Today’s reality presents us with an interconnected world with a multiplicity of means and forms of information. If you keep updated on daily news about local, regional and global events, you will notice that there is a large quantity of illegal acts involving companies that reach the front page of the newspapers.

Moreover, it is perceived more receptiveness within the society towards the rejection of some conducts that until recently, were accepted – or at least – tolerated, in relation to corruption, conflicts of interest or irregular public bids proceedings. Surely those are facts that we are familiar with.

In this context, it is vital for companies to count with a Compliance Program. Its very existence together with the demonstration of its strength and application to all business areas can contribute to prevent and -in many cases- avoid the occurrence of those crimes, as well as remediate damages or mitigate their impact. On top of this, Compliance Programs can help companies to avoid: fines that range from 2 to 5 times the amount of the undue benefit obtained, the impediment to participate in tenders, or even the dissolution of the company.

Here, Act# 27.401 on Corporate Criminal Liability for Legal Entities in Argentina was enacted in March 2018.

This law recommends the development of an adequate Compliance Program (named Integrity Program), such as defense tool to minimize or avoid fines to the company. It defines the program as a set of internal policies, procedures and mechanisms for promoting integrity, supervision and control, aimed at preventing, detecting and correcting irregular and illicit acts. At the same time, the law requires that the Compliance Program addresses the particular risks related to the activity of each company.

The law states that Compliance Programs must contain at least:

  • A Code of Ethics or Code of Conduct
  • Specific policies and procedures for tenders, administrative contracts, third parties’ controls and other interactions with the public sector
  • Training for the company staff

But Act #27.401 does not stop there as to its expectations about the composition of a Compliance Program, but details a number of other elements, which are not mandatory, but which can contribute with determination not only to the prevention of wrongdoing, but also to the mitigation of emerging damages and the reduction of possible penalties, if the facts occurred.  

Among them:

  • Periodic Risk Analysis: identifying the potential risks that an organization is exposed to is the first step to prevent them.
  • Clear support from the company’s senior management (Tone from the Top): without a clear message of an ethical culture supported by the top management, the Compliance Program would not make sense.
  • Internal complaint channels, duly identified and open to third parties: these channels are a very important element of the Compliance Program, since most violations of a company’s regulations or policies are known through complaints.
  • Protection for whistleblowers against retaliation: in order for the reporting channel to fulfil its role, potential whistleblowers need to feel protected from the possible implications of the facts to be reported.
  • Internal investigation that results in sanction, when applicable: Sanctions to the responsible subjects- that could end up in their termination-, imposed after comprehensive investigation and based on legitimate evidence will contribute to demonstrate the seriousness of the Compliance Program.
  • Procedures to check the integrity and background of third related parties: many of the businesses today are conducted through temporary associations with third parties. Hence it is important to know whom the company is interacting with, their background and the risks posed.

This set of elements, or the inclusion of many of them as possible, will serve companies to demonstrate their interest in preventing crimes.

In addition to these benefits, the Compliance Program is an opportunity for companies to build a strong internal and external reputation.

Inside the organization, creating a culture of integrity directly influences the good behavior and motivates employees to do the right.

Externally, to the public and community, an integrity reputation contributes to the chances of being chosen as a preferred supplier or customer. A company’s image and reputation are a key element that multinational companies and public sector consider when selecting a company to do business with.

Therefore, there is no doubt that having a Compliance Program is a good business for companies, since it allows them to comply with the Law, as well as provides competitive commercial advantage.

G5 Integritas can assist you in the design and implementation of a corporate Compliance Program for large, medium or small companies, based on an adequate risk assessment and “tailored to your needs”.

We invite you to contact us by writing to us at: [email protected] or by visiting our website on www.g5integritaslatam.com

Equipo G5 Integritas Latam

Equipo G5 Integritas Latam

Equipo G5 Integritas Latam

G5 Integritas is a consulting and strategic advisory firm for corporate clients, financial institutions, law firms, entrepreneurs and investors, specialized in: RISK AND COMPLIANCE DUE DILIGENCE AND BACKGROUND CHECK INVESTIGATIONS AND BUSINESS INTELLIGENCE SECURITY CONSULTING FORENSIC INFORMATION AND DATA RECOVERY

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