This article first appeared in La Tercera on January 27, 2020.
It has been 10 years since the law on criminal liability of legal entities came into force.
This law stems from comparative experience and is based on the principle that the company is responsible for crimes committed by its employees if they benefit the organization. In other words, if the company does nothing to prevent it, it is assumed that it is endorsing the crime.
In the beginning, the law sanctioned only 3 crimes: bribery, money laundering, and financing of terrorism, but it was not enough, so later other crimes were added.
There were no major changes. After the law was passed, it took years for companies to begin to understand that they needed prevention and to demonstrate with evidence that everything possible was being done to prevent this type of crime from occurring. This is how in Chile we began to talk about compliance, which in my definition, is to worry about the how and not just the what within the organization. Something that some companies are still discovering and that is mainly about creating a culture where not only the results are measured, but how they are reached.
The truth is that until we had our cases, it was not believed that companies were capable of committing crimes. We compared ourselves with some countries in the region and were astonished by the high levels of corruption. I think we were innocent and never thought that in the future we would also be in the news for our irregularities.
Several investigations related to corruption -not precisely with this law- such as La Polar in 2011 and the collusion of pharmacies that received a conviction in 2012, added to the cases related to this one, such as Ceresita, Salmones Colbún, Pehuenche, SQM, Caval and others that are still open, such as Penta and Corpesa, pushed two relevant changes at a social level. One of them has to do with an intolerance to this type of practices that directly harm the population, where the discontent has been expressed mainly through social networks (and even part of the “social stadium” is attributed to the same), while at the corporate level there is more awareness of the duty of management, supervision, and concern for reputation.
In simple terms, it was thought: if there are no symptoms, there is no disease… However, the signs were rather silent. It took a long time for new crimes to be added reactively with a higher probability of occurrence. Thus, since November 20, 2018, bribery between private parties, disloyal administration, misappropriation, and incompatible negotiation have been added to the crimes of the fishing law, such as water pollution.
For the same reason, companies that have not taken precautions must get on board as soon as possible. The longer it is delayed, the more complex it could be, given that there will be new requirements in other areas.
With the implementation of effective prevention, there are still some pending issues, such as understanding that not all companies have the same risks, therefore, compliance programs are not a simple copy/paste of manuals and codes of ethics, but a set of policies to operate the business, where the owner is not the compliance area, but the areas where the risks are (commercial, operations, finance, suppliers, investments, etc.). Therefore, the same policies that were made with another objective -efficiency, selling, etc-, become an integral part of compliance, since they are the ones that prevent these infractions from being committed.
In this sense, the law of criminal liability of legal persons pushes the board of directors to address good practices with the same importance as strategy, since it would not make sense for them to circulate on separate paths.
I will not tire of saying that the law is not everything. We are facing a more cultural than legislative issue, in which we need to understand that compliance is not made for “bad” companies -which must be 5% of the companies in the world-, compliance is designed for “good” companies, which by not having adequate controls or procedures, end up committing bad practices. Therefore, if companies did something to prevent this type of crime, corruption could decrease significantly in the world.
It is everyone’s task to contribute to the fight against corruption.
By Susana Sierra