White-Collar Crime 2020 Comparisons

Last Updated October 20, 2020

Contributed By Corporate Defense

Law and Practice

Authors



Corporate Defense is a Spanish law firm specialised in the areas of white-collar crime and multi-jurisdictional litigation. The firm has represented major financial institutions and multinational corporations, as well as their boards of directors and senior executives in a broad range of the most complex and high-profile white-collar and regulatory enforcement matters. The professionals in the firm combine significant technical expertise with extensive practical experience. Corporate Defense also conducts internal investigations and advises multinational companies in the area of compliance. In the area of white-collar crime the firm excels in complex litigation involving corporate criminal liability. In this specific practice, some members of the firm have been able to shape the case law of the Spanish Supreme Court. Recent matters involve representation of the interests of the Bank of Spain’s Resolution Authority, Spain’s FDIC, a relevant Chinese Bank headquartered in Luxembourg, a former president of a Spanish Bank, and a former president of a government-owned company.

Article 10 of the Spanish Penal Code (SPC) states that “offences are the intentional or negligent actions or omissions punishable by law”. Pursuant to Article 12 of the SPC, negligence (whether an action or an omission) is only punished if the specific offence so provides.

Under Spanish criminal law, there are objective (actus reus) and subjective (mens rea) liability requirements.

It is a bedrock principle of Spanish criminal law that liability should be imposed for what the perpetrator does, not for who he or she is. Thus, it is often stated that criminal law is concerned with “acts,” not “actors”. Accordingly, the involuntariness of the actor's conduct negates the existence of an act that is relevant for the criminal law. Generically, an omission can be defined as the failure to perform an act that is required by law, by contract, or by causing a previous risky situation. In some cases, when the defendant’s failure to act allows the wrongful result to happen, such an omission could be tantamount to the action causing the result.

Pursuant to Article 5 of the SPC, there can be no criminal liability without culpability. Therefore, Spanish criminal law proscribes strict liability. In Spain, a so-called normative approach to mens rea prevails. This approach focuses primarily on examining whether the offender was aware of the risk he or she was creating and of the possibility that his or her risky conduct might result in actual harm at the expense of the volitional element (desire) of guilt. This does not mean that the volitional element plays no role in the interpretation of criminal statutes. Some offences do refer to terms such as intent or malice. When discussing the meaning of these mental states, courts and commentators refer to well-established categories that bear some resemblance to the US Model Penal Code's section 2.02 distinctions between purpose, knowledge, recklessness, and negligence:

  • direct intent (purpose): the offender desires the outcome of his or her criminal action;
  • indirect intent (knowledge): the offender knows that the commission of the crime is a natural consequence of his or her conduct;
  • dolus eventualis (recklessness): the offender is aware that it is probable that his or her actions might bring about a crime;
  • negligence: the offender should have known that his or her conduct unjustifiably created a risk of producing a criminal result.

Other possible distinctions consider whether the offence requires the causation of a specific outcome or just an action aimed at causing the result  or whether the perpetrator of the offence is limited to certain persons with distinctive characteristics (eg, directors of a company, manufacturers, employees bound by confidentiality duties, public officers). The latter offences are referred to as special offences, as opposed to common offences, in which the perpetrator can be anyone. However, Article 31 of the SPC allows for a common perpetrator to be held criminally liable for a special offence if he or she acts on behalf of another individual or legal person who does fulfil the specific characteristics that pertain to the offence.

According to Article 16 of the SPC, a person may be held liable for attempting to commit an offence if he or she initiates the execution of the crime, carries out all or part of the acts that objectively should produce the result and yet the harm does not occur because of reasons that have nothing to do with the actor's original intention. A person will not be held liable if he or she voluntarily abandons his or her criminal attempt, either by not performing the remaining acts of execution needed to commit the offence or by taking affirmative steps to prevent the result from taking place after the acts of execution have been completed.

The statutes of limitations are regulated in Article 131 of the SPC, which sets forth different time periods, depending on the severity of the offence. Minor offences are governed by a one-year statute of limitations, whereas offences punished by up to five, ten, and 15 years of imprisonment are governed by five-, ten-, and 15-year limitation periods, respectively. Offences carrying a sentence of more than 15 years have a statute of limitations of 20 years. Genocide, crimes against humanity, certain war crimes and terrorist-related offences resulting in the death of a person have no statute of limitations.

The general rule, pursuant to Article 132 of the SPC, is that the limitation period starts to run the day on which the offence is committed. However, in continuing offences, time runs from the day on which the last infringement took place.

The statute of limitations may be interrupted when the judge issues a motivated resolution against the alleged offender. Notwithstanding, if a criminal complaint is filed and the judge issues the motivated resolution within a six-month period, the statute of limitations is deemed to have been interrupted on the day the criminal complaint was filed.

The rules providing for criminal extra-territorial jurisdiction are not contained in the SPC, but in the Judiciary Act (Ley Orgánica del Poder Judicial). The chief ground for exercising criminal jurisdiction is the territorial principle. According to this principle, embodied in Article 23.1 of the Judiciary Act, Spanish criminal law applies to events that occur within Spanish borders.

Article 23 of the Judiciary Act also provides for extra-territorial jurisdiction when any crime is committed by a Spanish citizen or a foreign national who has acquired Spanish citizenship after having committed the offence, as long as (i) the offence is punishable in the country where it was committed; (ii) the victim or the prosecution has filed a criminal complaint; and (iii) the perpetrator has not been acquitted, pardoned or sentenced in the country where the offence was committed.

Moreover, for private and foreign corruption offences, Article 23 of the Judiciary Act also provides for extraterritorial jurisdiction if (i) the perpetrator is a Spanish citizen or a foreign citizen whose usual residence is in Spain; (ii) the offence is committed by a manager, director, employee or associate of any kind of company, association, foundation or organisation which has its headquarters or registered office in Spain; or (iii) the crime is committed by a legal person, company, organisation, group or other kind of entity or association which has its headquarters or registered office in Spain.

For corporate criminal liability in Spain, two laws are of the essence: Organic Law 5/2010 and Organic Law 1/2015. While the first one abolished the Latin proverb societas delinquere non potest and allowed for legal entities to be held criminally liable, the second law strengthened and clarified the new legal regime, dispelling the doubts as to the nature of the responsibility of the legal person. Some scholars –and even the Prosecution Office in its Guidelines on this matter– considered the liability to be similar to that under the respondeat superior doctrine in the United States (vicarious liability). However, the possibility of considering vicarious liability for legal persons has been excluded by the Supreme Court, since it would be unconstitutional, and the legal persons must be punished for what it has been termed by the Spanish Supreme Court as a “Corporate Crime” (delito corporativo): the structural deficit in the control mechanisms that prevent and detect misconducts.

Since the last amendment to the SPC, pursuant to Article 31 bis.1, legal entities can be held criminally liable:

  • for offences committed in their name or on their behalf, and for their direct or indirect benefit, by their legal representatives or by those who, acting individually or as part of a body of the legal person, are authorised to take decisions on behalf of the legal person or have control and management capacities within it;
  • for offences committed by employees in the exercise of corporate activities on behalf of and for the direct or indirect benefit of the company due to a serious breach of their duties of supervision, monitoring and control by the individuals listed in the point above.

Note should be taken that not every offence triggers criminal responsibility for legal persons. The list is a numerus clausus.

Under Spanish law, both the individual and the legal person may be held liable for the same offence. Moreover, Article 31 ter of the SPC declares that the legal person will be held criminally liable when the offence has been committed by any of the individuals named in Article 31 bis.1 of the SPC, even though the specific person cannot be identified or charged. When, regarding the same facts, a pecuniary penalty is imposed on both the individual defendant and the legal person, the Tribunal shall moderate the amounts so that the resulting sum is not disproportionate.

Notwithstanding the above, the SPC provides a defence for those legal persons that have in place an effective compliance programme and sets forth several mitigating circumstances. Those will be dealt with in 4.1 Defences.

The failure to implement a compliance programme is not a crime under Spanish law. However, considering the duty of loyalty and care that directors have under Companies law, potential civil lawsuits may be brought against the non-compliant directors should they fail to put in place a compliance programme (Article 236 of the Spanish Companies Act).

The SPC does contemplate corporate successor liability. Article 130.2 proclaims that the transformation, merger, absorption or spin-off of a legal person does not extinguish its criminal liability, which will be transferred to the resulting entity(-ies). This Article also states that criminal liability shall not be extinguished by the concealed or merely apparent dissolution of the legal person.

Given the somewhat recent introduction of corporate criminal liability in Spain (2010), there are still more cases directed against individuals than companies. Yet, the corporate criminal liability statute specifically states that the fact that a company is being prosecuted and convicted does not exclude the possibility of prosecuting and convicting individuals.

According to Articles 109 and 116 of the SPC, if damages arise out of the offence, the defendant is obliged to pay for them if held criminally liable. The perpetrators of a crime (a figure that also includes co-perpetrators, instigators and necessary co-operators) have a joint and several responsibility, whereas the responsibility of the accomplices is subsidiary. Legal persons and individuals have also joint and several liability when both are sentenced.

Furthermore, Article 120.4 of the SPC holds corporations responsible in tort for the actions of their employees within the scope of their employment. In such cases, the corporate entity is held strictly liable, and there is thus no need to show that the harm took place as a result of negligence.

The Spanish Criminal Procedural Law establishes an opt-out system regarding the exercise of civil actions: unless the complainant states otherwise (ie, reserves his or her right to bring civil action separately after the conclusion of the criminal proceedings in a civil court), by bringing criminal charges the civil action is also brought automatically. In any case, irrespective of its application by a criminal or civil court, civil law applies.

Under Spanish law, class actions are confined to civil issues. In the criminal arena they are not regulated. However, there might be instances where a plurality of victims exists and each of them is represented and assisted by his or her individual court representative and lawyer. In those cases, the court may order the victims to group together under one or several court representatives and lawyers to avoid the proceedings from becoming unmanageable or producing undue delay.

The Supreme Court ruling dated 22 July 2019 ruled on the first conviction of “investors fraud” (Article 282 bis of the SPC).

The Supreme Court ruling of 16 March 2016 established the need to distinguish between the “individual crime” perpetrated by natural personas and the “corporate crime” perpetrated by the legal person. The conviction of the legal person must be based on the existence of a structural deficit in the mechanism that must prevent and detect misconduct (ie, corporate compliance programmes). The conviction cannot be based exclusively on the crime perpetrated by the natural person (no strict vicarious liability).

In Spain, the investigative phase (fase de instrucción) of the criminal proceedings is conducted by the Examining Magistrates (Jueces de Instrucción) located where the crime was committed. This jurisdiction rule has some exceptions, one of which is directly concerned with white-collar crimes. The National Court (Audiencia Nacional) has jurisdiction over money laundering and fraud-related crimes affecting the national economy or with repercussions in more than one region. Because of the nature of the cases brought before them, the six Examining Magistrates of the National Court have more experience dealing with white-collar crimes, but there is no specific branch within the judiciary that deals with these types of offences.

The prosecution is always a party to the proceedings involving white-collar offences (in tax fraud cases there is also a State Attorney representing the Tax Authority). The prosecution has a special branch, the Special Prosecutors Office against Corruption and Organised Crime, which is in charge of prosecuting white-collar offences of special relevance (something that is determined on a case-by-case basis by the Attorney General – Fiscal General del Estado). This branch has at its disposal special units from the tax authorities, the State General Intervention Office (Intervención General del Estado) and from the police.

Some local prosecution offices in Spain have a special section dealing with white-collar crime (Sección de Delitos Económicos).

There are no specific guidelines regarding the commencement of white-collar investigations. A victim can lodge a criminal complaint with the court, but also with the Prosecution Office or the police. The prosecution can also conduct its own preliminary investigation (diligencias de investigación) for a period of up to 12 months, that can be extended by the Attorney General. After that, the prosecution shall either file a criminal complaint or dismiss the case.

The investigating authorities in Spain in criminal matters are basically the Examining Magistrates and the Prosecution Office. Especially, the Examining Magistrates have vast powers to gather information and documents related to white-collar offences, ie, search and seizure, etc. The powers of the prosecution office are more limited.

Under the self-incrimination privilege, defendants cannot be compelled to produce any incriminatory evidence, so courts cannot force them (whether natural or legal persons) to produce documents. If so requested by any of the parties to the proceedings, courts can order any suspect (if the defendant is a legal person, a special representative shall be appointed to appear on its behalf) or witness to appear before the court to submit to questioning. In principle, witnesses cannot refuse to appear for questioning and must answer truthfully, whereas defendants can remain silent or even lie to the court (there is no perjury).

Pursuant to Article 18 of the Spanish Constitution and Article 545 of the Criminal Procedural Law, the domicile of a company is sacrosanct and, save for the consent of the company, a motivated court resolution granting access to the premises must be issued. Since there is a fundamental right involved, the resolution must meet a high threshold (ie, it must meet the requirements of adequacy, necessity and proportionality; it has to be highly probable that, in the relevant place, evidentiary elements may be found and there must not be a less intrusive way of acquiring the evidence sought).

There is no obligation under the SPC to conduct an internal investigation and, if conducted, to report the results to the authorities (since the Spanish Constitution establishes the right against self-incrimination).

However, internal investigations are an important intrinsic element of an effective compliance programme which can serve as a defence for a legal person. Disclosing the offence and co-operating with the authorities are mitigating circumstances, and those would normally require a previous internal investigation. The prosecution guidelines regarding corporate criminal liability establish that active co-operation and providing the authorities with the result of an internal investigation are indicators of the ethical commitment of the legal person and could even serve to exclude criminal responsibility – without prejudice to their consideration as mitigating factors.

Being a Member of the EU, Spain has incorporated into its national legislation all the European instruments of co-operation in criminal matters by virtue of the following legislation: Law 23/2014, dated November 23rd, of mutual recognition of decision in criminal matters. Therefore, the European Arrest Warrant, the European Investigation Order, etc, are enforceable in Spain.

In criminal matters, judicial assistance includes, on the one hand, extradition procedures, assistance consisting in carrying out any of the investigative acts in the framework of a criminal investigation or judicial procedure (such as summons, notification of judicial documents, obtaining of evidence, etc) better known as rogatory commissions and, on the other hand, the execution of criminal sentences that include both the transfer of convicted persons and the recognition and execution of final decisions.

International legal co-operation is exercised in Spain on the basis of Treaties or Agreements, whether bilateral or multilateral, or, in the absence of such treaties, through the principle of reciprocity.

Spain has signed bilateral co-operation agreements in criminal judicial matters with numerous countries, in addition to being a party to the multilateral agreements in this area of the United Nations or the Council of Europe, as well as the different co-operation instruments signed by the Member States of the European Union.

Regarding the competence to request judicial assistance in criminal matters, in Spain it corresponds to the judicial authority that follows the procedure, although the form of transmission of the requests varies depending on the applicable regulations.

In the case of most bilateral or multilateral agreements, a Central Authority is usually established as the channel for the requests. In the case of Spain, this Central Authority is the Ministry of Justice through the General Sub-Directorate for International Legal Co-operation.

In the event that the principle of reciprocity is invoked, the form of transmission will be diplomatic channels, although the Ministry of Justice, through the General Sub-Directorate for International Legal Cooperation, also channels said requests.

Finally, communication between the Member States of the European Union is generally channelled directly between Judicial Authorities, the intervention of the Central Authority being increasingly limited.

Regarding extradition, Spain has subscribed several Extradition Treaties with various countries and has, additionally, a specific legislation dealing with rendering individuals per extraditions requests: Law 4/1985, dated March 21st, on passive extradition. In most treaties there are no exceptions regarding white-collar crimes, except for tax offences.

Defences against extradition do not entail questioning the facts submitted by the foreign authorities. All extraditions are handled by the so-called “National Court” (Audiencia Nacional). The defences against extraditions commonly used are res judicata (double jeopardy), lack of jurisdiction of the foreign authorities in certain cases, political prosecution, statute of limitations, lack of dual incrimination.

White-collar investigations are normally initiated by a criminal complaint filed before an Examining Magistrate by the Prosecution Office, the victim of the offence (private prosecutor), or any Spanish national (popular prosecution). The Prosecution Office may also initiate an investigation before filing the criminal complaint. Yet, as noted before, its investigation powers are more limited than those of the Examining Magistrate.

In Spain, the prosecution has close to no leeway in deciding to charge a company or an individual with a white-collar offence. If there is prima facie evidence that the offence might have been committed by a individual competent to stand trial or a company without an effective compliance programme, the prosecution must charge the company or the individual and the investigative phase commences. Due to the lack of prosecutorial discretion regarding charging decisions, the effectiveness of the compliance programme must be ascertained during the investigative phase (or in trial).

Once the investigative phase is over, the prosecution could file for the dismissal of the case if it understands that there is not sufficient evidence to go to trial. If the private complainant disagrees, the court could find for the latter and proceed to trial.

Unlike in the United States and other jurisdictions, Spanish law does not regulate deferred or non-prosecution agreements or similar mechanisms for white-collar crimes.

The confession by a defendant to an offence before he or she is aware that there exist any criminal proceedings against him or her is one of the mitigating circumstances set forth in Article 21.4 of the SPC, affording the defendant the opportunity to receive a less severe sentence. However, even if the perpetrator confesses at a later stage, the courts consider such a confession as valid to mitigate the conviction on the basis of a general analogue-clause contained in Article 21.7 of the SPC.

In the plea-bargaining process, the defendant and the prosecution determine the exact punishment that shall be awarded by the court. The court will control the plea bargaining in the sense that it cannot allow a defendant to plead guilty and consent to a criminal sanction that it is above the statutory maximum sanction.

Where there are multiple defendants and some of them plead guilty and others not, the trial will take place. As a result, even those individuals pleading guilty can be acquitted by the court if the court concludes that there is insufficient evidence of the defendant perpetrating the offence (regardless of his or her confession).

The Attorney General's Office in Spain has signed with the General Council of Attorneys a protocol to implement the plea-bargaining process. However, this protocol is not binding and there are numerous plea-bargaining processes reached which are outside the specific guidelines of the protocol.

The core of corporate offences can be found in Articles 252, 253, 257 to 261 and 290 to 294 of the SPC.

Articles 252 and 253 relate to disloyal administration and misappropriation, two offences that have been frequently used in criminal prosecutions against banks and its directors in the years following the financial crisis in Spain. Those offences were subject to an important amendment in 2015 in an attempt to clarify and distinguish them.

Before 2015, disloyal administration was confined to corporate offences committed by directors who abused their functions (infringement of his or her fiduciary duties), thereby causing a quantifiable harm to the company. Since the amendment, it has become a common offence (being a director of a company is no longer a requirement, it is enough to have the power to manage assets from a third party). Misappropriation punished those instances where the perpetrator either appropriated (for himself or herself or a third party) any moveable asset that he or she received, with the obligation to give it back, or denied having received it in the first place.

Articles 257 to 261 regulate an array of offences that protects, according to the prevailing opinion among scholars, the right of the creditor to have his or her credit claims fulfilled with the assets of the debtor if he or she fails to honour his or her obligations and the integrity of bankruptcy proceedings. The main offences are asset-stripping (Article 257) and criminal insolvency (Article 259). 

Finally, Articles 290 to 294 (business offences) punish an array of actions carried out by directors of companies (falsification of annual accounts, infringing upon the rights of minority shareholders and obstructing or impeding the supervision and inspection tasks by the competent administrative authority).

Under Spanish Criminal law, there is not a single corruption offence, but rather an array of them (bribery, influence-peddling, embezzlement, fraud and illegal taxation, engaging in prohibited dealings, the using of secrets or inside information). Some of those offences are specific, whereas other offences are common offences (see 1.1 Classification of Criminal Offences).

The SPC divides bribery into three main categories: private bribery (Article 286 bis), bribery of foreign public officials (Article 286 ter) and public bribery (Articles 419 to 427 bis).

Bribery between private parties punishes the receipt, request or acceptance by (or the promise or giving to) a director, manager, employee or agent of a company (directly or through an intermediary) of an improper benefit or advantage of any nature, for himself or herself or for a third party, as consideration for unduly favouring another person in the acquisition or sale of goods, or in the contracting of services or in commercial transactions.

Bribery of foreign public officials consists of bribing (or attempting to bribe), directly or through an intermediary, by way of offering or granting any kind of improper benefit or advantage (pecuniary or otherwise) a public foreign official (for his or her benefit or the benefit of a third party) to induce him or her to perform or fail to perform his or her public duties in order to obtain or retain a contract, business or any other competitive advantage regarding the conduct of international business. Accepting a public foreign official's or an authority's request of a bribe is also considered an offence.

Private bribery and bribery of foreign public officials are punished with a sentence of imprisonment of up to four and six years, respectively.

Articles 419 to 423 concern various types of passive bribery:

  • requesting or acceptance by a public official of a gift, favour or benefit of any kind:
    1. to perform his or her duties unlawfully; or
    2. purely on the basis of his or her position; and
  • "grease" payments, or facilitation payments.

The requests or acceptances can be made directly or through an intermediary and for the benefit of the public official or a third party.

Article 424 makes it a criminal offence for a private individual to offer or give a gift or reward of any kind to a public official in the terms described in Articles 419 to 423. Complying with a request for a bribe from a public official is also punishable.

Public corruption charges could carry severe imprisonment sentences (up to six years) and disqualification from public office and deprivation of the right to hold public office.

There are no specific anti-corruption laws providing for a distinctive obligation to prevent bribery and influence-peddling apart from the provisions of the Criminal Code (of course, those provisions have been influenced by international legislation from the OECD and the European Union). Since private bribery and bribery of foreign and national public officials can trigger corporate criminal liability, the compliance programmes of those legal persons should consider those risks and set up measures to prevent them. One possible defence in this regard entails having the anti-bribery provisions of the compliance programme (or the compliance programme as a whole) certified (see 4.1 Defences).

Finally, it should be noted that in 2017 a new Public Procurement Law was enacted, pursuant to which, legal persons which commit certain corruption and fraud-related offences can be disbarred from public procurement. The same applies if a director or representative of the legal person is held criminally liable. However, having a compliance programme in place could serve as a defence.

Market abuse (market manipulation and insider trading) is dealt with in Articles 284  to 285 quater of the SPC. The Spanish market-abuse regime was recently amended in March 2019 to conform to the European Directive 2014/57 on criminal sanctions for market abuse (though some inconsistencies with the European legislation remain).

Article 284 is divided in three paragraphs:

  • the first paragraph includes a very broad definition of price disruption, making it a crime to use violence, threats, deceit or any other form of deception or contrivance to disrupt the prices that would result from the law of supply and demand of any movable or immovable good or a financial benchmark;
  • paragraph two punishes knowingly disseminating through the media, including the internet, or by any other means, false economic data about a person or a company aimed at:
    1. altering or preserving the price of a financial instrument or a spot commodity contract; or
    2. manipulating the calculation of a benchmark (information-based manipulation);
  • paragraph three punishes:
    1. entering into a transaction, conveying misleading signals or placing an order to trade which gives false or misleading signals as to the supply of, demand for, or price of a financial instrument or a related spot commodity contract; or
    2. securing the price of one or several financial instruments or a related spot commodity contract at an abnormal or artificial level using inside information (operation-based manipulation).

Pursuant to Articles 285 and 285 bis, insider dealing arises where a person possessing inside information:

  • uses that information (directly or indirectly) by acquiring or disposing of a financial instrument or cancelling or amending an order concerning a financial instrument;
  • recommends that another person engage in insider dealing; or
  • endangers market integrity or investor confidence by disclosing inside information to any other person (except where the disclosure is made in the normal exercise of an employment, a profession or duties).

Market abuse offences carry an imprisonment sentence that ranges from six months to six years, the imposition of monetary fines (the fine could be calculated per diem or in relation to the profit gained or loss caused) and disqualification from the practice of commercial activities for between two and five years.

Incitement, conspiracy and proposition to commit the aforementioned offences are specifically listed as an offence under Spanish law (but carry a lighter sentence).

Finally, although in recent years there have been several publicised cases involving misconduct of bankers and managers of financial institutions, in Spain there is not a specific Criminal Banking Law.

Tax fraud is a crime under Spanish law only when the amount evaded is over EUR120,000 (when payment of taxes is due to the European Union, the threshold is lowered to EUR10,000). Below that threshold, it is considered only an administrative offence. The concept of tax fraud not only comprises avoiding the payment of taxes, but also unduly obtaining tax refunds or enjoying tax benefits.

It is considered an aggravated offence when (i) the amount defrauded exceeds EUR600,000; (ii) the fraud is carried out by a criminal group or organisation; or (iii) straw men, shell companies or tax heavens are used to hinder the identity of the perpetrator or his or her patrimony or the amount of taxes evaded.

The law provides for a complete exemption in those instances where the tax-evader proceeds to pay his or her taxes before knowing that (i) the tax authorities have launched an investigation or (ii) the prosecution has lodged a criminal complaint. The SPC also provides for the possibility of a lighter sentence if the defendant confesses and pays his or her tax liability (the amount defrauded plus charges and interests) within two months of being charged.

According to Companies Law, financial record-keeping is one of the main duties of directors of a company (Articles 25 et seq of the Spanish Commercial Code and Articles 225 et seq of the Spanish Companies Act). Failing to comply with those obligations carries an array of detrimental outcomes for the company and its directors.

Article 310 deals with those consequences in the criminal area, punishing those who are duty-bound to keep financial accounts, books or tax records if they fail to do so (eg, by having parallel accounting systems that conceal the true situation of the company or making fictitious accounting entries).

Article 290 of the SPC punishes what has been called “financial engineering”. Pursuant to this Article, de iure or de facto directors of a company can be held criminally liable should they falsify the annual accounts or other corporate documents that reflect the legal or economic situation of the company in such a way as to harm the company, its shareholders or a third party. Misrepresenting (even recklessly) the documents that are filed can be done by means of concealing accurate data or by introducing false information, but not when an opinion is expressed.

It is important to highlight that, for the crime to be committed is not necessary that the harm be caused: the offence makes the mere possibility of causing the harm a crime. In this case, the offence carries a sentence of imprisonment of one to three years and a monetary fine. However, if the harm is caused, the minimum sentence of imprisonment that could be imposed is two years (the fine would also be higher).

In Spain, anti-competitive practices are not considered criminal offences (no Criminal Competition Law exists). These are administrative offences (Spanish Competition Act prohibits, among other practices, collusive agreements and abusive exploitation of a dominant position) that are dealt with in an administrative procedure in which the National Commission on Markets and Competition could impose fines of up to 10% of the turnover of the infringing undertaking.

The SPC affords a specific protection to consumers in Articles 281 to 283.

Article 281 punishes the removal of raw materials or consumer staples aimed at causing a shortage, forcing a price change or seriously harming consumers with a prison sentence of one to five years (five to seven-and-a-half years if the offence is committed in the event of a catastrophe or in dire situations) and a monetary penalty. Article 282 (false advertising) makes it a crime for a manufacturer or business owner to use deceptive or misleading information to offer or advertise his or her products or services in such a way that could result in a serious and clear harm to consumers. Article 283 deals with a type of invoice fraud, punishing exaggerated invoicing of goods or services whose cost is calculated with automatic devices, by altering or manipulating them. These two offences could carry a prison sentence of up to one year and a monetary penalty.

The amendment of the SPC in 2010 introduced a new type of fraud commonly referred to as investors' fraud. Article 282 bis of the SPC makes it a crime for publicly traded company directors to falsify the financial-economic information contained in the prospectuses of any financial instruments or the information that the company must disclose in accordance with securities legislation with the intent of attracting investors, placing any type of financial asset, or securing funds by any means (prison sentence of one to four years). The offence carries a more severe sentence if investors actually make the investment or the asset is allocated, or a serious harm is caused.

One of the goals of the amendments of the SPC in 2010 and 2015 was to adapt the national legislation to the provisions of European legislation on attacks against information systems. With that objective in mind, some new offences were introduced in the SPC and previous ones were reformulated. One of the new offences introduced in 2010 and relocated in 2015 outlawed the unauthorised access (or the providing of access) to an information system and staying inside an information system against the will of whomever has the rightful power of excluding the intruder. Using technical devices without being duly authorised to intercept a private flow of data to, from or within an information system and creating, acquiring or providing software or passwords without authorisation and with the intention of facilitating the perpetration of any of the aforementioned offences is also considered a crime.

Phishing is also listed as a particular type of fraud under Spanish law in Article 248.2 of the SPC. This Article makes it a crime to trick someone into transferring any kind of valuable asset with a profit intent and using any kind of computer manipulation or similar contrivance. Designing, having or providing specific software to commit the aforementioned kind of fraud is also punishable. The prison sentences for those kinds of offences range from six months to up to eight years, depending on several circumstances (eg, the amount of the fraud or the number of people tricked, the situation of special vulnerability of the victim, committing the offence taking advantage of the perpetrator’s business or professional credibility or abusing the trust of the victim).

On another note, Articles 264 to 264 ter deal with several computer-related offences. These Articles make it a crime:

  • to erase, damage, delete or alter by any means and without authorisation any kind of electronic data, software or electronic file of a third person;
  • to hinder or interrupt the functioning of an information system of a third party without authorisation; and
  • to create, acquire or provide software or passwords without authorisation and with the intention of facilitating the perpetration of any of the aforementioned offences.

Finally, Articles 278 to 280 deal with the protection of company secrets. This concept is not defined in the SPC, but case law and scholars define it as any information with economic value regarding any private aspect of a company that, if revealed, would damage its competitive capabilities.

Article 278 (industrial espionage) punishes the seizing by any means of data, documents (hard or electronic copies), hardware or object and or in order to discover a company secret (it carries a prison sentence of two to four years, and, if the perpetrator reveals or discloses the secret, of three to five years and a pecuniary penalty). The mere disclosure of a secret, if the perpetrator has a legal or contractual duty of confidentiality, also carries a prison sentence of two to four years and a pecuniary penalty (Article 279). If the perpetrator does not partake in the seizure of the secret but reveals it, knowing that it was illegally obtained, he or she faces a prison sentence of one to three years and a pecuniary penalty.

Offences in relation to smuggling, whether criminal offences or mere administrative infringements, are regulated in one statute: Organic Law 12/1995, of December 12th, on Repression of Smuggling modified by Organic Law 6/2011 of June 30th.

Articles 2 to 10 regulate the criminal aspects. For conduct to constitute a criminal offence, the value of the smuggled goods must be equal to or higher than EUR150,000,000 (Article 2). The amount is reduced to EUR50,000 when the object of smuggling is, for example, Historical Spanish Heritage, protected specimens of wild fauna and flora according the Washington Agreement of 3 March 1973 or to European Regulation No 338/1997 of 9 December 1996; defence material or material that can be used to produce nuclear energy with non-peaceful ends, etc.

If the smuggled goods are tobacco products, the value must reach EUR15,000,000 for the conduct to exceed the administrative scope and be considered criminal (Article 2.3.b). If the smuggled goods are toxic drugs, narcotics, psychotropic substances, arms, explosives, biological or toxic agents, chemical toxic substances and their precursors or other items, the possession of which is an offence, or if the smuggling is carried out through an organisation, the value of the smuggled goods is irrelevant because the conduct is always considered to be an offence (Article 2.3.a).

Article 2.1 makes the following punishable:

  • the import or export of goods without declaring them to the customs authorities;
  • commercial transactions, possession or distribution of legal merchandise without complying with requirements to prove their legal import;
  • commercial transactions, possession or distribution of goods subject to a state monopoly, and the other items previously mentioned;
  • the obtaining of authorisation for the preceding purposes using false information or by any other unlawful means, and other similar conduct. In the case of a continuous offence it is permitted to add up the different amounts, to reach the minimum sum that constitutes an offence (Article 2.4).

The concealment of offences (Article 451 of the SPC) was changed from being a form of participation in an offence after it was committed into an autonomous offence. The Supreme Court has established case law indicating that a person cannot be convicted of both the predicate offence and the concealment offence.

Various forms of assistance of principals and accomplices of an offence are penalised as concealment. The elements of the offence are the following:

Whoever has knowledge of a criminal offence committed and, without having intervened in it as a perpetrator, subsequently intervenes in its execution, in any of the following ways, shall be punished with a sentence of imprisonment of six months to three years:

  • aiding the offenders or accomplices to benefit from the gains, product or price of the criminal offence, without intending personal profit;
  • hiding, altering or destroying the evidence, effects or instruments of a criminal offence, to prevent it being discovered;
  • aiding the suspected criminals to avoid investigation by the authority or its agents, or to escape search or capture (in certain offences and/or specific circumstances).

Aiding and abetting the commission of a crime is punishable under Spanish law, although it carries a lighter sentence in relation to that of the perpetrator (except for those cases where the accomplice is deemed to have collaborated with an essential act for the crime, in which case the sentence is – or could be – as severe as that of the perpetrator). Accomplices must also pay damages should the perpetrators not have enough funds to do so (ie, they only respond on a subsidiary basis).

Money laundering is referenced in Articles 301 to 304 of the SPC. The main offence is prescribed in Article 301, which punishes money laundering in broad terms.

Pursuant to that Article, money laundering consists of the acquisition, possession, use, transformation or transmission of goods knowing that they stem from an illegal activity – carried out by the same perpetrator or a third party – aimed at concealing or disguising the illicit source of the goods or aiding the perpetrator of the illegal activity to avoid facing its consequences. As the Spanish Supreme Court has voiced on several occasions, the intention is a fundamental element of the crime, since not factoring it in would mean infringing the non bis in idem principle.

Depending on the predicative offence, concealing the actual nature, source, location or destination of the goods or ownership thereof is also construed as a money laundering offence.

The fact that the illegal activity, ie, the money laundering offence, could have been carried out by the perpetrator himself or herself was a hotly debated issue until it was clarified in 2010, when the amendment of the SPC clearly allowed for the possibility of the so-called autoblanqueo.

It is also worth noting that the term "illegal activity" is not tantamount to committing a crime, but rather has a broader meaning. Consequently, it is not necessary for a person to be convicted of money laundering that he or she had been previously convicted of any predicative offence. In any case, the prosecution must prove the illicit origin (the mere suspicion of it is not enough). In this regard, case law provides some examples from which the courts can infer that illicit origin, eg, faulty explanations regarding the origin of the proceeds, an unexplained increase of the wealth of the subject, lack of lawful transactions as a source of the funds, the use of shell companies or straw men, etc.

A person can be held liable for money laundering even if the predicate offence was committed, in whole or in part, abroad; and even if he or she acted recklessly (mere negligence is not enough). Performing what has been labelled as neutral acts (ie, acts that from a purely natural standpoint are causal to the offence but also socially adequate), however, do not give rise to the offence.

Money laundering carries imprisonment sentences, ranging from six months to nine years and heavy monetary penalties (which can be treble the value of the laundered goods). Depending on the severity of the offence and the personal circumstances of the perpetrator, the punishment can be disqualification from the practice of commercial and professional activities and deprivation of the right to hold public office for between one and ten years.

The main common defences in white-collar matters normally include lack of mens rea or acting under certain type of government authorisation.

For a legal person to be exempted from criminal liability, its governing body must have put in place, before the commission of the crime, an effective compliance programme. It is also necessary to have empowered an independent body within the entity with overseeing the compliance programme.

Pursuant to Article 31.bis.5 of the Spanish Criminal Code, for a compliance programme to be considered effective, it must include:

  • a risk-based assessment of the activities which could give rise to criminal liability for the company;
  • protocols and procedures that define the decision-making process of the corporate will;
  • models for the adequate management of financial resources to prevent the commission of crimes;
  • reporting obligations of possible risks and breaches of the compliance programme to the body in charge of overseeing the compliance programme (whistle-blowing channels);
  • a disciplinary system that adequately sanctions non-compliance with the compliance programme; and
  • performance evaluations that periodically determine if there is a need for improvement or modifications in the compliance programme.

When the crime is committed by a director or legal representative of the company, two more requirements must be met for the legal person to avoid being held criminally liable: (i) the perpetrator must have deceitfully avoided the controls of the compliance programme and (ii) the body in charge of the compliance programme must not have failed to act or to discharge its monitoring responsibilities poorly.

Those requirements must be met irrespective of the offence committed by the company.

Another step that could add to the defence of the company is to have its compliance programme certified. Having the compliance programme of the legal person could go a long way towards proving its commitment to the rule of law, but it is not a sure-fire method for the company to prove that it complied with all the requirements of the SPC, were a crime that triggers its responsibility to be committed. Note should be taken that the prosecution guidelines regarding corporate criminal liability declare that those certificates could be construed as an additional element of the adequacy of the programme, but they cannot ascertain its efficacy nor replace its assessment, which is the sole province of the court.

Some white-collar offences have de minimis exceptions regarding their economic amount (ie, the criminal offence is only triggered where a certain amount is defrauded or ill-gained through the crime, otherwise in most cases the unlawful act is dealt with by means of administrative fines). Tax fraud is one of those instances, where the amount of tax evaded must be over EUR120,000 for it to be considered a criminal offence. Also, market manipulation and insider-dealing offences require that some requisites be met apart from the mere conduct.

Timely self-disclosure is a mitigating factor for both individual and legal persons. Providing the authorities with new and relevant evidence during any stage of the proceedings is also a mitigating factor, but only for legal persons (as previously stated, if the perpetrator confesses during the proceedings, the courts consider that confession to be valid to mitigate the conviction on the basis of a general analogue-clause contained in Article 21.7 of the SPC). Under Spanish Criminal Law (unlike Competition Law), there are no leniency provisions which grant a first offender to report to the Authorities and gain immunity from prosecution.

The SPC also grants complete immunity to an individual who, having occasionally agreed to the request for a bribe made by a public official, reports the fact to the authorities within the following two months from the acceptance.

As stated in 4.1 Defences, an effective compliance programme must have a whistle-blowing channel. The prosecution, in its guidelines regarding corporate criminal liability, expresses that in order to compel employees to use the whistle-blowing channel, the compliance programme of the company must provide for anti-retaliation clauses. Whilst some laws provide specific protection for whistle-blowers (eg, Article 197 of the Spanish Securities Act contains an anti-retaliation clause for employees working for certain companies providing investment services and credit institutions), there is no explicit protection afforded to whistle-blowers under the Spanish Criminal Code (notwithstanding that the unauthorised access, use or disclosure of personal data contained in electronic files is a criminal offence), so protection for whistle-blowers is mainly dealt with in labour law.

An important aspect of the whistle-blowing channels is whether the information about the reporting employee is anonymous or merely kept confidential. Currently, Article 24.1 of the Personal Data Protection Act allows the complaints to be anonymous.

The European Directive on the protection of persons reporting on breaches of Union law states a prohibition of retaliation against reporting persons, provided that they met the requirements of the Directive. This new piece of legislation could probably serve as a wake-up call to enhance whistle-blower protection.

Finally, it should be noted that, in Spain, unlike the provisions contained in the Dodd-Frank Act or the False Claims Act, there is no economic incentive for whistle-blowers to report white-collar offences.

In light of the in dubio pro reo principle, the judge must acquit if he or she has reasonable doubts about the guilt of the defendant, who is not bound to prove his or her innocence (that onus lies with the prosecuting party). Given that justifications and excuses negate guilt, reasonable doubt about whether the defendant's conduct was justified or excused should lead to an acquittal. It should be noted, however, that the defendant has the initial burden of producing evidence of justification or excuse.

The legislature adopted a determinate sentencing framework in the Code. Thus, the sentence imposed by the judge must fall within the range of punishment prescribed statutorily for the crime committed. The judge may, however, make downward or upward adjustments in punishment as long as the sentence imposed remains within the statutory range. Such adjustments are made by taking into account the aggravating and mitigating factors spelled out in Articles 65–68 of the Criminal Code.

With regard to the quantity of punishment, prison sentences range from days to years, depending on the gravity of the offense. However, punishment may never exceed 40 years of imprisonment. The Code also requires that accomplices be punished less severely than perpetrators and that consummated crimes be punished more severely than attempted offences.

Corporate Defense SLP

Plaza de la Independencia, 2 - 5º Izq.
28001 Madrid
Spain

+34 91 781 9107

+34 91 577 7090

cd@corporate-defense.com www.corporate-defense.com
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Law and Practice in Spain

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Corporate Defense is a Spanish law firm specialised in the areas of white-collar crime and multi-jurisdictional litigation. The firm has represented major financial institutions and multinational corporations, as well as their boards of directors and senior executives in a broad range of the most complex and high-profile white-collar and regulatory enforcement matters. The professionals in the firm combine significant technical expertise with extensive practical experience. Corporate Defense also conducts internal investigations and advises multinational companies in the area of compliance. In the area of white-collar crime the firm excels in complex litigation involving corporate criminal liability. In this specific practice, some members of the firm have been able to shape the case law of the Spanish Supreme Court. Recent matters involve representation of the interests of the Bank of Spain’s Resolution Authority, Spain’s FDIC, a relevant Chinese Bank headquartered in Luxembourg, a former president of a Spanish Bank, and a former president of a government-owned company.