Page 39 - CORRUPTION LATAM

MONTT GROUP MAGAZINE - 2024
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compensation and legal costs that a failure in the organization’s scheme and policies entails, which is why it is necessary to define Explicitly identify situations that may lead to a conflict of interest, such as financial or personal relationships with suppliers or clients, and provide clear procedures to prevent disclosure, and as a remedial measure,
efficiently manage these conflicts.
Company leadership, specifically Senior Management, must demonstrate a visible commitment to ethics and compliance, this includes allocating the necessary resources for the development and maintenance of compliance programs and leading by example.
anaLySiS oF Law no 31,740
Law No 31,740 arises in a context where corruption and other economic crimes have seriously undermined trust in both public and private institutions in Peru; Over the years, several corruption scandals have affected the country’s image, weakening citizens’ trust in their rulers and the business sector. These challenges have highlighted the need for a more robust and effective regulatory framework to hold legal entities accountable and promote ethical business practices.
Historical and Legal context
Before the promulgation of Law No 31,740, Law No 30,424 already established the administrative responsibility of legal entities for certain crimes, including corruption, money laundering and financing of terrorism; However, the implementation of this law revealed several gaps and deficiencies that limited its effectiveness.
identified problems
• Limited Scope of Application: The law initially did not adequately cover all companies, leaving out many small and medium-sized enterprises (SMEs); Currently, Law No 31,740 extends its application to all companies, regardless of their size, recognizing that SMEs may also be involved in illicit activities.
Although the law applies to all companies, it recognizes the differences in capacity and resources between large companies and SMEs; Therefore, the requirements for the implementation of compliance programs and other measures can be proportionate to the size and complexity of the company.
• Inadequate Definitions: The definitions of liability and the conditions under which a company could be held liable were not clear enough, making their application difficult. The modification provides more precise definitions of the scenarios and conditions that determine the liability of a legal entity, this includes acts committed by employees, managers, and representatives of the company in the exercise of their functions.
The concept of liability for omission is introduced, where a company can be held responsible not only for direct illegal acts, but also for the failure to implement adequate preventive measures.
• Insufficient Sanctions: The sanctions provided were not always proportional to the seriousness of the crimes, which reduced their deterrent effect, which is why currently administrative fines can vary depending on the seriousness of the crime and the economic capacity of the company.
If serious violations are committed, the law allows for the temporary suspension of the company’s activities. This sanction can have a significant impact, encouraging companies to comply with regulations.
On the other hand, for the most serious cases, where a systematic lack of compliance and active participation in illegal activities is demonstrated, the law contemplates the
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