Spotlight on corporate conduct during criminal and regulatory investigations in Colombia


All the questions

Conduct

i Self-declaration

Companies are generally not obligated to report internal wrongdoing to Colombian authorities themselves. However, self-reporting to law enforcement agencies may be advised in certain circumstances. The statutory auditor has a legal obligation to report to the authorities acts of corruption that he detects in the course of his audit activities. Failure to do so will result in legal consequences for the auditing company and the auditors themselves.

The directors of a company (ie its management and the auditor) also have a legal obligation to inform shareholders and investors as soon as they become aware of an internal dysfunction.

Self-declaring companies can apply for immunity provided they confess and agree to cooperate with the competent authority until the end of the investigation. First applicants can obtain immunity from the Superintendence of Societies2 for fines up to the greater of the benefit obtained or intended by the acts of corruption or the equivalent of approximately US$50 million when they provide evidence of corruption, confess and cooperate. Regarding antitrust behavior, first claimants can obtain immunity from the Superintendence of Industry and Commerce3 for fines up to:

  1. the operating result of the company for the fiscal year immediately preceding that in which the penalty is imposed, with a maximum penalty ceiling of 20 percent of this value;
  2. the company’s equity for the fiscal year immediately preceding that during which the penalty is imposed, with a maximum penalty ceiling of 20% of this value;
  3. a fixed amount in minimum monthly salary, with a ceiling of approximately US$24.7 million;
  4. the value of the public contract in the event of behavior having affected or likely to affect the public procurement process, with a maximum penalty ceiling of 30% of this value;
  5. notwithstanding the foregoing, if the SIC can quantify the benefits derived by the offender from the conduct, it may impose as a sanction fines of up to 300% of such benefits; and
  6. in the case of individuals, approximately USD 500,000.

Pursuant to the provisions of the Penal Code, employees, officers and directors under investigation for misdemeanor may attempt to mitigate criminal penalties by applying to the GPO for reduced sentence and imprisonment; the success of the request will depend on the extent and value of the information the person provides to the prosecutor and the level of cooperation.

ii Internal investigations

Companies can conduct their own internal investigations and this practice is strongly recommended for companies that suspect wrongdoing. A thorough and complete investigation should provide the company with the necessary elements to determine the likely consequences of the possible violation and to determine whether or not it can and should report itself.

Internal investigations may include document analysis, witness interviews and e-discovery of employee work tools. The law grants legal privilege to the work product of in-house and outside counsel.

If proper protocols are followed, internal investigations are covered by solicitor-client privilege and can be used for leniency applications, where there is evidence of wrongdoing. To be privileged, discussions with lawyers must correspond to legitimate consultations related to a specific concern of the company, and not only of individuals, and must correspond in their nature to legal advice provided to the company. Companies generally do not use their own attorney for employee interviews. However, if an allegation against an employee is made, the company must follow specific protocols that allow the employee to present their defense on the matter.

When companies apply for leniency, the procedure is aimed at the persons concerned. Usually, these people keep their own lawyer when the official procedure is initiated.

In criminal terms, granting a request for confidential information from the GPO in the context of a criminal investigation requires the prior authorization of a judge. Administrative authorities such as the Superintendence of Enterprises and the Superintendence of Industry and Commerce do not require a judicial warrant for their requests for information (provided the information is relevant to the investigation).

iii Whistleblowers

Over the past few years, the GPO, the Superintendence of Industry and Commerce and the Superintendence of Enterprises have established robust programs for whistleblowers to report possible illegal behavior. As a result, reports of potential illegal behavior have become more common and effective in terms of uncovering wrongdoing.

The GPO whistleblower program includes a witness protection program. This program is open to victims and witnesses who provide information in the context of criminal proceedings. Under this program, individuals can be relocated to another region and receive the financial and psychological support needed to start a new life.

Leniency programs are administered according to administrative rules by the Superintendence of Industry and Commerce and the Superintendence of Enterprises. These procedures do not have a witness protection program. The leniency programs of these two authorities provide full and partial amnesty from fines for companies and individuals who admit to having participated in illegal behavior and who provide timely, detailed and effective assistance to the competent authority to detect, investigate and continue the behavior in question.

Leniency benefits are available even if the authority already knows about the conduct and has opened an investigation.

Businesses should consider anonymous internal reporting hotlines, in accordance with the guidelines of the anti-money laundering (AML) and anti-bribery and corruption (ABC) administrative authority, the Superintendency of Business, and should ensure that whistleblowers are protected from retaliation for their claims.

The content is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This may qualify as “lawyer advertising” requiring notice in some jurisdictions. Prior results do not guarantee similar results. For more information, please visit: www.bakermckenzie.com/en/client-resource-disclaimer.

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