Diligencing anti-corruption policies in Colombia

Andrés Felipe Parra	Ana María Rodríguez

In 2011, the Colombian Congress enacted an anti-corruption statute known as Law 1474 of 2011 to bring the country's anti-corruption laws up to international standards. The Law contains provisions that specifically refer to anti-corruption policies and prohibitions that are applicable to all sectors of the economy. Therefore, companies undertaking business activities in Colombia should adopt specifically tailored compliance policies and procedures, including the establishment of compliance manuals, to heighten awareness within the corporate organisation and minimise the potential legal liabilities that may arise out of unlawful conduct by any of its employees or third-parties acting on the entity's behalf.

Surprisingly, most companies in Colombia remain unaware of the existence of the new anti-corruption regulations, and the severe penalties that may be imposed for violations of the new law. One of the most significant penalties includes the potential cancellation or suspension of the company's registration with the Chamber of Commerce if it can be proven that the entity has sought to benefit from the commission of a criminal offence against the public administration, such as the commission of a bribery-related offence.

To avoid potential successor liability for violations of Colombian anti-corruption laws, during the course of any due diligence review by an investor of a Colombian target, the investor should undertake an in-depth review not only of the target's anti-corruption policies and procedures but also the target's culture and the so-called tone at the top, to ensure that the target has in place a robust compliance programme that is specifically tailored to potential risk exposure, and the particular facts and circumstances surrounding the target's commercial activities, for example in connection with the retention of third-party agents, securing of governmental permits or public procurement bids.

Through careful due diligence, including interviews with compliance personnel and executives of the target, the investor can discover any potential liabilities that may require adjustments to the transaction documents or a revision of the transaction structure to carve out such potential liabilities. Upon successful acquisition, the investor should also undertake a careful post-closing review and potential revision of the target's compliance policies and procedures (including any compliance manuals) to ensure that those are in line with both Colombian law and extraterritorial laws such as the FCPA or UK Bribery Act, that may apply to the investor.

Andrés Felipe Parra and Ana María Rodríguez

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