Explanation of crimes covered by Law 20.393 establishing criminal liability for legal persons
A. Introduction
Law No. 20.393 has established a limited list of crimes that can generate corporate criminal liability. They are bribery, money laundering, financing terrorism and money reception. We will next allocate a section to explain the fundamental characteristics of these crimes, in order to guide the behavior of owners, controllers, managers, senior executives, representatives, those engaged in administration and supervision, and in general those who are under the direction or supervision of the aforementioned, in Inversiones Aguas Metropolitanas S.A. in this area, all of whom will be referred to in this section and elsewhere in the document as "employees."
B. Bribery
- Bribery of national public officials
Article 250. He who offers or agrees to give a public employee an economic benefit, to their benefit or to a third party, to perform actions or incur omissions mentioned in Articles 248, 248(a) and 249, or for having already performed or incurred them, shall be liable for the same penalties of fines and disqualifications set forth in those provisions.
In the case of the benefit offered in connection with the acts or omissions of Article 248, the briber will be also punished with the penalty of minor imprisonment in its minimum degree.
In the case of benefits consented to or offered in connection with the acts or omissions referred to in Article 248(a), the briber will be further punished by minor imprisonment in the medium degree, in the case of benefit offered, or minor imprisonment in its minimum degree, in the case of consenting to the benefit.
In the case of benefits consented to or offered in connection with crimes or misdemeanors listed in Article 249, the briber will be further punished by minor imprisonment in the medium degree, in the case of benefit offered, or imprisonment in their minimal medium grade, in the case of benefit consented to. In these cases, if the briber could receive a penalty that is higher than the crime or misdemeanor in question, they will be charged with the latter.
Under the cited provision, for this crime to occur the involvement of a public official is required, either by requesting, receiving or agreeing to receive improper financial gain. Article 260 of the Criminal Code establishes who are considered public officials for this purpose:
Article 260. For the purposes of this Title and for paragraph IV of Title III, an employee is deemed to be all those who perform a public office or function, whether in the Central Administration or in semipublic institutions or companies, municipalities, autonomous agencies or organizations established by the State or dependent on it, whether or not they were appointed by the Head of the Republic or receive public salaries. This qualification is not altered if the position was gained through popular election.
The scope of the definition of Article 260 is quite wide; as a result, care must be taken when analyzing risk areas concerning the crime of bribery. The centerpiece of the legal definition is the performance of a public office or function.It has been understood as a first approximation that we are considering a person who holds a "public office" when they have been vested with an appointment or received remuneration provided by the state. Therefore, there are no major difficulties in identifying risk areas when there is a relationship with public officials who formally hold public office (ministers, parliamentarians, police officers, inspectors, judges, etc.), or in the case of laws that directly assign such a status, such as in Law N° 20.393 which states that individuals involved in certification activities fulfill a public function according to the terms of Article 260 of the Criminal Code. The same is not true for the term "public function," which creates numerous problems, incorporating the concept of a public official into countless positions not covered by the strict regulation of the Administrative Code. For this reason, in case of doubt the criteria to be used is to presume a person is a public official and utilize the preventive measures contained in this model accordingly.
Concerning the aforementioned, the identification of risk areas for committing the crime of bribery cannot come from a superfluous analysis, since it is possible that an employee of the company is engaging with a public official without it being obvious, especially if one considers that the public official does not necessarily receive remuneration (they can play an honorary function) or may not belong to the central government (such as the Real Estate Registry, the Notaries, the company Correos de Chile, CODELCO and ENAP).
Furthermore, although the crime of bribery will result in sanctions against anyone who provides or agrees to provide a public official an economic benefit, it is not necessary that it benefit the public official himself, but could instead seek to benefit a third party. Additionally, just the mere offer counts, meaning it is not necessary that a benefit has been paid, nor even accepted or received (from the perspective that concerns us here, commission of the crime occurs merely by offering to give an economic benefit).
The economic benefit is offered, asked, or agreed to in exchange for the public official performing certain actions or incurring omissions, but it is possible to accept, ask or receive the benefit before or after performing such acts or omissions.
For the purposes of this crime, economic benefit is understood as any remuneration received by the public official that increases their equity or prevents its decline, be it in cash, assets, or any other item of monetary value (discounts, additional credit benefits, scholarships, etc.)
The acts and omissions expected of the official are set out in Articles 248, 248(a) and 249 of the Criminal Code, under which an offer or solicitation of an economic benefit can have any of the following goals:
1. To solicit or agree to receive, on the part of the official, or to offer or agree to deliver more than what they are allowed to receive by virtue of their office. This is the case of certain public officials who are authorized to charge certain pre-established sums of money for services provided to the public, but who cannot receive more than has been legally established. The crime of bribery occurs if the official directly asks for more that what is established (in which case the crime is committed by the official), or if someone offers it to them.
For example, for a failure to meet the obligation to issue financial statements to the Securities and Insurance Superintendency, the respective agency is authorized to pursue a fine or penalty proceedings. Therefore, if an amount is paid or offered that is more than what corresponds to remedy the omission, the crime of bribery has occurred.
2. To solicit or accept to receive, or offer or agree to deliver, an economic benefit to the official, for themselves or a third party, to carry out an act within the duties of the agency, but one that is not part of their own duties.
For example, if a payment is made to an official other than the one who is entitled to receive it in order to rush an application.
3. To solicit or accept to receive, or offer or agree to deliver, an economic benefit to the officer to avoid or to stop doing something that is required by virtue of their position or function.
For example, an official is offered an economic benefit to not engage in a determined inspection.
4. To solicit or accept to receive, or offer or agree to deliver, an economic benefit to the official for performing or having performed an act that violates or is contrary to the duties of their office. The violation may also consist of exerting influence over another public officer so that the latter performs an act benefitting a third party.
For example, an official of a municipality is offered an economic benefit to grant time off the process of rebating investments of Aguas Andinas and as a result pays a lower fee to the Treasury.
5. To solicit or accept to receive, or offer or agree to deliver, an economic benefit to the officer to commit crimes or misdemeanors of an official character in the performance of their duties, or crimes infringing a person's rights guaranteed by the Constitution. An example of the former is a payment to a judge to hand down a ruling that goes against the law in a criminal case. An example of the second type is giving an economic advantage to a public official to detain a person without legal grounds.
- Bribery of foreign public officials
Article 251(a) - A person who offers, promotes or gives a foreign public official, a financial or other benefit, in their favor or of a third party, to perform an action or incur an omission with a view to obtaining or maintaining, for themselves or another, any illicit business or advantage in the scope of any international transactions, shall be punished with the penalty of minor imprisonment in its medium to maximum degree, plus with a fine and disqualification set forth in subsection Article 248(a). If the benefit is noneconomic, the fine shall be between one hundred to one thousand UTMs. The same sanctions will be applied to a person who offers, promotes or gives an allusion of benefit to a foreign public official for performing or having committed the referenced acts or omissions.
Whomsoever, in the same situations as those described in the preceding paragraph, consents to give the said benefit, shall be punished by minor imprisonment in its minimum to medium degree, in addition to the same fines and disqualification indicated.
These are broadly the same requirements previously discussed for bribery, except that in this case the public official must serve another country or an international organization and the promised profit can be of a noneconomic nature.
For example, the crime is committed if, under an international tender sponsored by a foreign government or an international organization, money is offered to an official or agency of that country in exchange for awarding the bid to one of the bidders.
The crime of bribery of foreign public officials is judged by the Chilean justice even when it is committed outside the country. This is provided for in Article 6 Nº2 of the Organic Code of Courts, provided the crime is committed by a Chilean or by a foreigner with regular residency in Chile. In both cases, criminal liability could be triggered for the legal entity for which the person works.
The same is not true if an individual commits the crime abroad and is not Chilean or a regular resident, in which case the crime must be brought before the foreign courts.
C. Money Laundering
Article 27 of Law N° 19,913: The punishment of maximum imprisonment in the minimum to medium degrees and a fine of between two hundred and one thousand UTMs shall be applied to the following:
- To the person who in any way conceals or disguises the illicit origin of certain assets, knowing that they come directly or indirectly from the commission of acts constituting one of the crimes under Law Nº 20,000, which punishes the smuggling of psychotropic and narcotic substances; under Law Nº 18,314, which defines acts of terrorism and establishes penalties; in Article 10 of Law Nº 17,798, on arms control; in Title XI of Law Nº 18,045, on the stock market; on Title XVII of the decree with force of law Nº 3 of the Ministry of Finance, 1997, under the General Banking Law; in Article 168 in conjunction with Article 178, Nº 1, both from the decree with force of law Nº 30 of the Ministry of Finance, 2005, approving the consolidated, coordinated and systematized text of the decree with force of Law Nº 213 of the Ministry of Finance of 1953 on the Customs Ordinance; in the second paragraph of Article 81 of Law Nº 17,336 on intellectual property; in Articles 59 and 64 of Law Nº 18,840, from the Central Bank Act; in paragraph three of number 4º of Article 97 of the Tax Code; in paragraphs 4, 5, 6, 9 and 9(a) of Title V and paragraph 10 of Title VI, both from Book II of the Criminal Code: in Articles 141, 142, 366d, 367, 374(a), 411(a), 411(b), 411(c), 411(d), and Articles 468 and 470, Nº 8, concerning the final paragraph of Article 467 of the Criminal Code; or, knowing of the origin of the assets, conceals or disguises them.
- To the person who acquires, possesses, keeps or uses such assets for profit, where they were aware of the illicit origin at the moment of receiving them.
The same penalty shall be applied to the conduct described in this article if the assets come from an act committed abroad which is punishable in the place it was committed and which in Chile constitutes one of the crimes listed in letter a) above.
For the purposes of this article, assets are understood to mean any class of objects with monetary value, body or incorporeal, movable or immovable, tangible or intangible, as well as legal documents or instruments evidencing ownership of the assets or other rights over them.
If the author of any of the acts described in letters a) or b) does not know the origin of the assets due to inexcusable negligence, the punishment of imprisonment corresponding to the first or last paragraph of this Article shall be reduced by two grades.
The fact that the origin of the aforementioned assets is a common and unlawful act mentioned in letter a) of the first paragraph shall not require a prior conviction, and can be proved following the same procedure used to prosecute the crimes under this article.
If the person participated as the author or accomplice of the act which provided such assets, they shall, in addition to the sanctions contemplated in this article, be punished additional for the originating actions.
In any case, the punishment of imprisonment applicable for cases of letters a) and b) shall not exceed the greater punishment which the law assigns to the author of the crime or misdemeanors through which the assets contemplated in this Article arose, without prejudice to the fines and additional penalties that may apply in accordance with the law.
The crime of money laundering is established in Article 27 of Law 19,913. To be established, it is required that the funds that are hidden, concealed or maintained come from certain illicit activities listed in the same Article, and that therefore are known as "underlying crimes." Thus, it can be said that money laundering involves concealing or disguising the illicit origin of the assets, for an offense to arise out of these underlying crimes, or keeping such illegal assets in control of the author.
In our legal system, the following are crimes that give rise to money laundering:
- Those established by Law N° 20,000, which sanctions the illicit trade of narcotics.
- Those which constitute acts of terrorism, described in Law N° 18,314.
- Parts of Law N° 17,798, concerning arms control:
- Those who manufacture, arm, process, import, bringing into the country, export, domestically transport, store, distribute, or establish conventions without the authorization prescribed by the law on regulated firearms.
- Those who build, use, package or own the facilities used in the construction, assembly, testing, storage or housing of firearms without the authorization required by law.
- The crimes established in the General Banking Law, several of which apply only to banking and financial personnel, except for Article 160 which punishes those who obtain credits from credit institutions by providing or giving false or maliciously incomplete information about their identity, activities or financial or equity situation, causing damage to the institution.
- The crime of smuggling, of Article 168 in Conjunction with Article 178 Nº 1, both of the Customs Ordinance, which covers those who introduce or remove from the national territory assets whose importation or exportation are prohibited, or who evades the corresponding taxes or does not pass the assets through Customs, or who brings foreign assets from a special tax regime into other areas with higher tax rates or to the rest of the country.
- In the second paragraph of Article 81 of Law Nº 17,336, on intellectual property, which punishes whoever seeks to profit by manufacturing, importing, bringing into the country, taking or acquiring for purposes of commercial distribution copies of works, whether performances or sound recordings, in whatever medium, reproduced in violation of the provisions and rules on intellectual property.
- Articles 59 and 64 of Law Nº 18,840, of Chile's Central Banking Law, referring in general to the manufacture and circulation of false currency, and of false documents at the Central Bank.
- The third paragraph of Number 4 of Article 97 of the Tax Code, concerning the malicious obtaining of tax refunds.
- Crimes of corruption, embezzlement of public funds, fraud and extortion, bribery, kidnapping and abduction of minors, production and distribution of pornographic material using minors, migrant smuggling and trafficking, and fraud and subsidy scams, all set forth in the Criminal Code.
- The crimes of Law N° 18,045 on the Securities Market, which among other references includes the following:
- The malicious delivery of false records to the Superintendency of Securities and Insurance, to a stock exchange, or to the general public;
- The directors, administrators and managers of an issuer of publicly offered securities when they make maliciously false statements in the respective process of prospectus, issuance and dissemination;
- Those who issue public offerings of securities without meeting the legal requirements for registration;
- Those who deliberately use privileged insider information;
- Those who take advantage of insider information to conduct an act with the purpose of obtaining a pecuniary benefit or avoiding a loss, whether for themselves or third parties;
- Those who disclose privileged information, for the purpose of receiving a pecuniary benefit or avoiding a loss, whether for themselves or third parties:
- Those who disseminate false or misleading information with the purpose of manipulating the market;
- The trading of securities with the purpose of artificially stabilizing, fixing or causing prices to fluctuate; and
- Make false contributions or transactions
To provide examples, the following situations constitute violations of the law on securities markets, which could eventually constitute the crime of money laundering:
- A publicly-held company signs a memorandum of agreement for the exclusive distribution of a new industrial input for a major industrial company, information that is disseminated through the press. However, when the memorandum is rescinded by unilateral decision by the prospective client, and before such information was disclosed to the market, the CEO and shareholder sold a major stake in the company, by which they avoided losses produced by a drastic drop in share value once the news became public.
- A few directors of a publicly-held company purchased shares in the companies that form it, based on knowledge of the financial status of those companies, where the information was not yet in the public domain.
- A major shareholder in a publicly-held company meets with some of the controlling members of a major Bank, to inform them they should leave their positions as borrowers at the Bank and seek to acquire an additional percentage of shares that would allow them to take control of the company. The members of the controlling group inform the rest of the group, one of whom decides to increase their stake in order to consolidate their control in the Bank, before the information is disclosed to the market.
- An employee of a printing company specializing in the financial sector, who was working in the preparation of brochures and other items related to public offerings of the acquisition of shares of certain publicly-held companies, succeeded in deciphering the codes used to keep the names of the companies involved secret, and later purchased shares in the companies before they launched the public offerings and before the announcement to the market.
Under Article 27 of Law N° 19,913, the crime of money laundering is committed under the following circumstances:
1. When in any fashion an entity hides or disguises the illicit or prohibited origin of certain assets. In such case, the knowledge that the assets in some manner come from the commission of a crime as established by law, is absolutely necessary.
For example, the sale of property to a trafficker in order to provide equity in which the illicit origin of certain assets can be concealed.
2. When an entitiy acquires, owns, has or uses assets of an illicit origin for profit, provided they knew of its illicit origins upon receipt. For example, an arms dealer invests in securities of a company to take advantage of the income resulting from their illegal activity.
3. When an entity acquires through any of the manners described above, even though the illicit origin of the assets are unknown, if the person should have known about the process and but for a lack of required care did not do so. This deals with a person who is reckless with regards to money laundering, under which not only is the person who directly intended to conceal the illicit origin of the assets punishable, but also the person who for lack of owed care "allowed" the unlawful conduct to take place.
D. Financing of Terrorism
Article 8 Law N° 18,314: Whoever by any means, directly or indirectly, solicits, collects or provides funds for the purpose of being used in the commission of any of the terrorist crimes listed in Article 2º, shall be punishable with minor imprisonment in its minimum to medium degree, unless when while providing the funds they assume responsibility for a particular crime, in which case they will be sanctioned by this last title, without prejudice to the provisions of Article 294(a) of the Criminal Code.
Under the International Convention for the Suppression of the Financing of Terrorism, the United Nations understands the commission of a crime as anyone who "by any means,, unlawfully and willfully, provides or collects funds with the intention that they should be used or in the knowledge that they are to be used in order to carry out: (a) An act which constitutes an offence within the scope of and as defined in existing agreements; or (b) Any other act intended to cause death or serious bodily injury to a civilian, or to any other person not taking an active part in the hostilities in a situation of armed conflict, when the purpose of such act, by its nature or context, is to intimidate a population, or to compel a government or an international organization to do or to abstain from doing any act."
In our country the financing of terrorism is described and punished in Article 8° of Law 18,314, for those who in any form solicit, collect or provide funds with the purpose of them being used to commit terrorist crimes established under the law.
The following qualify as terrorist crimes when they are used to intimidate a population or achieve a decision by the government:
- Aggravated murder, mutilation, assault resulting in life-threatening or severely life-threatening injuries, kidnapping, child abduction, the sending of explosive letters or parcels, fires and other damage to property, crimes against public health and derailment.
- To seize or attack a ship, aircraft, train, bus or other form of public transport in service, or the carrying out of acts which put in danger the lives, physical integrity or public health of passengers or crew.
- To make an attempt against the life or physical integrity of a Head of State or other political, judicial, military, policy or religious authority, or of persons who are internationally protected by reason of their office.
- To place, post, turn, throw, shoot or detonate bombs or explosives or incendiary devices of any kind, weapons of mass destruction, or weapons with toxic, corrosive or infectious effects.
- Additionally, conspiracy to commit one of the above-mentioned crimes.
The above are considered terrorism crimes if the act is committed with the aim of producing among the population, or in a portion of the population, a justified fear of becoming a victim of crimes of the same manner, whether shown by the nature and effects of the methods used, or by proof of following a premeditated plan to attack a category or determined group of people, whether it is committed to start or inhibit government decisions or to impose official requirements.The crimes could result for example through donations that are knowingly made to organizations or individuals who, although they appear to be for lawful purposes, actually perform or finance terrorist activities..
E. Reception
“Article 456(a)- ??Those who, knowing the origin or could not at least have know it, hold in their possession, under any circumstances, stolen or robbed items or stolen livestock, whether received or misappropriated under article 470, number 1, transports, buys, sells, modifies or markets in any form, even if it has already disposed of them, will suffer the penalty of imprisonment in any of its degrees and a fine of between five and one hundred monthly tax units (UTMs).
In determining the applicable penalty, the court shall take into account, in particular, the value of the items and the seriousness of the crime through which they were obtained, if known by the perpetrator.
When the object being received is a motor vehicle or items that are part of public or household supply networks, such as electricity, gas, water, sewerage, rainwater collectors or telephone networks, the maximum grade of lesser imprisonment will be applied, and a fine of between five and twenty monthly tax units. The penal sentence for crimes of this subsection will include confiscation of the instruments, tools or means used to commit them or to modify or transport the removed items. Additionally, if such items are stored, hidden or modified in a commercial establishment and the owner or administrator has knowledge of it, the permanent closure of said establishment may be decreed, authorizing the competent authority.
The maximum degree of the penalty established in the first paragraph shall be imposed when the author has carried out the activities multiple times or is a repeat offender of them. In cases of repetition or recidivism in the reception of objects indicated in the preceding paragraph, the prison sentence established therein shall be increased by one degree.
In the case of the crime of stealing livestock, the fine established in the first paragraph shall be between seventy-five and one hundred monthly tax units (UTMs) and the judge may order the final closure of the establishment.
If the value of that received exceeds four hundred monthly tax units (UTMs), the maximum degree of penalty will be imposed, or the maximum penalty corresponding to each case."
This crime contemplates various forms of commission: to have, to transport, to buy, to sell, to modify or to commercialize species coming from some crimes against the property. All these actions have in common the direct exploitation of the removed or appropriated items, and/or allowing or facilitating the author who carried out such crimes in taking advantage of what he obtained through his crime.
The items received are those coming from the following offenses against property:
- Theft: that which consists of appropriating, without the will of its owner and for profit, the personal property of others. Personal property is any item that can move or be transported from one place to another.
- Robbery: that which is also appropriating, without the will of the owner and for profit, of a movable personal property, but includes violence or intimidation of people or force with items.
- Theft of livestock: that which consists of theft of certain animals or parts of them.
- Misappropriation: that which consists of appropriation to the detriment of another of values ??that would have been received with an obligation to deliver them or to return them.
A person can only be punished for reception when he was aware that the item came from a crime. But since this can be difficult to prove, reception also occurs if a person should have known about the illicit origin of the good that he holds or acquires. This is, for example, the case for those who purchase items through informal trade that were robbed or stolen, or without a contract or tax document, or when the goods show external signals that allow suspicions about their illicit origin.