including Chile and Mexico) and six non-member countries (including Argentina, Brazil, and Colombia).¹⁴ Like the OAS Convention, the OECD Convention requires countries to proscribe the bribery of foreign public officials in the same way that countries prohibit the bribery of their domestic officials.¹⁵ To that end, the Convention requires the enactment of national laws criminalizing the bribery of foreign public officials with the focus on the supply of funds -- the person who promises or gives the bribe, in contrast to the offense committed by the official who receives the bribe.

In 2002 and 2003, the UN General Assembly negotiated and adopted the United Nations International Convention against Corruption ("UN Convention"). The UN Convention entered into force on December 14, 2005, and 164 countries have agreed to abide by its terms, including twenty-eight OAS member states.¹⁶ The UN Convention is considered the most aggressive and important international convention combating corruption. In addition to criminalizing bribery and embezzlement of public funds, the UN Convention also criminalizes trading in influence, concealment and laundering of the proceeds of corruption, and obstruction of justice. The Convention also prescribes various mandatory and voluntary measures for member countries to adopt, including measures to prevent public and private sector corruption, facilitation of international cooperation, and asset recovery.

II. SURVEY OF THE ANTI-BRIBERY LAWS OF ARGENTINA, BRAZIL, COLOMBIA, MEXICO AND VENEZUELA

Argentina, Brazil, Colombia, Mexico, and Venezuela have all ratified the OAS and UN Conventions.¹⁷ Furthermore, Argentina, Brazil, Colombia, and Mexico have also ratified the OECD Convention.¹⁸ Consistent with their obligations under these conventions, Argentina, Brazil, Colombia, Mexico, and Venezuela have implemented laws prohibiting transnational bribery. In general, the anti-corruption laws of all five countries prohibit a broader range of conduct than the FCPA, including bribery of domestic public officials and passive bribery.

A. Argentina's Anti-Bribery Laws

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Argentina's anti-bribery laws are established by statute, and set forth under Title XI, Chapter VI of the Argentine Criminal Code ("ACC"), the Civil Service Code of Ethics set forth in Decree 41/99, the Public Ethics Act (N° 25,188), and the Law Frame of Regulation of Employment of a National Civil Servant No. 25.164 and its Decree No. 1421.02 ("Law of Employment").¹⁹ The ACC makes it unlawful for any person to offer an economic advantage to a domestic or foreign public official or an employee of an international organization in order to obtain or retain business or an advantage.²⁰

The Anti-Corruption Office ("ACO") within the Ministry of Justice and Human Rights, has authority to investigate corruption allegations but does not have independent authority to initiate anti-corruption cases.²¹ The ACO is also responsible for elaborating and coordinating public anti-bribery programs.²² To date, no individual has been convicted of violating the ACC and the few cases that are open have not made any relevant progress.²³ There are at least two anti-corruption matters pending, one before an Argentine court and another under investigation.²⁴ Both cases involve alleged bribes in connection with hydroelectric power projects, one in the Philippines and another in Bolivia.²⁵

1. Passive Corruption Violations under the ACC

The ACC prohibits public officials from personally, or through an intermediary, receiving money or any other gift or accepting any promise, directly or indirectly, to perform or refrain from performing an act in relation to his or her duties.²⁶ The definition of the term "benefits," is broadly defined to include gifts, favors...