sebastian sal - dfsm attorneys at law - buenos aires, argentina preventing corruption in the private...

Preventing Corruption in the Private Sector.

Sebastian Sal - DFSM Attorneys at Law - Buenos Aires, Argentina

Introduction

1) When we speak about corruption: Public Corruption. Government, Politicians, Congressmen, Judges, Police Officers are among our favorite.

2)Wrong. Corruption is everywhere, not only in the Public Sector.


Every time that someone collects a bribe there is someone who is paying for it. One is inseparable from the other.The question, as Shakespeare would say, could be to profit or not to profit. In order to obtain profits, crimes like fraud against the public administration (including tax evasion), money laundering, fraudulent administration are committed by private entities. What could Public Institutions do to stop private corruption?


Provide ethical formation that allow people to avoid corrupt behaviour.

No matter what kind of control the Public Sector organizes to check private entities, the most important is education, based on ethics.


Survey at UBA 25% of the students will be loyal and incorruptible employees, no matter if they will be controlled or not.

50% wouldnt steal their employers if they will be controlled, not because it is wrong to take illegal advantages but because they are afraid to loose their jobs, if they were caught.

The other 25% will steal no matter what you do in order to control them. They are confident that they will never get caught. Even worse, they believe that their employers will ask them to commit a corrupt act in order to obtain extraordinary profit.


In Argentina the most common crimes committed by private companies are fraud against the Public Administration, tax evasion if we paid the money would go to the Politicians instead of to the people, many people think-, money laundering, fraudulent administration and common frauds.

Estimated that the total amount of the damage produced by the private sector during the 1980-2005 period was ten billion dollars


First of all corruption in the private field affects the freedom of the markets, and the international trade. On a second place, it affects the full society, specifically the poorest people.

Public Sector should create a conduct code or ethical rules for national and multinational companies.


b) Make each inhabitant of a country a "real citizen", informed and interested in public issues.It is obviously that the power of control should be in the Public sector, but sometimes the private and personal one is more important and effective. We have to give this power to every citizen.


Ordinary people is the best ally in order to fight corruption, they are everywhere and they know everything.

We need to let them know that corruption is a problem that affects every citizen in every country.


Article 13 of the UNCAC establishes that Each State Party shall take appropriate measures, within its means and in accordance with fundamental principles of its domestic law, to promote the active participation of individuals and groups outside the public sector, such as civil society, non-governmental organizations and community-based organizations, in the prevention of and the fight against corruption and to raise public awareness regarding the existence, causes and gravity of and the threat posed by corruption


Corruption takes place within the business sector as well as between the private and public sectors and also shows that co-operation with law enforcement agencies needs strengthening.


c) Social and Personal sanctions (ex- ante) so that society i.e. family, friends, colleagues - morally other people corrupt acts.In order to encourage people to help Public Authorities to fight private corruption we need whistleblowers. We need to develop mechanisms to protect them; encourage the development of institutions, laws and practices, which ensure that responsible citizens can report corrupt practices without fear of reprisals; and ensure that the media is empowered to play its pivotal role in holding relevant individuals and institutions accountable.


For example in the USA we can find the Whistleblower Protection Act.

Under U.S.A law, a whistle blower (or whistleblower) is an employee who "tells" on an employer, because he or she reasonably believed that the employer has committed an illegal act.


Three elements are needed: 1) that the plaintiff engaged in protected activity as defined by the Act; 2) that the plaintiff was subsequently discharged from employment; and 3) that there is a casual connection between the protected activity and the discharge - Melchi v. Burns Intern. Sec Services Inc., 597 F.Supp.575 (D.Mich.1984).-. Furthermore the same court in the same case established that the term suspected violations meant to bring within the Acts protection an employees subjective good faith belief that he was reporting a violation of the law.

As we have seen, to establish a protection for individuals will encourage them to control private companies, helping public prosecutors offices to fight crimes.


d) Protection for witnesses, journalists, NGOs or public officers that face judicial, political or economic Mafias.

UNCAC is aware of that and encourages State Parties to establish procedures for the physical protection witnesses, relocating them and permitting, where appropriate, non-disclosure or limitations on the disclosure of information concerning the identity and whereabouts of such persons; to provide evidentiary rules to permit witnesses and experts to give testimony in a manner that ensures the safety of such persons. In Argentina, a witness protection program for key witnesses in drug-related prosecutions was created in 1998.


Besides, providing immunity for repented criminals that collaborate with the investigation and bring back assets obtained as a consequence of corrupt acts, would be another way to successfully fight corruption in the private areas.


f) Extension of the criminal liability to corporations. Some measures as the introduction of the know your customer-rule as well as blacklisting of companies in case they engage in corrupt activities might be other useful elements. Implementing the UNCAC as well as the Organization of Economic Co-operation and Development (OECD) Anti-Bribery Convention requires additional steps to the mere adoption of laws that criminalize corrupt behavior. The private sector has to be pro-actively engaged in fighting corruption. What is more, Multi National Enterprises have to acknowledge the enormous costs of corruption.


The European Council Framework Decision 2003/568/JHA involves the liability not only of natural persons in the capacity of employees but also of legal persons such as firms and /or companies.

The US Supreme Court held in New York Central And Hudson River Railroad Co. V. United States, (1909) when the giving of rebates or concessions endured to the benefit of the corporations of which the individuals were but the instruments make corporations criminally liable....


How can a Corporation be imprisoned?

In US v Allegheny Bottling Co. (ED Va. 1988) the Judge stated that he could close the physical plant itself and guard it , could allow employees to come and go and limit certain actions or sales if that is what the court imposes.


g) Exemplary sanctions to private corporations which corrupt civil employees. Another option to control private corporations is to give exemplary sanctions to private corporations.UNCAC Article 34 establishes that States Parties may consider corruption a relevant factor in legal proceedings to annul or rescind a contract, withdraw a concession or other similar instrument or take any other remedial action. Besides the UNCAC establishes a Compensation for damage in order to ensure that entities or persons who have suffered damage as a result of an act of corruption have the right to initiate legal proceedings against those responsible for that damage in order to obtain compensation.


h) Conclusion.Ordinary citizens should be aware that corruption always make a huge harm to civil society. They should be aware that a country is formed and that it is their rights to control corruption.

Each country is property of the citizens, and in this way we have to be the most concerned about corruption and the first ones in fighting it.


sebastian sal - dfsm attorneys at law - buenos aires, argentina preventing corruption in the private...

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