Criminal Liability of Companies Survey

Transcription

1 1. General Criminal Liability of Companies Survey Colombia BRIGARD & URRUTIA CONTACT INFORMATION: Carlos Fradique-Méndez Camilo Enciso Vanegas Cra. 7 No Torre B Tel: cfradique@bu.com.co ; cenciso@bu.com.co Website: Can a company be prosecuted in your jurisdiction in a similar way as an individual offender? Please explain the main differences, if any. No. It is not possible to prosecute a company in matters regarding criminal liability under Colombian law. However, the Colombian Constitutional Court has stated in several rulings, such as decisions C-674 of 1998 and C-320 of 1998, that the criminal liability of companies is not prohibited under the Colombian Constitution. On the contrary, the Constitutional Court has made clear that corporations or companies may be prosecuted for certain crimes such as the ones which attempt against the environment or the general interest of the community, amongst others, provided that (i) a law has foreseen said type of liability, and (ii) Congress enacts a law which regulates the specific procedure to prosecute companies. The Court has argued that under Colombian law, it is not possible to prosecute corporations as the Criminal Code does not foresee such type of responsibility. In light of this, according to the Court, under the principle nullum crimimen, nullum poena, sine lege praevia lege poenali, it is not possible to determine fair sanctions to be 1

2 imposed unless the law expressly regulates the criminal act. As a result, corporations and/or companies may not be prosecuted under Colombia laws. Notwithstanding the above, according to article 107 of Law 906 of 2004, the Criminal Procedural Code, (i) a natural person or a company may be liable for damages caused by others, provided: (a) the damages are caused by persons who depend directly upon the natural person or the company, or (b) the damages are caused by persons over whom the natural person or the company have the duty of vigilance and control. In addition, the natural person or the company under this article may be considered as a liable third party to be notified to appear in the reparation hearing, as per the victim s petition request or his own attorney petition, in which case the court must determine the damages to be paid by the liable third party. The Criminal Procedural Code before Law 906 of 2004, Law 600 of 2000, in its Article 69, which remains enforceable in the prosecution of crimes and felonies performed before the issuance of Law 906, 2004, also regulated third party liability. The incorporation of liable third parties to the process may be requested through a petition to incorporate a civil party filed within the same criminal process by the victim or victims. After the petition to include the liable third party within a process is notified, the third party is considered as a party with all the rights and obligations granted by (a) due process principle, (b) the Constitution, (c) the Criminal Procedural Code, (d) the Criminal Code, and (e) applicable rules. Finally, it is important to note that under Law 906 of 2004, (i) preventive measures over the assets of liable third parties may be requested by victims once the decision to prosecute filed by the prosecutor is definitive, and (ii) per the request of the victims the courts must decide if the liable third party must or must not pay damages to the victim or victims, once the defendant is found guilty in the final ruling Can other types of sanctions under criminal law be imposed on companies? Describe the major types of sanctions and their legal prerequisites. Apart from the liability applicable to liable third parties as explained above, and as a result of the influence of Spanish law in Colombian legal tradition, Law 906, 2004, establishes certain sanctions which may have an effect on companies as a result of a criminal procedure. As such, Article 91 of the Code of Criminal Procedure states as follows: Article 91. Suspension and closing of the organization (company). At any time before the indictment, by the petition of the prosecutor, the judge must order the competent authority ( ) to suspend the activities of a company or order the temporary closing of commercial establishments owned by individuals or companies, when it is reasonable to believe they have dedicated, totally or partially, to undertake criminal activities. 2

3 The measures described above will be permanent, when certainty beyond any reasonable doubt exists... Even though Law 906 of 2004 established the aforementioned sanction, the Colombian Constitutional Court has stated that this provision may not be applied, as it is not clear from the existing criminal regulations applicable which are the specific procedural rules applicable to corporations. Furthermore, the sanctions which may be imposed to corporations in each specific crime are not clear, thus its application would violate the principle nullum crimen, nullum poena praevia. In addition, Article 16 of the Code of Commerce, states the following: Every time a sentence regarding crimes against ownership rights, authorities (public officer, notary public, consul), the national economy, industry and commerce, smuggling, illegal or unfair trade, usurpation of rights of industrial ownership and issuance of checks with insufficient funds or related to non existing accounts, a sanction prohibiting the exercise of commerce during two to ten years will be imposed as an accessory sanction. Nonetheless, as it was previously pointed out, this article may not be applied as no specific criminal procedure regarding these sanctions has been implemented in Colombia, and Article 16 of the Code of Commerce does not clarify the procedure to follow in order to impose the accessory sanctions Are there any other kinds of sanctions in other fields of law which can be imposed on companies following the commission of an offence by its directors, managers or employees (e.g. fines, dissolution of a company, etc.)? Please describe the relevant sanctions and summarize the legal prerequisites. According to Decree 3100 of 1997, the Superintendence of Companies must supervise and control certain companies in Colombia and impose administrative sanctions over said companies, when necessary. The Superintendence may (i) take the control over, or intervene in the control of, the company, (ii) order its dissolution, which may be considered as its organizational death penalty, and (iii) impose fines if, for example, the company does not register a change of control over the company before the competent authority. Further, throughout the Code of Commerce several articles establish sanctions that may be imposed to corporations or companies: (i) Article 37 establishes the possibility of the Superintendence of Industry and Commerce (SIC) to impose fines against persons who develop commercial activities without being registered before the mercantile register. The same sanction may be imposed in the case of the lack of registration of new commercial establishments. The 3

4 SIC may also impose sanctions to companies who violate the applicable rules of Law 256 of 1996 regarding unfair trade or cutthroat competition (Title V. Article 33). (ii) Article 58 establishes the possibility of imposing fines to companies which infringe the prohibitions of article 57 of the Code of Commerce, regarding restrictions to companies in relation to information registered or provided in balance sheets. Such fines may be imposed by the Chamber of Commerce, the Superintendence of Finance, or the Superintendence of Companies, but their imposition will not exclude criminal liability of the persons involved. According to said provision, in the event it is impossible to establish the person responsible of the infraction, the person who has the ownership over the balance sheets, the accountant, and the fiscal auditor shall be considered to be joint and several debtors of the fines imposed. (iii) Article 62 of the Code of Commerce establishes that the fiscal auditor, the accountant or the tenant of the balance sheets who incur in the violation of the obligation to maintain the confidentiality over the same, will be sanctioned, according to the Criminal Code, for the crime of violation of confidentiality and correspondence, albeit the applicable disciplinary sanctions. (iv) According to article 87 of the Code of Commerce, the SIC may impose fines or order the suspension or closing of the company to the competent Chamber of Commerce. (v) Other acts which may be punished by competent authorities are (a) the infraction of the prohibition for one person to occupy more than five positions in the board of directors of different companies 1, (b) the fraud or falsification of information 2, (c) the misdirection of working capital of a foreign company in investments different to the social purpose of the company by its subsidiary 3, and others Criminal Liability of Companies 2.1. What types of sanctions can be imposed on a company? What is the minimum/maximum punishment for each sanction? If the sanctions distinguish between certain types of offences please describe the sanctions for the most relevant offences or groups of offences. 1 Article 202 of the Code of Commerce. 2 Articles and 395, of the Code of Commerce (sanctions and fines due to fraud and falsification of documents). 3 Article 491 of the Code of Commerce. When a foreign company does not invest the assigned capital in activities intended to perform the social purpose of its subsidiary, the competent superintendence shall impose fines ( ) to the legal representative in order to oblige him to use the moneys in a proper manner in order to accomplish its purpose. Notwithstanding the foregoing, the legal representative may be subject to other sanctions under this title. 4 Articles 201, 212 (criminal liability of the fiscal auditor), 216 (sanctions against the fiscal auditor), 217 (imposition of sanctions), 221 (dissolution or closing of the company ordered by the Superintendence of Companies or a court), 404 (restriction to the managers of the company to transfer or purchase its shares), 414 (obliged transfer of shares), and 458 (restriction to perform mercantile acts if the net patrimony of the company decreases below 50% of outstanding capital), of the Code of Commerce. 4

5 No sanctions may be imposed on companies derived from criminal liability, due to the arguments stated above. Only administrative sanctions may be imposed, as those described in 1.2 and What are the legal requirements for each type of sanction? 2.3. Is the prosecution of a company confined to certain types of offences or to offences committed by certain hierarchy of company staff? If yes, please explain in more detail How will acts (or omissions) of individuals (directors, managers, employees) be attributed to a company? Can acts or omissions been attributed if the individual violated only internal (but not statutory) rules or regulations? 2.5 How will mens rea of the company be established? Colombian law does not regulate this issue. However, if sanctions against companies were regulated by Congress, it is deemed that some crimes (such as those who affect the environment) could be judged in application of the strict liability criteria, following current tendencies by western countries towards the prevention of damages derived from risk related activities Is there a strict liability of a company for certain kinds of offences for which mens rea is not required? Please describe for which kind of offences mens rea is necessary and for which not. Colombian law does not regulate sanctions against companies in criminal procedures Is it necessary to identify and/or convict the individual offender in order to prosecute a company? Criminal liability of companies does not exist under the Criminal Code or under the Code of Criminal Procedure. However, if the Congress were to develop in a legal manner the concept of criminal liability of companies, it would not be necessary to identify or convict the individual offender in order to punish the company, unless it were absolutely necessary to establish the liability of the company or its participation in the crime or felony What additional defenses (except of lack of offence) can a company raise? 5

6 2.9. Can a company avoid punishment if it is sufficiently organized, has duly instructed its directors, managers or employees and has taken reasonable care to exert control on its directors, managers or employees? What extent or organizational requirements and control are necessary to avoid conviction? It depends on the type of liability regulated by law for each conduct. In certain activities, which represent major risks for society, the companies may be liable due to strict liability, as explained above in 2.5. However, strict criminal liability is forbidden under criminal procedural Colombian laws and applicable rules. Nonetheless, strict civil liability is applicable in criminal cases, in the precise cases regulated by law. However, it is of common use that the companies and persons demonstrate that they have performed all the activities and taken all the measures required to minimize and/or avoid possible harm to third parties Can certain kinds of sanctions be executed during the investigative phase of a criminal proceeding (e.g. preliminary seizure of bank accounts, attachment of claims)? No. Nonetheless, when a company is called into a proceeding as a liable third party, the courts may impose protective measures against it, such as seizure and freezing of bank accounts, or garnishments over its shares or other assets Can both the individual offender and the company be convicted for the same offense? If Congress legislated on criminal liability procedures to prosecute companies, it would be possible to convict both the company and the individual offender. However, we believe said alternative is not feasible, due to a very strong position of Colombian scholars and politicians who believe that the simultaneous prosecution and imposition of sanctions against (i) companies, and (ii) individual offenders (who are owners or members of the companies), would constitute an infraction of the non bis in idem principle Can a parent/group company be prosecuted for offences being committed within a subsidiary? There are no specific rulings on this issue under Colombian law. However, on 2007, the National General Prosecutor, initiated criminal actions against high executives of Chiquita Brands International and its Colombian subsidiary Banadex, for their support and financing of paramilitary illegal armed forces, who 6

7 intended to exterminate trade union leaders in Colombia. The prosecution is currently being held by the National General Prosecutor. 3. Criminal Sanctions on a Company 3.1. What other types of sanctions but a criminal punishment can be imposed on a company? Please describe the types of sanctions and their legal requirements. As stated above in 1.3, fines and other administrative sanctions may be imposed upon companies Is the imposition of these sanctions confined to certain types of offences? Describe the most relevant sanctions and types of offences? 3.3. What defenses can a company raise against these offences? 3.4. Can such sanctions been executed during the investigative phase of a criminal proceedings? Please read 1.3 above. 4. Procedural Issues in Cases of Corporate Liability 4.1. Does the prosecution have discretion to prosecute or not a company? Which aspects will the prosecution take into account? The Colombian Code of Criminal Procedure grants the prosecution the option of desisting from prosecuting in certain cases. Thus, if Congress legislates on the sanctions and procedure applicable to companies said option would be applicable in criminal liability procedures where companies are involved. Article 114, numeral 2; and article 324 of the Code of Criminal Procedure, regulate the causes which allow the prosecutor to decline from exercising the legal action against the offender. The prosecutor may not desist from the prosecution, when the investigated facts are related to infractions against international humanitarian law, crimes against humanity, genocide, drug trafficking and terrorism At what stage during an investigation/proceeding does a company have the status as a suspect or similar status? 7

8 4.3. Does a company have the rights to remain silent (nemo tenetur se ipsum accusare), to refuse production of documents, to deny access to company site without search warrant, to refuse testimony, to answer questions or to any other suspects rights? Yes, according to the due process principle regulated under article 29 of the Constitution When will a company be informed that it is or can become prosecuted? 4.5. Can the directors, managers or employees be witness in proceedings against a company? Does this also apply if the directors, managers or employees are suspects themselves? Not explicitly regulated. However, the answer is yes, taking into account the due process principle regulated under article 29 of the Constitution Will there be a joint proceeding against the company and the individual offender? 4.7. Does the proceeding against a company differ from that against an individual suspect? If yes, describe the elemental differences. Colombian Code of Criminal Procedure does not regulate procedural rules applicable to companies. 5. Procedural Issues on Other Criminal Sanctions 5.1. Does the prosecution have discretion to impose or not a sanction on a company? This issue is not regulated under Colombian law. However, Colombia has adopted since 2004 a Code of Criminal Procedure which allows the prosecution to waive the right to initiate the criminal action based on different considerations. It is likely that the option to withdraw the action would be applicable to companies in the event the criminal procedures applicable to companies were created, as explained in 4.1 above. 5.2 Which aspects will the prosecution or court take into consideration? Read answer 4.1 above. 8

9 5.3. Does the company, have the status of a suspect or a similar status and at what stage in proceedings? 5.4. When will the company been informed that the prosecution is considering to impose sanctions or have sanctions imposed? 5.5. Which procedural rights does a company have when it is at risk that sanctions might be imposed? 5.6. Will there be joint proceedings against the company and the individual offender? 5.6. Does the proceeding against a company differ from that against an individual suspect? If yes, describe the elemental differences. 6. Criminal Liability of Directors or Managers 6.1. Can directors or managers be criminally held liable for offences committed by other individual directors, managers or employees? Which legal concepts apply in your jurisdiction? Yes. In certain cases it is possible to prosecute directors or managers when a criminal conduct is committed due to negligence or lack of performance of their duties What are the legal requirements for a criminal liability of directors and managers for offences committed by others? 6.3. Does a criminal liability arise only from the fact that another director, manager or employee was not adequately selected, instructed, supervised or the company not adequately organized? No. This circumstance only applies for civil liability, unless criminal law states otherwise, which is not the case under Colombian law. 9