WHY IS IT IMPORTANT TO COMPLY WITH THE FCPA RULES?
Gabriel Palma Cruzat.
The US Law on Foreign Corrupt Practices Act (“FCPA”) leads us to consider the need for Chilean companies to have an internal compliance program beyond the mere requirements stipulated by the Chilean law in this topic (currently Law 20,393 on Criminal Liability of Legal Persons).
Concerning 2 main subjects (Anti-corruption and Internal Accounting Records), the FCPA was originally promulgated in the 1970s, to sanction individuals and companies for improper payments to foreign public officials, and US issuers who did not prevent or detect such undue payments, having current application to national consortia, issuers and foreign persons and companies while acting on the US territory.
With regard to anti-corruption regulations, after its promulgation, it was included that any individual or entity acting on the territory of the US, through the use of means or instrumentalities of commerce or any other act, offer, pay or deliver any valuables (in their broad sense) to any foreign official, in order to obtain benefits that they would not otherwise have access to.
In this context, the precautions that Chilean companies (and foreigners in general) must have when conducting business are linked to what is meant by “issuer”, where we see that companies that are listed on a market are considered US capitals or that must periodically submit reports to the SEC, which include those that have an American Depositary Receipt or “ADR”, and understand the concept of “means or instrumentalities of commerce”, where we find a wide interpretation considering the use of means of transportation, the use of communication routes (postal mail, email, text messages, faxes, to or through the US), and the use of the US banking system.
CREATION OF THE SEC COMPLAINT PROGRAM
As a consequence of the above, in 2010, the SEC’s complaint program was created, aiming to detect and prevent fraud and infractions to the capital market, which includes among its characteristics, economic rewards to individuals who voluntarily grant information that ends in monetary sanctions, as well as how confidentiality of whistleblowers is protected and prohibits retaliation by employers to workers who file complaints.
Through this program of complaints sanctions over US$1.5 billion have been generated, including more than US$740 million in restitution for illegal profits and interests for the benefit of affected investors.
Between 2011 and 2017, the SEC, through its complaints program, received 225 complaints from Latin America, 32 of which came from Chile.
Despite the current efforts to modernize and improve our standards on corporate integrity, the presence of figures currently existing in other laws, which have managed to generate a robust and complete figure, such as that of a company, is missing in the discussions and proposals, an auditor for the company in cases of corruption, in order to ensure the implementation of a correct integrity system; or incentives for institutions to self-denounce, such as penalty reductions or their flexibility; or protection plans for the complainant and/or witness, so that their labor or social security is not threatened.
Due to the above, while our legislation is not sufficiently developed, it becomes necessary for institutions to have a robust corporate governance, as well as a powerful corporate integrity program, which tend to generate good business practices with the consequent increase in the reputational appreciation in the market in general.