|Carlos Fradique-Méndez||Andrés Felipe Parra|
In recent years, the world has seen how numerous jurisdictions have amended their legal regimes to include harsher penalties against companies involved in bribery. Chile in 2009, the UK in 2010, Brazil in 2013 and, most recently, Colombia in 2016, have all sent out a clear message for all legal entities and companies established in their territories and doing business in their countries. That is: if any of your employees, contractors, subcontractors or any other affiliated entity engages in conduct which may be deemed corrupt, the legal entity will be held responsible and will face harsh sanctions.
The recent enactment of Law 1778 of 2016 means Colombia's authorities and corporations incorporated in Colombia must prepare for a new regime. All those seeking to do business in Colombia must be aware that if they do not prepare and forcibly ignore the enactment of this new law and corrupt conduct occurs within their business, the Superintendence of Companies may: impose harsh pecuniary sanctions of up to COP$137,891,000,000 (approximately $42 million); order the publication of the sanctions imposed in widespread media and in the certificates and registries of the respective corporation and on the corporation's website; debar the corporation from contracting with government-owned entities for up to 20 years; and, prohibit the corporation from receiving incentives or subsidies (including tax benefits) from the government for five years.
Therefore, entities seeking to do business in Colombia, or that are already doing business in Colombia, must implement all necessary actions to avoid being sanctioned. It is recommended that they assign budgets and personnel to:
- verify the status of the corporation's actions regarding the risk of corruption, determining which activities could entail higher risks, as well as the efficiency of existing control mechanisms to address any such risks;
- verify the corporation's culture regarding the risk of corruption and execute any change necessary to make improvements;
- verify the content and enforceability of any ethics or conduct standards within the company, adjusting internal procedures to comply with the law;
- seek external guidance if necessary; and,
- in general, communicate to personnel and business allies that the company has a zero tolerance policy regarding corruption. Companies must be aware of the importance of conducting transparent business and performing activities correctly.
Compliance in Colombia has changed, significantly. The only question left is: is Colombia up to the challenge?
Carlos Fradique-Méndez and Andrés Felipe Parra
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