Corporate Criminal Liability, Compliance, and Anti-Corruption Efforts: Is There a Real Change in Latin America’s Legal Culture?

InLaw Alliance Spain -  The rapid global expansion of compliance has made it an essential pillar in the fight against corruption in Europe and Latin America.
Compliance was born in the USA as a tool for defending organizations against that fearsome legal institution: the criminal liability of legal entities. Its essence consists of establishing internal mechanisms within organizations capable of preventing, detecting, and reacting to irregularities, whether bribery, fraud, or any other illicit practices, that could trigger the organization’s liability. Among them, or perhaps first and foremost, are acts of corruption, which gave rise to it and explain its rapid development, thanks to the US Foreign Corrupt Practices Act (FCPA), published in 1977, following the Watergate scandal and the discovery of corrupt bribery networks, which shamed American society.

The FCPA was a bold, unashamed, extremely powerful extraterritorial law designed to put an end to the malpractice of seeking preferential treatment from governments through bribery of their officials or politicians. A law suitable for application almost anywhere in the world, it marked the starting gun for a race that would turn the United States, for nearly five decades, into a kind of universal policeman against corruption.

Other countries, such as the United Kingdom, with its 2010 Bribery Act, or France, with its 2016 Sapin II Act, would follow suit years later, although without achieving the power of the North American law. International organizations such as the OECD, through its 1997 Convention, or the United Nations, with the 2003 Convention, promoted international regulatory frameworks, which have become true global standards of this same message.

In Europe, the Council of Europe’s Group of States Against Corruption (GRECO) sets guidelines for combating corruption and monitors the progress or laziness of states. Its criticisms leave no one indifferent, and rarely fail to translate into legislative changes or reforms to meet the standards set by the Group. However, Spain has long received poor marks from GRECO, like an indolent student unable to pass its subjects.

The important thing is that this arsenal of legal norms and oversight instruments has actually been put into practice. The United States, with its FCPA in hand, has struck exemplary blows in almost every area of ​​the world, protected by the enormous scope of its jurisdiction. Furthermore, it has urged offending organizations to impose rigorous internal self-laundering processes on themselves, forcing them to return to the path of the law.

In Europe, the Siemens (2005) and Volkswagen (2015) cases are true examples of the forcefulness of the long arm of the American justice system. No less significant has been its influence in Latin America, where some countries suffer from systemic corruption problems, aggravated by the lack of truly independent judiciaries. Both the US Department of Justice and the Security Exchange Commission have carried out spectacular punishments in the region. The Fujimori Montesinos case was paradigmatic, in which more than 1,600 people were bribed to control the media, judges, and congressment.

No less impactful was the Lava Jato/Odebrecht case, a monumental scheme that implicated the Brazilian state oil company Petrobras and politicians and businessmen from several countries, resulting in harsh sentences and significant political upheaval.

Despite these shocking lessons learned, the problem in Latin America is far from gone. In 2024, levels of bribery of officials in the region remained above the global average. According to Transparency International’s Global Corruption Barometer (GCB) indicators, in Latin America and the Caribbean, 62% of citizens perceived that corruption had increased that year, and more than half believed their government was not doing enough.

Twenty-nine percent of those who used public services reported having paid a bribe—equivalent to nearly 90 million people. Only 9% of those who paid bribes reported them, and 28% of them suffered retaliation for it. Although countries like Uruguay and Chile show positive indicators, others, such as Venezuela, Nicaragua, and Haiti, are at the bottom and show significant needs for improvement. This exceptional instrument, the FCPA, was certainly put on hold on February 10th, following a disconcerting Executive Order from President Donald Trump, accompanied by statements lamenting that American business owners could not compete on equal terms in certain markets with operators from other countries, which are subject to much more lax regulations, and participate in their routines, that is (although the President did not explicitly state this) participate in their irregular payments to public officials.

This pause in the FCPA has been followed by new enforcement guidelines, published in June of this year, whose exact scope is still difficult to assess, but which suggest a complete abandonment of the traditionally crucial role that the United States has played since 1977 in this kind of global crusade against corruption.

However, other countries are preparing to take the lead. The U.S. administration’s shift in this and many other matters following the arrival of Donald Trump is forcing Europe to quickly shake off the eternal tutelage of the United States. Recently, authorities in the United Kingdom, France, and Switzerland announced the formation of an International Anti-Corruption Oversight Working Group to strengthen their anti-bribery investigation strategies. The U.S. is taking over in the fight for transparency.

Preventing bribery of foreign public officials is a difficult issue and puts a strain on any control or compliance system. It’s no secret that, as President Trump says, in so-called risk markets, companies subject to rigorous compliance systems compete on unequal terms with operators from other parts of the world for access to public contracts, the awarding of which is in the hands of unscrupulous politicians. However, the high reputational cost of corruption accusations, the vigorous cleanup efforts by banks that finance major international projects, and the widespread advance of a compliance culture in emerging economies, led by younger generations, make it possible to compete without getting their hands dirty. Many companies do so, and do so successfully. In the last decade, the introduction of criminal liability for legal entities into most Latin American criminal codes has also begun to move in the same direction.
         
Compliance is an indispensable tool for keeping business owners away from bad temptations. It requires solid control structures, adequate resources, and, above all, clear leadership from the organization’s management. It is vital to encourage and protect internal whistleblowers, safeguard the independence of the judiciary, and promote a culture of transparency, starting with governments and extending throughout society. It is not an easy task, but it can be done.

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