Colombia Strengthens the Corporate Liability Framework and Makes Other Substantial Amendments to Its Anti-Corruption Legislation

1. Enhanced corporate liability

The Law expands the list of offences for whose commission the legal persons can be held liable. Previously, it included only the crimes against the public administration and misappropriation of public property. From now on, organisations can be sanctioned under the following conditions:

If a senior employee has been convicted of crimes against the public administration, environment, economic and social order, financing of terrorism and organised crime, management of resources related to terrorism and organised crime, or any activities associated with misappropriation of public property, or has reached a pre-trial resolution based on the “principle of opportunity” (principio de oportunidad) in the course of investigation of the aforementioned offences or relevant court proceedings; in this context, the organisation gained either directly or indirectly or tried to gain undue advantage from the crime committed by its senior employee, permitting or allowing for its commission by its acts or omissions;
If the organisation has been found guilty of foreign bribery by providing directly or indirectly, offering or promising an undue advantage to a foreign public official in exchange of certain acts or omissions.

The provisions of the Law also clarify the categories of legal persons subject to the sanctions for these offences. These legal persons are:

organisations members of temporary joint ventures or consortia;
State corporations;
State-owned enterprises;
not-for-profit organisation registered in Colombia; and
foreign affiliates.

Additionally, the Law extends the list of liability measures for the abovementioned offences. Now, potential penalties include:

a fine of up to 200,000 monthly wages (200 billion COP or roughly 50,500,000 USD) and mandatory forfeiture of the alleged benefit or the benefit gained from the offence; upon the decision of the competent authority, up to ten per cent of the fine can be used to implement, improve or update transparency and business ethics programmes in the organisation that was held liable;
the publication of an abstract of the decision concerning the liability of the organisation in the media and on its corporate website;
the prohibition to receive any sort of material aid or subsidies from the State within ten years (previously, the maximum term was of five years);
the prohibition to participate in public procurement and contracting within 20 years;
dismissal of the employees with managerial functions that were found guilty, and suspension of the individuals that condoned the unlawful conduct.

Furthermore, the information about the organisation held liable is included in a dedicated public register.

At the same time, the Law establishes the mitigating and aggravating circumstances that affect the sanctions imposed on organisations. In particular, the mitigating circumstances include:

admission of guilt before the issuance of the order compelling testimony, except for the cases of repeated offences;
facilitation of verification of the assets of the accused;
conduct of a due diligence procedure in the course of acquisition of the legal person that has committed a corruption offence by a third party;
self-disclosure and provision of evidence by the legal person;
adoption of measures to prevent corruption in the future;
non-realisation of the benefit gained from the corruption offence.

The aggravating circumstances are:

violation of legitimate rights of citizens and organisations;
unlawful economic profit;
repeated offence;
resistance, refusal or interference with the investigation or oversight actions and violation of procedural rights of the defendant;
implementation of fraud schemes or the use of an intermediary to conceal the offence or its consequences;
reluctance to execute the orders of the competent authority or the lack of respect for the relevant decisions.

2. Adoption of transparency and business ethics programmes

The Law obliges organisations to adopt transparency and business ethics programmes in line with the requirements defined by the oversight, inspection and supervision executive bodies in coordination with the Secretariat for Transparency under the President of the Republic (Secretaría de Transparencia de la Presidencia de la República, hereinafter, the Secretariat for Transparency). The programmes should be designed taking into account the area of activity, corruption and other risks, the amount of assets and revenues, authorised strength and mission of the company, and include the mechanisms and standards of internal audit.

3. Due diligence

The Law changes the procedure for verifying corporate beneficial owners. In particular, the companies obliged to implement a system for the prevention and management of money laundering, terrorist financing and proliferation risks or provide information to the Single Register of Beneficial Owners (Registro Único de Beneficiarios Finales) are required to conduct due diligence procedures that would allow identifying:

the natural person or organisation that has made a transaction or concluded a public contract, its beneficial owner and ownership structure;
the objective of the contract and the mission of the contractor.

4. Financial accountability

According to the Law, the following offences are added to the list of financial accountability offences:

double-entry bookkeeping;
inclusion of non-existent expenditure or liabilities without their correct identification or undue incorporation of operations in financial reporting;
use of forged documents;
inclusion of items of expenditure that do not correspond to the records of accounts in the financial reporting.

The Law also introduces a dedicated procedure for reflecting the information about the implementation of public contracts in the financial reporting.

5. Implementation of a mechanism for the prevention and detection of unjustified increase in assets

According to the Law, an autonomous mechanism for early warning and detection of unjustified increase in assets of civil servants will be established under the National Prosecutor General’s Office (Procuraduría General de la Nación). This mechanism will consolidate the databases containing information about assets, interests etc. of officials, tax and property information concerning both the persons subject to verification procedures and their spouses, permanent partners and children that are currently administered by different authorities, including the Administration Department for the Civil Service (Departamento Administrativo de la Función Pública), the National Civil Registry Office (Registraduría Nacional del Estado Civil) and others. It is also intended to ensure that necessary information is provided in real time.

6. Anti-corruption training

The Law obliges the educational institutions at all levels, from pre-school institutions to universities:

to implement curricula focused on the participation of society in ensuring transparency, efficient public administration and proper use of public resources;
to establish the office of Student Comptroller (Contralor Estudiantil) responsible for raising awareness about the rights and duties of citizens and the government, mechanisms for the participation of society in the decision-making oversight etc.

7. Functioning of anti-corruption bodies (divisions)

The Law provides for the establishment of a National Ethics Commission (Comisión Nacional de Moralización) and two technical sub-commissions. One of them will deal with corruption prevention. In particular, it will develop and apply the indicators of efficiency, effectiveness and transparency of the functioning of public bodies, coordinate the organisation of educational and awareness-raising events on ethics and morality in the civil service etc. The other will be responsible for detecting and holding liable the individuals holding public offices at the national, regional and local levels for corruption offences.

The powers to search, confiscate and return illicit asset located abroad are entrusted to the General Comptroller of the Republic (Contraloría General de la República) which is now authorised to hold persons liable and impose penalties.

Additionally, an Anti-Corruption Observatory (Observatorio Anticorrupcion) is established in the structure of the Secretariat for Transparency. It will gather, aggregate and analyse public information, including information about corruption offences, with the aim to detect corruption risks in different sectors of the economy. Based on its findings the Secretariat for Transparency will conduct research and develop documents with a view to formulating further proposals on the amendments to existing legal acts.

8. Reparation of damages caused by corruption offences

The Law introduces a provision according to which a damage inflicted by a corruption offence to public property should be repaired by both material and immaterial means.

In cases where a corruption offence causes damage to public property, besides the obligation to cover the cost of the proven damage, the sentence can include a fine of up to one thousand minimum wages (one billion COP or roughly 252,000 USD); the gravity of the offence, the degree of participation of the accused and his/her economic capabilities are taken into consideration.

The monies derived from fines are transferred to the Reparation Fund for Corruption Victims (Fondo de Reparación de las Víctimas de Actos de Corrupción) under the Prosecutor General’s Office. At a later stage, the funds are allocated in the following manner:

40 per cent are allocated to the Prosecutor General’s Office to restore the rights of the victims of corruption, and ensure a complete material and/or immaterial reparation of the damage caused;
25 per cent are allocated to the National Agency for the Legal Defence (Agencia Nacional de Defensa Jurídica del Estado);
25 per cent are allocated to the Administrative Department of the President of the Republic (Departamento Administrativo de la Presidencia de la República) to design plans, programmes and policies aimed at promoting integrity, transparency and ethics.