Organic Law of 17 February 2021 No. 392 “On Amendments to the Comprehensive Organic Criminal Code in Relation to Anti-Corruption” (Ley Orgánica Reformatoria del Código Orgánico Integral Penal en materia Anticorrupción), coming into force 180 days after its publication, envisages, in particular, the following changes*.
1. New corruption crimes
One of the key reforms of the Criminal Code is the expansion of the list of corruption crimes and the inclusion in it of such corpora delicti as:
- obstruction of justice;
- overpricing in public procurement;
- private sector bribery.
The natural persons who commit these crimes shall be punishable with imprisonment for a term from three to five years (for an obstruction of justice) or from five to seven years (for overpricing in public procurement and commercial bribery), or shall be subject to other penalties as provided for by the Criminal Code, for instance, the denial of the right to partial or full parole, the prohibition to conclude public contracts (for corruption cases in the private sector, the period of such prohibition can vary from ten to 25 years).
2. Increased penalties for corruption crimes
The Law also amends the provisions on the penalties for the crimes already listed in the Criminal Code primarily by increasing potential terms of imprisonment.
In particular, active and passive bribery, including bribery of foreign officials, is now punishable with imprisonment from five to seven years (from seven to ten years in the event that the official was bribed to commit unlawful actions).
Solicitation, trading in influence and the offer of trading in influence shall be punishable with imprisonment from three to five years.
Civil servants, persons acting on behalf of a public entity in any public authority, suppliers of goods, works and services for public needs, officials, administrators, senior managers or employees of the entities of Ecuador’s financial system, members or presidents of boards of directors and governing and oversight councils of these entities convicted of embezzlement of public funds shall be imprisoned for a term raging between five and 13 years depending on the circumstances of the crime and prohibited from holding offices in the public sector, financial institutions or public organisations and partnerships that act as financial intermediaries. Moreover, based on a report of the Office of the Comptroller General of the State (Contraloría General del Estado – CGE), the prosecutor can request that the public contract with respect to which violations have been detected and its payment are suspended.
Furthermore, the Law stipulates that if a corruption crime is committed in an emergency situation (such as a pandemic) the offender can get the maximum penalty.
The amendments also regard other types of penalties, primarily those on confiscation of property: from now on, any property of a person convicted of corruption, including the property which is not in any way related to the crime, can be confiscated in favour of the State in accordance with a court decision provided that it is impossible to confiscate the proceeds of crime or such proceeds are insufficient to repair the damage caused by that crime.
3. Liability of legal persons
A number of significant changes are made to the provisions on liability of legal persons. In particular, the Law introduces sanctions against legal persons for corruption which imply the dissolution or liquidation of the organisation and a fine from 500 to 1,000 of single base salaries.
At the same time, the Law introduces the possibility to mitigate these sanctions if organisations comply with a number of conditions:
- the entity self-discloses to competent authorities before the investigation begins;
- it cooperates with the investigation;
- it fully compensates the damage caused by the crime before the court proceedings start;
- it has a compliance programme in place and has appointed the officers responsible for its implementation.
The Criminal Code defines the minimum requirements for the compliance programme, including:
- Adoption of measures for preventing, detecting and managing corruption risks;
- Introduction of internal control mechanisms and appointment of competent officers;
- Constant oversight and monitoring by both internal and external experts, assessment of programmes and policies, protocols or procedures;
- Development of a financial governance model;
- Establishment of reporting channels for feedback;
- Adoption of a code of ethics;
- Implementation of personnel training programmes;
- Introduction of internal investigation mechanisms;
- Introduction of the obligation to inform the compliance officer of potential risks and offences;
- Definition of the procedure for holding persons disciplinary liable for infringing provisions of the compliance programme;
- Introduction of due diligence mechanisms.
In parallel, the list of aggravating circumstances is expanded and now includes the previous cases when the legal person was held liable for a similar offence, the use of other domestic or foreign companies to commit a crime and exploitation of existing rules to escape liability (for example, the organisation of external audit to conceal an offence).
4. Provisions on whistleblowers.
New amendments to the Criminal Code oblige natural persons to report crimes, including those related to corruption, and add the provisions on the need to guarantee the confidentiality of personal data of whistleblowers. Furthermore, if the information provided by whistleblowers results in confiscation of proceeds of crime, the Law grants them the right to a financial reward ranging from 10% to 20% of the value of confiscated property.
5. The functions of the Office of the Comptroller General of Ecuador.
Finally, the Law adds to the Criminal Code the provisions on the activities of the CGE with regard to the fight against corruption, in particular, formalising its functions in detecting the cases of contract overpricing in public procurement and obliging it to submit reports on indicators of crimes to the Attorney General’s Office of Ecuador (Fiscalía General del Estado) and subsequently participate in relevant investigations.
*The introduction of these amendments to the domestic criminal legislation was a condition for the country to obtain the IMF financial assistance of $2 billion.