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New State contracting and criminal law measures adopted to sanction the commission of corruption acts

Law 2014 of 2019, enacted on December 30th of 2019, introduced important changes in relation to acts of corruption and crimes against the “public administration”: Significant amendments were made in connection with both (i) the Colombian public procurement regime established in Law 80 of 1993 regarding debarment for contracting with the State, and (ii) the Criminal Code regarding arrest and imprisonment of public officials and private individuals.  The objective of Law 2014 of 2019 is to adopt measures for the effective sanction of said behaviours.

We have prepared a brief summary of the adopted measures below:

Extension of the debarment to contracting with the State in relation to corruption acts

The first measure relates to debarment/disqualification scenario set forth in paragraph j), section 1), of Article 8 of Law 80 of 1993 which provides sanctions for persons who were convicted for crimes against the public administration and/or with legal entities who have been declared administratively responsible of transnational bribery.

Under the overruled regulation, debarment/disqualification was only applicable to (i) companies (with an exception regarding stock corporations) whose officers and directors (legal representatives and members of the board of directors) were convicted or (ii) companies (with an exception regarding stock corporations) whose controlling shareholders were convicted.  Debarment/disqualification was extended to parent companies, subsidiaries and branches.

According to the new regulation, debarment/disqualification has a wider span, affecting also:

(i) Corporate groups whose individuals or companies are convicted for crimes against the public administration and/or transnational bribery, if and when the criminal behaviour was part of a corporate group policy;

(ii) Companies whose “legal personality” was cancelled due to the commission of acts of corruption and crimes against the “public administration”;

(iii) Officers and directors, controlling shareholders, parent companies, subsidiaries and branches who benefitted from a non-prosecution or differed prosecution agreement (principio de oportunidad) related to the crimes listed in this law.

In addition, under new regulation, debarment/disqualification extends permanently (i) to individuals convicted for the commission of certain acts provided for in Law 2014 of 2019 and (ii) to companies related to the convicted individual (officers, directors, etc).  Note, this also entails a significant change since under the overruled regulation debarment/disqualification lasted only 20 years.

Finally, under new regulation, all debarment/disqualification scenarios and incompatibility situations established in article 8 of Law 80 of 1993 also apply to private contracting processes in which public funds are compromised.  Thus, bidding processes that are not governed by Law 80 of 1993 but involve public funds, such as those governed by the selection rules of multilateral organizations, would also be covered.

Unilateral assignment after a supervening disqualification situation

According to article 9 of Law 80 of 1993, as amended by Law 2014 of 2019, contractual rights in public contracts can be assigned if and when certain debarment/disqualification scenarios arise after the contract has been entered into by the parties.  Such scenarios include the ones provided for under paragraph j), section 1 of article 8 of Law 80 of 1993 as wells as when the private contractor is subject to an administrative sanction for the commission of acts of corruption (i.e. by the Superintendence of Corporations for transnational bribery under Law 1778 of 2016).

In this specific case, the contractor does not have the option to resign to performance of the contract (as set forth in article 9 of Law 80) and the contracting authority must order, through an administrative act, the unilateral assignment of the contract without compensation to the contractor/assignor.  Thereafter, the contracting authority shall determine and appoint the assignee.

Also, the liquidated damages provision will be triggered.

Once the unilateral assignment of the contract has been decided and the administrative act is fully in force (en firme), the contracting authority must notify its decision to all disciplinary, fiscal and criminal authorities and provide them with copies of the relevant file so that such authorities can proceed with their own investigations in connection with the same conducts.

The National Government must issue additional regulation regarding the assignment procedures within 6 months of enactment of Law 2014 of 2019.

Reforms to Criminal Law provisions

The following are the reforms introduced by Law 2014 of 2019, to the Colombian criminal law:

The following crimes, related to conducts that may occur within public procurement processes, were excluded from the benefit granted by Section 38G of the Colombian Criminal Code regarding the possibility of replacing imprisonment for home confinement when the convicted person has had served at least half of his imprisonment term in prison.

The crimes are as follows: embezzlement; extortion by a government officials; any type of bribery related with public officials introduced in the Colombian Criminal Code (cohechos); undue interest in the celebration of contracts; contract without the compliance of legal requirements; anticompetitive agreements; undue influence of government officials; illicit enrichment; breach of duty by action; false testimony; bribery; bribery within the criminal process; threats to a witness, concealment, modification or destruction of evidence; and crimes that affects public property.  Accordingly, any public official, or individual that commits any of these crimes after December 31st, 2019 (date in which the Law entered into effect) will have to serve his or her whole sentence in prison.

Furthermore, a paragraph was incorporated to Section 5 of the Colombian Penitentiary Code.  This paragraph establishes special protection measures for public officials and former public officials that have been sentenced or are in preventive imprisonment, and that have been part of the following institutions: INPEC, criminal justice system, judicial police (policía judicial) and Public Ministry, public officials named by popular election and public officials that hold a legal or constitutional privilege. This provision provides that officials should be kept in special establishments, different from regular prisons. This is applicable to the officials and former officials in preventive arrest or that have been sentenced for a crime, taking into consideration the severity of the crime, security conditions, the personality of the individual, his backgrounds and the crime committed. Nevertheless, the same paragraph excludes from these measures any public official, or former public official that has committed any of the crimes listed above.  In all cases these offenders will be remanded to special pavilions for public officials in regular prisons.

Authors

Daniel Rodríguez
Daniel Rodríguez, LL.M.
Partner
Bogotá
Jacques Simhon
Jacques Simhon, LL.M.
Partner
Bogotá
María Lucía Amador
María Lucía Amador, LL.M.
Associate
Bogotá
Santiago Calle
Santiago Calle
Associate
Paula Gutiérrez-CMS-Colombia
Paula Andrea Gutiérrez
Associate
Bogotá
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