Welcome to the first of our updates on countering bribery and corruption in the Life Sciences and Healthcare sector, examining the regulatory regimes from across Europe.
Spain: Forthcoming Revision to the Spanish Criminal Code – Guidance on how a Compliance Programme could exonerate corporate criminal liability
Under the 2010 amendment to the Spanish Criminal Code, companies are liable for illegal acts committed by their employees for the benefit of the company, if the company has not applied “due control” to prevent those acts. These ‘illegal acts’ include bribing public officials and conduct known as “commercial bribery” (bribery within the private sector). The penalties that may be imposed on a company, if found liable, range from substantial fines to the suspension or even closure of the business itself.
However, the 2010 amendment did not set out what would constitute the “due control” which could exonerate or, at least, reduce, a company’s criminal liability arising from these illegal acts. This not only generated great debate among opinion-formers, but contributed to significant legal uncertainty. It is now the Spanish Government’s intention to fill this gap by an additional amendment to the Criminal Code which it is expected will be enacted before the end of this year.
Defending against criminal activity
In accordance with the draft amendment, in order for a company to defend itself from any criminal liability arising from illegal acts committed by its employees, it will need to provide evidence of the following:
(a) The board of directors or equivalent management body of the company must have approved and implemented a robust internal compliance programme prior to the occurrence of the illegal acts.
(b) The monitoring and implementation of the compliance programme must have been entrusted by the board of directors to an internal body or individual within the company with sufficient resources and powers to act independently and autonomously.
(c) The employee(s) who committed the illegal acts must have dishonestly circumvented the company’s internal policies and procedures, such that the conduct was not detected in spite of the internal controls or preventive measures having been carried out.
Businesses in the Life Sciences sector should take note that this final requirement of showing dishonesty is particularly stringent and will, arguably, make the Spanish law harsher on defendants than the UK Bribery Act in this respect.
Criteria for devising your compliance programme
Finally, it is proposed that the amendment will also set out within the Criminal Code the criteria to be applied when devising the compliance programme itself, namely:
(i) It must take into account any business and activities of the company, which could, by their nature, increase the risk of any illegal act being committed by any of its employees;
(ii) It must be the product of the policies and standard operating procedures which reflect the decision-making process of the company and its bodies;
(iii) It must oblige all employees to report any suspected illegal conduct to the internal body in charge of monitoring compliance with the programme;
(iv) The company should allocate sufficient human and financial resources to ensure adequate monitoring, follow-up and implementation of the compliance programme; and
(v) The company must put in place an internal disciplinary system which sets a range of penalties for any breach of the compliance programme by the company’s employees, including dismissal.
Organisations should take steps now to ensure that their compliance programmes are aligned to the newly defined requirements, in readiness for the Code’s enactment into law expected in a few months time.