The opportunity for strategic corporate measures through compliance programmes in Colombia

In its economic report about Colombia, the Organisation for Economic Cooperation and Development (OECD) recognised efforts made by recent governments in the fight against corruption1. However, the perception on corruption being on the rise is still high: about 62% of Colombians believe that corruption levels have increased2.

The legislative measures have been abundant in the last decade. Since Congress enacted the anti-corruption statute in 2011, which amended the Criminal Code, the measures include harsh sanctions against corrupt individuals and an increase in the term of debarment preventing former public officers from interacting with state-owned entities. Colombian governments have followed recommendations to enhance measures to increase effectiveness in the prosecution of legal entities and not merely individuals, for corrupt actions.

In addition, following recommendations from the OECD, in 20213 the Superintendence of Companies introduced new mandatory requirements of business transparency and ethics programmes.

Thus, since 1 January 2022, companies supervised by the Colombian Superintendence of Companies were required to implement transparency and ethics programmes, independently from the sector in which they exercise their activities.

In 2023, the obligation will apply to the following companies in Colombia:

  1. Companies that carried out in 2022 directly or through an intermediary, contractor or an affiliated company, international business or transactions for a certain value4 and meet certain financial thresholds in their 2022 financial statements5;
  2. Companies that meet certain financial thresholds in their 2022 financial statements6 and executed agreements with public entities that individually or collectively amount to a certain value7;
  3. Companies that are engaged in activities in specific sectors (namely infrastructure, healthcare, construction, manufacturing, TMT, automotive and financial services), meet certain lower financial thresholds8 and executed agreements with public entities that in the aggregate added a certain value9.

The implementation of the business transparency and ethics programme is not only a requirement for the companies that meet the criteria described above, but also an element that the Superintendence of Companies must consider when graduating the fines that it imposes on the legal entities for findings of corruption.

The agency has indicated that it will recognise business transparency and ethics programmes as adequate when they contain, at least, the following elements:

  • The principles, procedures and governance related to the business transparency and ethics programme;
  • Measures to identify, evaluate and manage corruption risks, so that the programme should no longer only aim to prevent corrupt conducts but also include mechanisms to mitigate risks related to contracting with public entities and those managing public resources;
  • An exhaustive assessment of corruption and transnational bribery risks, which should be reflected in a risk matrix reflecting the nuances of the entity’s activity;
  • Definition of the role and responsibilities of all the entity’s directors and the compliance officer;
  • Appointment of a compliance officer (who must be domiciled in Colombia and have proven expertise on the matter and resources to exercise their functions);
  • Existence of due diligence mechanisms to map the risks of related third parties and undertake mitigation actions;
  • Existence of mechanisms for control and supervision of compliance policies;
  • Adequate disclosure of compliance policies and business transparency and ethics programme;
  • Channels to denounce wrongdoings;
  • Existence of adequate communication channels.

During 2022, many companies devoted important efforts to implement business transparency and ethics programmes. In most cases, these activities were oriented to satisfy the legal requirements imposed by the mandatory provisions. Clearly this is an important step to increase the engagement of the private sector in combatting corruption.

However, the Colombian government should now aim to create incentives that allow companies to understand the strategic benefits of developing a culture of compliance and not merely complying with the formal requirements. These opportunities require the commitment of the shareholders and directors of the company – through the well-recognised tone at the top.

The creation of a risk matrix and the analysis involved in designing mechanisms that control or reduce the opportunities of stakeholders within the company to engage in corrupt activities, create the prospect for measuring performance in the most relevant areas of the organisation. It also allows the directors to quickly identify gaps, drains and inadequate procedures. A compliance programme applied with a strategic vision creates opportunities to enhance the value of the company and to increase the worth of the shareholders’ investment.

To achieve these goals, companies can and should rely on technical and technological tools that allow them to communicate the principles, procedures, goals and contacts efficiently. These also allow them to monitor, detect and correct the possible situations in a timely and efficient manner.

The implementation of a compliance programme does not need to be a burden. Adequately designed, implemented and executed, it can become a strategic tool that allows the shareholders to understand and grow the organisation in a structured way.

Notes

  1. See OECD Economic Surveys, Colombia 2022: OECD Economic Surveys: Colombia 2022.
  2. https://www.latinobarometro.org/latContents.jsp
  3. Superintendence of Companies, Circular 100-000011 of 9 August 2021, applicable from 1 January 2022.
  4. Transactions equal to or exceeding 100 times the value of the minimum monthly legal salary: ie, COP$100m or approximately USD$20,700 in 2022.
  5. Total assets or revenues equal to or greater than 30,000 times the value of the minimum monthly legal salary: ie, COP$30bn or approximately USD$6.2m in 2022
  6. See note 4.
  7. Contracts that are individually valued at or in the aggregate are equal to or exceeding 500 times the value of the minimum monthly legal salary: ie, COP$500m or approximately USD$103,900
    in 2022.
  8. Total assets equal to or greater than 5,000 times the value of the minimum monthly legal salary: ie, equivalent in 2022: COP$5bn or approximately USD$1.03m, and turnover of or greater than 3,000 times the value of the minimum monthly legal salary: equivalent in 2022: COP$3bn or approximately USD$623,000.
  9. See note 7.