Compliance: New Guidelines issued by the Anti-corruption Office directed to SMEs.
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Compliance Department Report | New Guidelines issued by the Anti-corruption Office directed to PyMEs (small and medium-sized enterprises)
Dear Sir or Madam,
Argentina’s Anti-Corruption Office (“AO”) issued the Complementary Guidelines for the Implementation of Compliance Programs in PyMEs (“SME Guidelines”). It did so through Resolution 36/2019, published on November 12th, 2019, in the Official Gazette. The SME Guidelines are specifically directed to small and medium-sized enterprises (“SME”). They contain practical tools for the implementation of “adequate” Programs in accordance with provisions of articles 22 and 23 of Law 27,401 on Corporate Criminal Liability. The following are some relevant aspects.
A specific and complementary document
Decree 277/2018, published on April 6th, 2018, entrusted the AO to establish guidelines to help legal entities to implement “adequate” Programs. According to Law 27,401, the adequacy of a Program depends on each entity’s risks, size, and economic capacity. Thus, in October 2018, the AO issued general Guidelines.
The SME Guidelines are specifically directed to SME and, as stated by them, they are a complement to those Guidelines, which SME could also follow.
Six steps for an adequate Compliance Program
In line with the Guidelines, but adapted to simpler structures, the SME Guidelines describe six successive steps to design, implement and assess a Program: (i) top management commitment, (ii) assessment of the company’s inherent risks, (iii) action plan to mitigate risks and creation of an internal document with the Program’s elements, (iv) implementation, (v) periodic assessment of the Program’s impact, plus necessary improvements, (vi) communication to employees and business partners on the company’s integrity policies and procedures, on regular basis.
The relevance of risk assessment
The SME Guidelines explain that risk assessment prior to designing a program is a key factor. Therefore, it suggests a six-step method: (i) define the scope of analysis, (ii) identify risks, (iii) assess inherent risks, (iv) identify controls in force, (v) assess residual risk, (vi) decide the action plan. Contrary to the Guidelines, these steps are less sophisticated.
Economically affordable actions
The SME Guidelines address most of the mandatory and non-mandatory elements that Law 27,401 provides for adequate Programs. They also state that being smaller in size or having the smaller economic capacity “does not justify not having ethical conduct”. In consequence, the document suggests economically “affordable mechanisms”, thought for self-assessment. They also include examples and other recommendations, such as taking collective actions.
Even so, the SME Guidelines do not address (a) internal investigations nor (b) M&A due diligence. These two are convenient elements for big companies, according to the Guidelines.
A glossary and formats to make its implementation easier
The SME Guidelines include a basic glossary and a summary of local and international relevant legislation on anti-corruption and public ethic. They also provide formats that SME could use as internal documents, among others.
Conclusion
With the SME Guidelines, the AO suggests the importance of Compliance Programs also in smaller companies. The practical tools that they provide, adapted to their characteristics, help SME implementing them. In addition, they assist big companies when deciding whether SME in their value chain have adequate Programs. In this way, the AO takes into account the relevance of such companies in the local economy and keeps Argentina in line with international standards in the fight against corruption.
Please, do not hesitate to contact us should you require any additional information on this matter.
Sincerely,
Maximiliano D’Auro