Chile has signed up to several anti-bribery and anti-corruption international conventions. Most relevant are the Inter-American Convention Against Corruption of the Organization of American States (OAS), the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the United Nations Convention against Corruption.
The main legislation against corruption and bribery is set forth in the Código Penal (Criminal Code), Law No 18,575 on Public Administration, and Law No 18,834 on Statute Applicable to Public Officials. All offences are laid down in legal texts.
For example, bribery is considered a crime in the Criminal Code (Articles 248 to 251 sexies), but the same conduct is also prohibited under laws which regulate the activity of domestic public officials (especially Law No 18,575 and Law No 18,834) and are considered infringements of the probity and impartiality principles to which public officials are subject, which provide administrative sanctions for such conduct.
It is also worth mentioning that Law No 20,393, on Criminal Liability of Legal Entities, is applicable to a specific list of offences, including among others the crimes of bribery, unlawful negotiation and commercial bribery.
There are no general guidelines. Judgments are a source of interpretation of the law, but do not constitute precedent. Judgments are only binding in the case in which they are issued and only for the parties involved in that case.
The National Public Prosecutor, which is the entity entrusted with the investigation and enforcement of criminal offences, has recently issued new instructions to which public prosecutors are subject in the context of anti-corruption investigations (Oficio Fiscalía Nacional No 472-2020, 29 July 2020).
These instructions are aimed at achieving an effective, coherent and co-ordinated performance of the function of public prosecution. Therefore, they are binding for prosecutors only.
The new instructions refer to relevant matters regarding corruption crimes, such as the concept of public officer, ameliorating and aggravating circumstances of criminal liability, whistle-blowing, and several procedural matters, such as the possibility of reaching agreements in order to finish investigations without a trial, ie, through a monetary settlement or deferred prosecution agreements.
Legislation on corruption-related crimes has been subject to important amendments over the past decade. The most noteworthy occurred in 2009 and 2018, which were the modifications of the Criminal Code and the enactment of Laws No 19,913, No 20,393 and No 21,121.
In 2009 the Criminal Code was amended to include the bribery of foreign public officials in the context of international business transactions as a criminal offence. During the same year, Law No 20,393 on Criminal Liability of Legal Entities was enacted, which considers bribery as one of the crimes that may give rise to criminal penalties for such entities. These amendments were a consequence of the adoption by Chilean law of the standards required by the OECD, of which Chile has been a full member since 2010.
On 20 November 2018, Law No 21,121 was published, amending the Criminal Code, Law No 20,393, and Law No 19,913 on money laundering, incorporating several changes regarding bribery, bribery of foreign public officials (following recommendations issued by the OECD), unlawful negotiation and money laundering, including an increase of applicable penalties. However, the most relevant change was the introduction of commercial bribery and disloyal administration as new punishable crimes. Also, Law No 21,121 established the crime of bribery without counter-performance, which solved a common probatory difficulty regarding the connection of the payment with the act performed by the public official.
Additionally, Laws No 21,227 and No 21,240, which were recently passed as a response to the COVID-19 pandemic, established criminal offences that could carry criminal liability of legal entities.
Law No 21,227 (6 April 2020) regulates access to unemployment insurance benefits. Article 14 punishes those who, through simulation or deceit, obtain an economic benefit, such as an unemployment insurance, greater than that to which they are entitled. If the crime is committed in interest or for the benefit of a company, the legal person may be criminally liable, provided that the commission of the crime is a consequence of the breach, by the company, of its duties of direction and supervision over its workers.
Law No 21,240 (20 June 2020) amended the Criminal Code, establishing new and more severe penalties for those who fail to comply with sanitary measures in the event of an epidemic or pandemic. This new regulation incorporated Article 318 ter to the Criminal Code, which penalises companies that order workers under their supervision to attend their workplace, when those workers are in quarantine or in mandatory isolation ordered by the health authority. The commission of this crime could also make the legal person criminally liable.
The Chilean legal system contemplates a wide list of crimes related to corruption and bribery, for which the main and most relevant are embezzlement of public funds, grant fraud, unlawful negotiation, bribery, commercial bribery and influence-peddling.
All these crimes are defined in the Criminal Code and follow the general rules of punishability. In this respect, for an act of that kind to be punishable, it must have been carried out with intent (the Criminal Code only punishes acts that have been done with recklessness in specific cases, almost none of which is related to corruption and bribery; there is an exception in the case of embezzlement, see 2.4 Public Officials). In crimes related to corruption and bribery, the Chilean criminal system does not require any kind of motive to be ascribed to the offender in order to impose a sanction.
There is no general legal definition of bribery (or at least not just one). Bribery is punished in different provisions of the Criminal Code (Articles 248, 248 bis, 249 and 250). The criminal conduct is defined as giving, offering or consenting to give an economic benefit or a benefit of any other nature, and, from the public officer’s perspective, as receiving, offering to receive or accepting receipt of that benefit, be it in favour of the employee or a third person. All these conducts shall be related, in the original conception of the Criminal Code, to the performance or lack of performance by the public officer of an act according to his or her duties, against his or her duties or a specific crime. However, Law No 21,121 included as a new provision a basic form of bribery consisting in the act of giving, offering, or consenting to a benefit by reason of the position of the public employee, without any request of any conduct by the public officer as a counter performance for the benefit. In other words, the mere fact of granting/consenting a benefit is sanctioned as bribery.
With respect to the benefit, it can be an economic benefit or of any other kind of benefit (ie, social or sexual).
An exception is stated in Article 251 sexies, according to which in some conducts, such as giving or offering protocol donations, or those of little economic value that customs authorise as manifestations of courtesy and good education, will not be considered as an offence.
Chilean legislation does not include a specific obligation to prevent bribery, nor does it oblige companies to maintain compliance programmes. Nonetheless, Law No 20,393 on Criminal Liability of Legal Entities acknowledges the importance of compliance programmes, as it assumes that management and supervisory duties of the legal entity have been met if, prior to the commission of the offence, the legal entity has implemented a crime-prevention model. A well-functioning compliance programme may be an exculpatory factor for the legal entity.
Article 260 of the Criminal Code contains a broad definition of public official, which applies to all offences committed by public officials. This concept extends to all those who exercise a “public function”, applying to all bodies created or dependent on the State. In this respect, it includes situations that clearly go beyond the restricted technical notion that administrative legislation confers on the term “public official”.
Bribery of foreign officials constitutes an exception to the principle of territoriality generally applicable in Chile. In that sense, Chilean courts may have jurisdiction regarding the bribery of a foreign official committed abroad, either by a Chilean national or a foreigner with residence in Chile. The offence consists of the offering or promising of an economic or any other benefit to a foreign public official in return for the foreign public official’s performance or omission of an act that would provide an unfair advantage in an international transaction (or business deal) to the offeror of the bribe.
One of the main novelties brought about by Law No 21,121 was the criminalisation of commercial bribery. It punishes an employee or mandatary who requests or accepts to receive an economic or other benefit, for himself or herself or for a third party, in order to favour or have favoured in the exercise of his or her tasks the contracting with one bidder over another.
Influence-peddling is punished in Article 240 bis of the Criminal Code. This rule sanctions the public employee who, being directly or indirectly interested in any kind of contract or operation in which another public employee must intervene, exercises influence on him or her to obtain a favourable decision for his or her interests.
In Chilean legislation there is no offence that punishes a private person who seeks to influence the decisions of a foreign public official.
There is no specific criminal sanction related to financial record-keeping. However, there are many administrative rules that impose on corporations an obligation to maintain correct accounts and a duty to provide reliable financial information. The Comisión para el Mercado Financiero (Financial Market Commission) is the public entity that supervises corporations in these matters.
There are, nevertheless, specific criminal sanctions for acts that consist of providing false or misleading information to the market (including false information contained in financials delivered to the Financial Markets Commission) in connection with publicly traded securities. The relevance of information in stock transactions is recognised in several provisions of the Securities Market Law (Law No 18,045). This law includes several offences that violate the protection of information in transactions of securities, including adulteration, misuse and concealment or improper disclosure of information to be considered in sales decisions or in the terms of commercial acts involving publicly traded securities.
Articles 59 and 60 of Law No 18,045 contain a catalogue of crimes related to abuse of the stock market. Article 59 punishes the provision of false information to the market. Article 60 contains a series of offences involving the fraudulent acquisition of shares without making a tender offer in those cases in which it is mandatory to do so, the use or disclosure of privileged information to obtain benefits or avoiding a loss in transactions of public offer values (insider trading), the improper use of values in custody and the deliberate concealment or elimination of accounting records or custody of securities.
The Chilean legal system defines privileged information (insider trading) as any information related to one or more issuers of shares, to their businesses or to one or more shares issued by them that is not disclosed to the market and the knowledge of which, by its nature, is capable of influencing the quotation of the issued shares, as well as the information held on the acquisition or disposal operations to be carried out by an institutional investor in the stock market. Law No 18,045 assumes that the directors, managers, administrators, main executives and liquidators of an issuer of securities or an institutional investor are in the possession of privileged information.
In addition to the different types of bribery, Chilean legislation contemplates a wide catalogue of crimes regarding public officials; the most relevant related to corruption are embezzlement of public funds, grant fraud and unlawful negotiation:
The Chilean Criminal Code distinguishes between two classes of co-operators: the necessary co-operator, legally equated with the perpetrator even though they maintain qualitative differences, and the accomplice in the strict legal sense.
The necessary co-operator is one who performs an act without which the crime could not have been committed. The accomplice, however, is the one who is not included in the definition of co-operator, but who also assists in the execution of the act with previous or simultaneous actions. In the case of the necessary co-operator, he or she is punished with the same penalty as the perpetrator, while the accomplice is punished with a lower penalty.
Limitation periods are established in consideration of the nature of the criminal offence. Crimes (crímenes) have a limitation period of 15 years in cases where the law imposes a penalty of life imprisonment, or ten years in the other cases, misdemeanours (simples delitos) are limited to five years, and in the case of offences (faltas), six months. The limitation period is suspended once a criminal procedure is directed against the defendant.
Law No 21,212 introduced certain common rules for crimes committed by public officials, one of these being the suspension of the statute of limitations of the crime while the respective official is in office, in order to avoid impunity for the passage of time.
If the accused leaves the country at any time during the limitation period, the limitation period runs at half the speed, ie, two days abroad count as one for the purposes of calculating the limitation period.
In principle, only crimes committed in Chile can be prosecuted before Chilean courts. There are only a few exceptions to this. The extra-territorial reach of Chilean criminal law is specifically regulated in the Código Orgánico de Tribunales (Code of Organisation of Courts), including crimes committed abroad by Chileans against Chileans, if the offender returns to Chile without having been prosecuted abroad, in cases where bribes are accepted by Chilean public officials abroad or the bribery of a foreign public official committed by a Chilean.
In addition, most of Chilean legal literature and jurisprudence understands that the Chilean state can prosecute crimes if the execution of a criminal act begins in Chile, even though its effects occur in another country, or if the execution of a crime begins abroad, but it has consequences in Chile.
Since the enactment of Law No 20,393, the list of offences for which a company can be held criminally liable has been extended several times. Today, companies can be criminally liable for bribery, money laundering, financing of terrorism, receipt of stolen goods, disloyal administration, commercial bribery, unlawful negotiation, misappropriation and certain conducts that are related to water pollution and illegal fishing activities. As mentioned previously in 1.4 Recent Key Amendments to National Legislation, Laws No 21,227 and No 21,249 established new crimes in the context of the COVID-19 pandemic, including criminal liability of legal persons.
Regarding all the above-mentioned offences, the public prosecutor may seek both the individual responsibility of those who performed the conduct and the criminal responsibility of the company. However, the Public Prosecutor's Office has no institutional guidelines that state that either individuals or companies must be preferentially prosecuted. Moreover, managers are not criminally responsible for the mere fact that the company is convicted of the crime.
There is no special provision dealing with the possibility of the same lawyers representing the legal entities and the natural persons involved, and joint representation is common, except where the defence strategies are incompatible (the Bar Code of Ethics and the Criminal Procedure Code are applicable).
In the case of a reorganisation, merger, acquisition, division or dissolution of a company where one of the sanctioned crimes was committed, Law No 20,393 provides that the responsibility for such acts is transmitted to the successor.
There are no special defences available for individuals charged in connection with bribery or corruption offences. In that respect, offenders have the same defences available as for other crimes (ie, mitigating circumstances such as not having prior convictions, material collaboration with the investigation, self-indictment, etc). Defendants have ample rights of defence, they are granted access to the file from the beginning of the investigation and have broad access to an attorney, including the Public Criminal Defence.
In connection with legal entities, they may be exempted from criminal liability, inter alia concerning bribery cases, if, before the criminal offence has been executed, they had adopted an appropriate compliance programme aimed to avoid the occurrence of that particular crime. Such prevention programmes may be certified by external entities registered for these purposes before the Financial Market Commission.
However, the Law No 20,393 on Criminal Liability of Legal Entities expressly makes certain mitigating circumstances available, such as to repair with extreme diligence the damage caused by the offence or the adoption of measures to avoid the reiteration of the offence after the offence has been committed but before the beginning of the trial. Also, self-reporting of the offence by the legal representatives of the company to the authorities before they are aware that a legal proceeding has been initiated against the company may also be argued as a mitigating circumstance.
Effective co-operation with the investigation is a special mitigating circumstance in bribery cases. The co-operation has effectively to serve the purpose of clarifying the investigated case, identifying the offenders, preventing the perpetration of the crime or facilitating the confiscation of goods or assets deriving from the offence. This mitigating circumstance is not available for high-ranking and elected public officers, judges and public prosecutors.
The Chilean criminal system does not contemplate exceptions of any kind regarding bribery or corruption offences.
The Chilean criminal system does not contemplate de minimis exceptions of any kind regarding bribery or corruption offences.
The Chilean criminal system does not contemplate restrictions with respect to bribery or corruption offences within the scope of a specific sector or industry.
Companies are not subject to the supervision by regulatory entities for the compliance with anti-corruption laws. It is beyond the Prosecutor’s Office to issue regulations or measures to create incentives to self-report a known or suspected violation.
According to Law No 20,393 on Criminal Liability of Legal Entities, self-reporting may constitute a mitigating circumstance if it is performed by the legal representatives of the company before the applicable proceeding is initiated.
For individuals, penalties for bribery, embezzlement, grant fraud and unlawful negotiation are the following:
It is worth saying that all sentences of more than five years and one day are effectively served in jail (no benefits or agreements with the prosecutor are allowed).
With respect to legal entities, according to the Law No 20,393 on Criminal Liability of Legal Entities, the available penalties for corporate entities, in the case of acts of bribery, include the imposition of fines (of up to approximately USD20 million for the worst cases), temporary prohibition to enter into contracts with governmental bodies and/or the temporary loss of right to receive governmental benefits, and even in some cases the dissolution of the company.
As previously stated, each crime has a specific penalty established by law. The Criminal Code contemplates general rules for penalty assessment, including mitigating and aggravating factors, such as recidivism. In that respect, the penalty is determined applying the following factors: the penalty assigned by law to the crime, the degree of development of the crime (attempted crimes have a lower penalty), the kind of criminal intervention (perpetrator, co-operator or accomplice), mitigating and aggravating circumstances and the extent of the damage caused by the crime.
The law contemplates the possibility of reaching an agreement in order to terminate the case without going to trial, either through a monetary settlement or deferred prosecution agreements.
Plea agreements, however, are available when the conviction sought by the Prosecutor’s Office does not exceed five years of imprisonment. When defendants acknowledge the facts for which they are being prosecuted, they may apply for a reduced conviction, with the authorisation of the judge.
There are no other guidelines that judges and/or prosecutors should follow in any of these situations.
Pursuant to Law No 20,393 on Criminal Liability of Legal Entities, the existence of a compliance programme may exempt a company from criminal liability to the extent it fulfils the requirements stated by law.
According to Article 4° of Law No 20,939, compliance programmes should have (for having the aforementioned exemption effect) at least the following elements:
Regarding individuals, self-reporting or substantial co-operation in the context of a criminal investigation may be considered as mitigating factors when considering the extent of criminal responsibility.
Law No 20,393 on Criminal Liability of Legal Entities provides incentive mechanisms for companies to self-denounce. Thus, if the managers of a company report their own misconduct before the start of a criminal prosecution, they will have the right to a reduced sentence.
In the absence of legal regulation, whistle-blowing is not a widespread practice. The Chilean criminal procedural system allows the prosecutor to enter into agreements with individuals, generally approved by the judge or court, but this is more of a general rule than a direct regulation to protect whistle-blowers.
There is no regulation of the foregoing in the private sector, so individuals who report suspicious or illegal conduct within a company will depend on the company's internal policies. Due to the increased application of compliance programmes in recent years, it has become more common for companies to have systems which protect whistle-blowers.
There are no protocols or regulations issued by enforcement authorities granting incentives for whistle-blowers specifically in connection with anti-corruption violations. As is the case in all kind of criminal investigations (and not only anti-corruption cases), individuals or corporate entities may decide to co-operate with the prosecutor to obtain more lenient treatment by entering, for example, into agreements with the Public Prosecutor’s Office, which may imply a deferred prosecution or a reduced penalty in the context of a plea agreement. The only limitation on these settlements is determined by law for cases where the possible sanction on the defendant exceeds three years' imprisonment in the case of deferred prosecution agreements and five years of imprisonment in the case of a plea agreement.
In an effort to create incentives to obtain information that can boost and strengthen anti-corruption investigations, Law No 21,121 recognises the effective co-operation with the investigation as a special mitigating circumstance in bribery cases, which can significantly reduce the applicable penalty. Such co-operation has effectively to serve the purpose of clarifying the investigated case, identifying the offenders, preventing the perpetration of the crime or facilitating the confiscation of goods or assets deriving from the offence.
In connection with administrative sanctions, there are certain provisions aimed at protecting whistle-blowers who hold a public office when reporting crimes or administrative infringements to the competent authorities. However, this protection is very limited, as it only applies to public officers and only considers the suspension of the ability to apply certain disciplinary measures against such persons for a period of up to 90 days after the investigation initiated by the report of the whistle-blower has finished. The identity and the information that the whistle-blower provides have to be kept confidential if requested by the person that provides the information.
However, substantial co-operation with the investigation is considered as a mitigating circumstance that may lower the applicable penalty. In practice, co-operation may also play a role in the willingness of the prosecutor to offer an alternative resolution for the case and not go to trial.
There have been attempts to include whistle-blower protection in legislation. However, these protections have had a rather limited effect, as they only refer to certain public officers and only consider a suspension of the ability to apply certain disciplinary measures against these persons for a period of up to 90 days after the investigation initiated by the report of the whistle-blower has ended. The whistle-blower may request that his or her identity and the information that he or she provides be kept confidential. These provisions, in an administrative way, are regulated in Law No 18,834 on Statute Applicable to Public Officials.
In general, Chilean law does not provide for administrative sanctions for corporate entities in the case of violation of anti-corruption laws. However, they may face administrative penalties in cases of violation of specific administrative provisions which indirectly aim to avoid potential corruption or conflicts of interest. This is the case, for example, with violations to the recently introduced provision that prohibits corporate entities from financing political campaigns or parties, which may be punished with monetary fines.
Individuals may also face criminal prosecution, risking penalties that include fines, prohibition to exercise a public office or imprisonment.
Administrative liability in the case of individuals is in general only applicable for anti-corruption violations committed by public servants and is enforced by the General Comptroller’s Office. However, as is the case of corporate entities, there are certain special administrative penalties that may be applicable to individuals in general in the context of violations to limits applicable to the financing of political campaigns.
The law does not contemplate civil enforcement by government agencies. However, anyone who suffers damage by a conduct – whether committed by entities or individuals – that contravenes anti-corruption laws may file a civil action against that entity, pursuant to general tort law.
The public bodies in charge of the prosecution of the crimes and administrative infractions mentioned above are the Public Prosecutor’s Office and the Comptroller General of the Republic, respectively. The interaction between those two public bodies is not expressly regulated, but each of them falls within its exclusive sphere of competence: the Public Prosecutor investigates and pursues the punishment of the facts that constitute a crime, and the Comptroller General of the Republic investigates and sanctions the facts that constitute only an administrative fault.
The process to acquire information or documentation is relatively similar, whether it comes from the Comptroller General of the Republic or the Public Prosecutor. Both agencies direct a request for information to the requested person and generally give a deadline for the delivery of the background. As stated previously, only in the case of the Public Prosecutor's Office, if the person denies or delays the delivery of a record, may the agency request the court with pertinent criminal jurisdiction to authorise the seizure with the help of the public force.
The administrative body - the Comptroller General of the Republic - has little discretion to mitigate the fulfilment of its powers; that is, it must investigate - and punish in its case - any cases of corruption that may arise in accordance with the law. However, as has been described in previous sections, the Public Prosecutor’s Office is entitled to mitigate the enforcement of criminal law through different mechanisms (see 1.3 Guidelines for the Interpretation and Enforcement of National Legislation, 5.2 Guidelines Applicable to the Assessment of Penalties, and 6.4 Incentives for Whistle-Blowers).
As previously mentioned, the area of jurisdiction of each public agency depends on whether the acts of corruption constitute only administrative offences (in which case only the Comptroller General of the Republic is involved) or also constitute criminal offences (in which case the Public Prosecutor’s Office is involved and litigates before the courts with criminal jurisdiction).
Law No 21,121 was enacted less than one year ago. As a result, the effects of the new anti-corruption legislation have yet to be seen. Since these crimes are associated with complex behaviours, the cases to which these new types of crimes will be applied are still in the investigation stage. This impedes a well-founded opinion on the effects of the new law and whether it will serve to combat corruption efficiently.
With respect to the most significant corruption cases that have occurred in recent times, these have been resolved or are being investigated under the law in force at the time of the events.
Many of the recent cases of bribery or corruption have ended with plea agreements and convicted people were not sentenced to jail, but severe penalties of fines and restrictions were imposed. However, to date, the fines and restrictions provided in the current legislation have not been applied.
Many of the modifications enacted by Law No 21,121 were adopted with the purpose of fulfilling international commitments in the matter of corruption, and as a reaction to certain cases of corruption that have occurred in recent times in Chile.
The current legislation is severe with corruption and bribery and is expected to be more effective, but it is still too early to give an informed opinion.
As previously noted, changes in corruption and bribery legislation have been made only recently. In addition, there are two relevant projects in progress.
The first one seeks to establish a new Criminal Code. This project is still under discussion in pre-legislative proceedings, and addresses corruption and bribery offences in a severe manner.
The second one is a project that is already being discussed before the legislators (Cámara de Diputados, Boletines Números 13.204-07 and 13.205-07), and seeks to carry out a profound reform of several economic crimes. The catalogue of crimes that the project seeks to reform include crimes committed by public officials which are related to corruption matters. The project establishes more severe penalties and different regulations for the determination of fines, restricts strongly the possibility of serving non-custodial sentences, broadens the catalogue of crimes that make legal persons criminally responsible, and regulates profit confiscations as a civil consequence associated to a criminal conviction, so that it is not restricted only to convicted persons, but also affects third parties. It is an ambitious and innovative project that is in progress before the legislative bodies.