13.08.2019

 

The Draft Law on Approving “The RA Anti-Corruption Strategy and its Implementation Action Plan for 2019-2022” provides for the introduction of the institute of criminal prosecution of legal entities for corruption offenses. 

According to Mariam Zadoyan, Project Manager of the ALA’s Component of “Armenia: Promoting Anti-Corruption Conduct and Reforms” project, the issue of determining the type of liability for legal entities should be envisaged as the expected outcome of the action. She noted that Article 26 (2) of the UN Convention against Corruption states: "Subject to the legal principles of the State Party, the liability of legal persons may be criminal, civil or administrative."

“As we can see, the Convention does not only require criminal liability. This institute is enshrined in the laws of a number of countries: Austria, England, Belgium, Denmark, Hungary, Israel, Ireland, Iceland, Canada, China, USA, France, Switzerland and elsewhere. However, different countries have different views on the liability of legal entities. In particular, the basis of corporate liability varies from country to country, and in some countries criminal liability is envisaged, such as the US, UK, the Netherlands, and in some countries, the administrative law - Germany, Italy ... It should be noted that theoretical literature notes: Those countries that have separate administrative courts and administrative proceedings, such as in Germany, it is preferable to provide administrative responsibility rather than criminal, since administrative proceedings are already designed to leverage legal entities,” Mariam Zadoyan said.

According to the expert, the name of the event should be envisaged as “Introduction of the institute of bringing Legal Entities to Liability for Corruption Offenses”, and the expected outcome of the action should be “Drafting Relevant Laws” rather than the "Amendments and Additions to the Criminal Code" and/or "Amendments to the Criminal Procedure Code", because there may be other types of liability than criminal ones, which will be regulated by other laws.

In addition, the expected outcome of the action should be the "Decision on the choice of sanctions for legal entities". Article 26 (4)) of the UN Convention against Corruption provides: “Each State Party shall, in particular, ensure that legal persons held liable in accordance with this article are subject to effective, proportionate and dissuasive criminal or non-criminal sanctions, including monetary sanctions.” Article 131 of the  New Draft Criminal Code, provided for the following types of punishment of legal entities: "fine, temporary termination of the right to engage in certain types of activity, compulsory liquidation and prohibition of activities in the territory of the Republic of Armenia", she added.

The list of remedies provided by the draft, unlike international experience, was very exhaustive. The Recommendation of 1988 of the Council of Europe Committee of Ministers provides for a number of penalties, with a focus primarily on preventive fines and not on the economic destruction of a company. In addition, the principle of proportionality of punishment must be maintained. Exploring the international experience shows that there are alternative sanctions, such as administrative oversight (Albania), judicial supervision (up to 5 years in France), etc. If a legal entity is subject to legal liability for corruption offenses, it shall also be punishable by deprivation of participation in the public procurement process.

“It is necessary to foresee the “provision of exemption /mitigation of the legal entity from criminal liability” as an expected output of the measure. In this connection, it is necessary to undertake measures to foresee link between the measures aimed to introduce anti-corruption compliance programs (and this measure.” Mariam Zadoyan said.

She also noted that the study of international practice indicates that the existence of an anti-corruption compliance program in many countries is taken into account when determining the liability of the legal entity. “Different countries have proposed different approaches to exempting or mitigating the liability of legal entities. For example, in some countries the law provides for full exemption from liability where there is an anti-corruption compliance program, and the responsible staffs have done their utmost to prevent corruption, for example, in the Netherlands, Spain, Switzerland, and Australia. In some countries the existence of an anti-corruption compliance program may be taken into account when establishing the liability of a legal entity, such as in Latvia, Montenegro, Serbia and Ukraine. In some countries the existence of an anti-corruption compliance program may be taken into account when determining the liability of a legal person, but the burden of proof lies with the legal entity that there are no deficiencies in their anti-corruption compliance program, for example, in Japan and Korea.” Mariam Zadoyan said.

It should be added that Article 129 of the Draft Criminal Code provided for the exclusion of criminal liability of a legal person, “if the legal person has taken all necessary and sufficient measures to prevent the commission of the crime, but the real possibility of preventing the crime has been missing”. That is, the Republic of Armenia intended to adopt the principle of exclusion of responsibility.