Opportunities of the new Criminal Liability for Legal Entities Act in Chile

August 6, 2010

Since coming into force, last December2009, little has been said about the new Criminal Liability for Legal Entities Act.

This is not consistent with the importantinnovations introduced by this law to ourlegal system: On one hand, it breaks withthe fundamental principle of Criminal Lawby which criminal responsibility is onlyrecognized to individuals and, on the otherhand, it gives form to a system of crime pre­vention that, if implemented correctly, mayexempt companies from criminal liability,the major target of this rule.

In this new legal scenario, where compa­nies face significant new challenges, thescope of the crimes addressed by the lawmust be clear and, in turn, take advantageof all the potential that the crime preventionsystem provides.

In relation to the first aspect, giving the lawa first glance it may be concluded that itonly refers to a limited list of offenses that can be attributed directly to the company,such as money laundering, terrorist finan­cing and bribery of domestic or foreign public officials. In this regard, bear in mind that the traditional association of money laundering crimes to drugtrafficking is not accurate. This offense also includes the contact or concealment of funds -in some cases even because of inexcusable negligence -coming from awide range of crimes closer to business,such as insider information in the stock market or obtaining credits based on falseor incomplete data, with damage to finan­cial institutions. Also, it is necessary toconsider that bribery does not materializejust by obtaining an illegal action from apublic official in exchange for money, butby the simple offer of money.

In relation to a second issue ruled by thislaw, it seems important to emphasize the protection that the compliance system canoffer to the company and its employees ­beyond the scope of this law. Indeed, the crime prevention system of Law 20.393 allows for the exemption of criminal respon­sibility to the company in relation to the crimes defined by this law, but implemen­ted properly it can also prevent other crimes that are normally related to busi­ness, such as tax offenses, public health offenses, informatics crimes and disclosure of trade secrets. The significant importance that compliance has achieved in countries such as Germany or Spain, who do not recognize criminal liability of companies, is a clear example of its virtues of preventingcrimes by employees. The significant importance that compliance has achieved in countries such as Germany or Spain,who do not recognize criminal liability of companies, is a clear example of its virtues of preventing crimes by employees.

The enactment of Law 20.393 improvesthe positioning of our country in the 

international arena -which was one of the recommendations of the OECD when accepting our country as a member. Thecorrect implementation of the preventionsystem, can improve the positioning of the company in relation to its commercial part­ners, the public opinion, increasingly sensi­tive to the social effects of these kind of crimes, and in regards to the State itself,that could reward this good practice in public procurement as well as in its role assupervisor.

From this perspective, more than a sourceof new costs for the company or a limita­tion to it, and beyond the preventive effecton crimes or defense of criminal sanc­tions, the new law model of self regula­tion can turn into an interesting compe­titive advantage.