Law No. 31564 “On Preventing and Managing Conflicts of Interest upon Recruitment to and Dismissal from the Civil Service” (Ley de Prevención y Mitigación del Conflicto de Intereses en El Acceso y Salida de Personal del Servicio Público) abolishes previous Law No. 27588 “On Prohibitions and Restrictions for Civil Servants and Persons Providing Services to the State on Contractual Basis” (Ley Nº 27588 que establece prohibiciones e incompatibilidades de funcionarios y servidores públicos, así como de las personas que presten servicios al Estado bajo cualquier modalidad contractual) and introduces the restrictions listed below.
Restriction on moving from the private sector to the public one
The key novelty of the Law consists in restrictions for the persons who, upon their recruitment to the civil service (employment by a public organisation):
- owned (continue to own) over 1% of shares or participation rate of the organisations covered by General Law No. 26887 “On Companies” (Ley General de Sociedades) and Decree-Law No. 21621 “On Limited Liability Companies” (Decreto-Ley de la Empresa Individual de Responsabilidad Limitada) and related to the activities regulated by the public body (organisation) where the individual holds a position even if the organisation is managed by a third party through fiduciary or similar companies;
- held the position of head, were legal representatives or attorneys, provided advisory services to the organisations mentioned in the previous paragraph and the companies associated with them, including those who ceased their relationship with these organisations less than one year before their recruitment to the civil service;
- were members of governing bodies or heads of civil society organisations or other not-for-profit organisations related to the activities regulated by the public body (organisation) where they hold a position also in a situation where they ceased the relationship with these organisations less than one year before their recruitment to the civil service.
These individuals are prohibited from undertaking any interaction with the relevant organisations in the following forms:
- personal decision-making, participation in decision-making, provision of advice in decision-making concerning these organisations; this prohibition is applicable for three years since they recruited to the civil service (employed by a public organisation) or until they sell their shares (participation rate) in the organisation;
- act as lawyers, legal representatives, consultants, sponsors, experts or intermediaries on behalf of a public body in the proceedings concerning these organisations; this prohibition is applicable until the proceedings are concluded.
Restrictions on moving from the public sector to the private one
The Law also introduces restrictions for the persons resigning from the civil service (public organisation). These include:
- heads and other senior officials of public bodies, members of boards of directors, advisory boards, commissions for administrative disputes, other commissions and collegial units in these bodies fulfilling public functions or acting on behalf of the State, including the president, members of the Congress, ministers and deputy ministers, president and members of the Executive Council of the Judiciary (Consejo Ejecutivo del Poder Judicial), Prosecutor General (Fiscal de la Nación), governors, city mayors etc.;
- heads of state corporations and mixed ownership companies and their representatives in the boards of directors;
- individuals holding public positions and positions in the civil service who had access to classified information and took decisions with regard to private sector organisations within their competence.
These categories of persons are prohibited from:
1) interacting, within one year after resigning from a public body (organisation), with the private sector organisations with regard to which they exercised certain powers or fulfilled certain public functions, including the following forms of interaction:
- get employed by these organisations, in particular, by concluding civil law and other contracts;
- be a member of the board of governors or hold managerial positions in these organisations as well as in the companies associated with them;
- receive material or immaterial benefits from these organisations;
- acquire directly or indirectly shares or participation rates of these organisations, their subsidiaries and organisations economically related to them;
- lobby the interests of these organisations;
2) representing the interests of the organisations with regard to which the individual exercised certain powers or fulfilled certain public functions as a lawyer, legal representative, consultant, sponsor, expert or intermediary in proceedings conducted by the public body (organisation) where they held a position except for the proceedings regarding directly that individual, his/her spouse, parents or minor children; in the event that the former servant (employee) was directly involved in the proceeding while holding the position, the prohibition is applicable since the proceedings are concluded or, in other cases, within one year since the resignation from the public body (organisation);
3) disclosing classified or other confidential information, using it in the interest of third parties to the detriment of the State or other persons; the prohibition is applicable until the status of this information is changed.
Additionally, the Law establishes the obligation of the individuals recruited to the civil service (employed by public organisations) to file declarations certifying their compliance with the prohibitions and restrictions to the HR departments (Oficina de Recursos Humanos) or to the logistics departments (Oficina de Logística) of public bodies. This obligation is imposed without prejudice to the norms providing for the need to submit interests declarations to the Comptroller General of the Republic (La Contraloría General de la República) under Law No. 31227 “On Transferring the Powers to Gather, Store and Analyse Declarations of Interests of Government Officials, Civil Servants and Candidates for Public Office as well as to Hold Them Liable for Violating Relevant Requirements to the Comptroller General of the Republic” (Ley Que Transfiere a la Contraloría General de la República la Competencia Para Recibir y Ejercer El Control, Fiscalización y Sanción Respecto a la Declaración Jurada de Intereses de Autoridades, Servidores y Candidatos a Cargos Públicos).
The declarations are public, and the functions to verify them are granted to the Office of Institutional Integrity (Oficina de Integridad Institucional).
Finally, the Law establishes penalties for committing:
1) minor offences:
- failure to submit declarations of interests;
- failure to adopt measures for managing conflicts of interest;
2) serious offences, i.e. submission of false information in a declaration of interests, an incomplete or deliberately misleading declaration;
3) very serious offences, i.e. failure to comply with the restrictions, prohibitions and obligations established by the Law.
Specific types of penalties for these offences are defined in dedicated legal acts regulating the activities of a respective category of officials.
In addition to the penalties, the Law prohibits the conclusion of contracts with public bodies (organisations) and private companies associated with violations of the Law for up to five years for the cases where:
- individuals who resigned from the civil service (public organisation), in violation of the prohibition, represent interests of private sector organisations related to the powers exercised by the individuals when they held a position or fulfilled the functions of a public body (organisation) where they held a position as a lawyer, legal representative, consultant, sponsor, expert or intermediary in proceedings conducted by the public body (organisation);
- individuals moving from the private sector to the public one in violation of the prohibitions and restrictions established by the Law.
The civil servants (employees) found guilty of these offences are entered into the National Register of Sanctions against Civil Servants (Registro Nacional de Sanciones contra Servidores Civiles), while the organisations whose officials violate the prohibitions and restrictions are put on the list of companies that are prohibited from concluding public contracts (relación de proveedores inhabilitados para contratar con el Estado).