General context, key principles and hot topics
1 Identify the highest-profile corporate investigation under way in your country, describing and commenting on its most noteworthy aspects.
Currently, the Corpesca case is the highest-profile corporate investigation under way in Chile. It concerns Corpesca SA, a Chilean fishing company, and two politicians, former senator Jaime Orpis and former congresswoman Marta Isasi.
The investigation began in the context of a political scandal that arose in 2015 about illegal financing of electoral campaigns by large businesses. The scandal affected politicians from all sides of the spectrum and involved prominent Chilean companies, such as SQM, Penta and Corpesca. The criminal case involves charges for bribery, tax fraud and tax evasion offences.
In 2018, Chilean prosecutors filed criminal charges against Corpesca, former senator Orpis and former congresswoman Isasi. The trial began in March 2020 but was soon adjourned until further notice because of covid-19 crisis. Remarkably, Corpesca is the first Chilean corporation that has been criminally charged, despite having asserted a compliance programme defence during the prosecutor’s investigation. This case is therefore likely to set forth the first judicial standards for a corporation’s compliance defence in Chile.
2 Outline the legal framework for corporate liability in your country.
Law No. 20,393, enacted in November 2009, established for the first time a criminal liability regime in Chile for legal entities. This Law punishes companies if certain criminal offences are committed in their interests or benefit by their owners, managers or chief executives, provided that those crimes are a consequence of companies breaching their supervision duties. In practice, companies can avoid criminal liability if, before the execution of the relevant crime, they have designed and implemented an effective compliance programme to prevent these crimes.
Law No. 20,393 only operates under some express established offences. Initially, this list included only bribery, money laundering and financing of terrorism. However, since its enactment, the Law has been amended to expand a corporation’s criminal liability to other underlying offences, such as certain environmental crimes, some forms of corporate fraud and, most recently, crimes against public health (relating to the covid-19 crisis).
3 Which law enforcement authorities regulate corporations? How is jurisdiction between the authorities allocated? Do the authorities have policies or protocols relating to the prosecution of corporations?
The primary enforcement authorities that regulate corporations in Chile are the Commission for the Financial Market (CMF), the Internal Revenue Service (SII), the National Economic Prosecutor’s Office (FNE) and the Criminal Prosecutor’s Office (MP).
Each office has jurisdiction over its own subject matter, but the MP centralises all criminal enforcement competences. Notwithstanding the above, there are certain crimes (such as tax evasion and cartel offences) that can only be criminally prosecuted if the relevant technical office (e.g., the SII or FNE) first files a formal criminal complaint.
In general, each office has internal guidelines or protocols relating to the prosecution of corporations. For example, the general criteria for the criminal investigation and prosecution of corporations under Law No. 20,393 are established in the National Prosecutor’s General Instruction No. 440/2010.
4 What grounds must the authorities have to initiate an investigation? Is a certain threshold of suspicion necessary to trigger an investigation?
As a general rule, an enforcement authority can open and conduct an investigation either at its own initiative or at the request of a third party. However, Chilean law does not generally establish a threshold of suspicion to trigger an investigation. Although each agency usually has protocols to guide these decisions and allowing their control, they are usually subject to a discretionary decision-making process.
In any case, as explained in question 3, there are certain offences (such as cartel and tax evasion offences) that can only be prosecuted by the MP if the technical authority (e.g., the FNE or SII) has requested it to do so by filing a criminal complaint.
5 How can the lawfulness or scope of a notice or subpoena from an authority be challenged in your country?
As a general rule, private parties must comply with subpoenas to produce documents. However, if the materials requested are protected by legal confidentiality rules (for example, banking transactions records), the party can in practice refuse to comply with the subpoena until a court authorises seizure of the requested materials.
Private parties are also generally forced to comply with subpoenas to give testimony. In criminal investigations, witnesses can only refuse to answer a given question based on the privilege against self-incrimination, incrimination of a close relative, or professional secrecy.
6 Does your country make use of co-operative agreements giving immunity or leniency to individuals who assist or co-operate with authorities?
Leniency or immunity agreements have been introduced in some particular areas during the past decade, especially relating to corporations. Two of the most important are the leniency programmes of the CMF and the FNE. Both grant immunity or lesser charges to whistleblowers who actively co-operate with the authority’s investigations relating to certain breaches against financial markets or antitrust regulations. Likewise, whistleblowers are entitled to a reduction of the criminal penalties they can face for the same facts.
However, the law does not provide for general regulation about leniency agreements in criminal cases. Nevertheless, if a defendant (including corporations) makes significant contributions to the investigations, prosecutors might consider it as a mitigating circumstance and apply to the judge for a reduction in penalties. In certain crimes, the law mainly regulates their implementation by prosecutors and judges (e.g., corruption crimes and some forms of organised crime).
7 What are the top priorities for your country’s law enforcement authorities?
In recent years, the authorities have prioritised enforcement actions against major corporations, for corruption, antitrust and, lately, environmental violations.
8 To what extent do law enforcement authorities in your jurisdiction place importance on a corporation having an effective compliance programme? What guidance exists (in the form of official guidance, speeches or case law) on what makes an effective compliance programme?
Under Law No. 20,393, a corporation cannot be held criminally liable for a relevant offence committed in its interest or benefit if, before the event occurred, the company has designed and implemented an effective compliance programme. According to Article 4º of Law No. 20,393, an effective compliance programme must have at least the following elements: (1) a compliance officer, appointed by the highest administrative authority of the legal entity, with adequate resources, material means and power to carry out the role; (2) a risk-based crime prevention system, that is to say internal protocols, rules, procedures and sanctions, to adequately prevent the commission of relevant offences in the context of the company’s areas of activity; and (3) a mechanism to monitor, assess and update the company’s crime prevention system, and to detect and correct its flaws.
To date, courts have not analysed the extension and material content of an effective compliance programme. Further, the MP has not addressed this matter in General Instruction No. 440/2010, which sets forth the general criteria for the criminal investigation and prosecution of corporations under Law No. 20,393.
9 Does your country regulate cybersecurity? Describe the approach of local law enforcement authorities to cybersecurity-related failings.
Law No. 19,628 on Personal Data Protection governs the management and treatment of personal data and databases. In general, according to this law, the treatment and management of personal data, defined as any information relating to specific or identifiable individuals, must be authorised by law or expressly in writing by the owner of the relevant information (data subject), which authorisation may be revoked (with no retroactive effect) at any time. The data subject must be duly informed as to the purpose for which his or her personal data are collected and about the potential disclosure of such data to the public. All personal data must be used exclusively for the purpose for which it was collected. This law establishes a general duty of care on those responsible for databases (both controllers and processors): these parties shall take care of the data with due diligence and are also responsible for any damage. Moral and compensatory damages would need to be sought before an ordinary civil court.
Law No. 19,628 on Personal Data Protection does not have specific provisions on cybersecurity, such as obligations to report security incidents or specific data security requirements. A Bill currently in Congress at an advanced stage does include the duty to adopt safety measures, and reporting obligations in regard to security breaches (e.g., the duty to report any security breach to the Personal Data Agency by the most expeditious means possible and without undue delay; when a breach affects sensitive data, the data controller must inform the data subjects of the breach in clear and simple language, specifying the data affected, the possible consequences of the security breach and the measures adopted to avoid further damage, among other things). As the Bill has not progressed in the Congress very quickly, and in the absence of regulations, other authorities have started to react to privacy issues, such as the National Consumer Bureau (SERNAC) on consumer protection and the CMF in respect of regulations on cybersecurity issues.
Law No. 19,496 on Consumer Protection, in the context of e-commerce, includes provisions with regard to the security of websites and apps: a website or app must have the technical features to provide security and confidentiality to personal and financial data provided by consumers, considering events such as alteration or unauthorised transfer of that data, unauthorised disclosure, or interception or malicious access by third parties. These security measures relate mainly to the redirection to secure sites under the cryptographic protocol ‘https’ and the verification of the padlock symbol in the web browser, without confusing security images, among other things. Both the website or app and the means of payment offered must have a high standard of computer security and the user should be informed about this.
This Law also considers a voluntary procedure for the protection of collective interests (collective mediation) and subsequent class action lawsuit following security breaches. SERNAC is actively seeking compensation for consumers who have been affected by security breaches, such as disclosure of personal information, interruption of computer services, limiting users to carry out their transactions, in addition to causing other damage, including duplication of charges and differences in balances in checking accounts. The proceeding can only begin if no class actions have been filed that relate to the same facts and, once the proceeding has commenced, no class actions can be filed concerning the same facts until the voluntary proceeding ends. This proceeding can be initiated by SERNAC or a complaint from a consumer association.
This public entity has issued several regulations on cybersecurity for banks and financial institutions. The main provisions seek to raise security standards and to obtain accurate information about security breaches quickly.
The obligations of banks and financial institutions to report cybersecurity incidents to CMF include a 30-minute limit for reporting the first information about any incident; entities must inform any event of relevant operational incidents affecting business continuity, information security or the image of the institution. CMF regulations also set minimum conditions that must be considered for the development and maintenance of information regarding cybersecurity incidents. A digital platform has been established by the CMF for incidents to be reported to the regulator within 30 minutes. Additionally, there is an obligation to appoint an executive level manager to communicate with the CMF at all times (Chapter 20-8 of the Updated Compilation of Rules (Recopilación Actualizada de Normas (RAN)).
The handling of cybersecurity incidents by banks or financial institutions is considered a relevant factor to determine their evaluation and classification as financial institutions of higher or lesser rank. There is an obligation to record and have a complete register of all cybersecurity incidents, with a full description of each incident. There must be a framework for action established by the board of directors of the entity, which must consider the specific management strategy for this risk, the level of tolerance admitted, roles and responsibilities of participants, processes and methodologies to be used for its management in consideration of best practices, the volume and complexity of business activities and existing international standards. The board has the obligation to rule on managing cybersecurity at least once a year (RAN, Chapter 1-13).
Regarding operational risks, regulations further require banks to continuously monitor operational risk, to invest in technology and security that mitigate these risks and that are consistent with the volume and complexity of an entity’s activities and operations. Entities must have an adequate long-term plan in respect of technological infrastructure, and a structure in place dedicated to managing the security of information in general and cybersecurity in particular, business continuity plans and contingency (RAN, Chapter 1-13).
Finally, the CMF regulations contain general guidelines regarding outsourced services, in particular the outsourcing of data processing services and additional safeguards in the case of cloud services. The provisions set the conditions that an entity must meet before taking the decision to outsource a service, including essential requirements regarding the sites of processing, aspects of business continuity and information security, among other things. Regarding this last aspect, the bank must require the supplier to ensure confidentiality, integrity, traceability and availability of the information assets (RAN, Chapter 20-7).
10 Does your country regulate cybercrime? What is the approach of law enforcement authorities in your country to cybercrime?
Law No. 19,223 establishes the primary cybercrime offences in Chile to protect data and computer systems. However, its provisions are long outdated, as this Law has not been amended since its enactment in 1993, causing significant difficulties to Chilean prosecutors to prosecute and obtain convictions for these types of crimes. Therefore, law enforcement authorities have prioritised the prosecution of cybercrime under general offences that are committed using computer systems (e.g., fraud).
On May 2020, Congress passed Law No. 21,234, which established several types of fraud relating to misuse of banking cards and electronic fund transfers made through the internet (e.g., phishing). The Law also allows the implementation of relevant and sensitive investigative techniques, such as interception of communications, controlled delivery and undercover operations, among other things. The Chilean Investigations Police has a specialised department to investigate cybercrime matters.
Cross-border issues and foreign authorities
11 Does local criminal law have general extraterritorial effect? To the extent that extraterritorial effect is limited to specific offences, give details.
As a general rule, Chilean criminal law is governed by the territorial principle. However, Article 6 of the Organic Code of Courts establishes those exceptions for which criminal law will have an extraterritorial effect; for example, when Chilean people or individuals with habitual residence in Chile bribe a foreign official abroad. Also, in the case of cartel offences that affect the Chilean market, and when Chilean officials commit certain corruption crimes abroad (e.g., tax fraud and bribery). Similarly, Law No. 19,913 on Money Laundering lays down another exception under Article 27, which enables punishment in Chile for a money laundering offence, even when the relevant predicate offence was committed abroad.
12 Describe the principal challenges that arise in your country in cross-border investigations, and explain whether and how such challenges depend on the other countries involved.
Some law enforcement agencies have specialised departments to handle international co-operation, such as the International Cooperation and Extraditions Unit (UCIEX) of the MP or the Financial Analysis Unit (UAF). Each unit has signed its own international agreements with foreign authorities to improve cross-border investigations. Hence, difficulties arise when an investigation involves a country with which enforcement agencies have not signed an agreement; in these cases, co-operation will mainly depend on the other country’s interest and willingness.
13 Does double jeopardy, or a similar concept, apply to prevent a corporation from facing criminal exposure in your country after it resolves charges on the same core set of facts in another? Is there anything analogous in your jurisdiction to the ‘anti-piling on’ policy as exists in the United States (the Policy on Coordination of Corporate Resolution Penalties) to prevent multiple authorities seeking to penalise companies for the same conduct?
In general, Chilean law does recognise the criminal judgments made by foreign courts (Article 13, Code of Criminal Procedure). Thus, in principle, corporations might not be criminally prosecuted and punished in Chile on the same set of facts on which they were convicted or acquitted abroad. However, Chilean law will not recognise double jeopardy if it appears that the aim of the first trial was to avoid prosecution under Chilean courts, or that the first trial was conducted in a way that either violates due process guarantees or in any other way reveals a lack of intention to judge the defendant genuinely.
Chilean law does not have a general provision concerning multiple law enforcement authorities seeking to penalise, as with the United States’ anti-piling policy. The Chilean Constitutional Court has given some guidelines on this matter, but its case law is still unclear. Initially, the Court established that the double jeopardy principle applied to the sanctioning powers of administrative agencies (STC 244-1996). However, during the past few years, the Court has expressly refused to apply the double jeopardy principle in cases relating to securities offences investigated in different countries, arguing that the infringement affected different markets, among other reasons. As a consequence, this is a matter that must be considered case by case.
14 Are ‘global’ settlements common in your country? What are the practical considerations?
No, they are not common in Chile.
15 What bearing do the decisions of foreign authorities have on an investigation of the same matter in your country?
The decisions of foreign authorities are typically just another form of evidence for an investigation, without any special effect provided by Chilean law. However, in practice, they can influence how Chilean authorities are likely to evaluate the merits and strengthen of their own cases.
Economic sanctions enforcement
16 Describe your country’s sanctions programme and any recent sanctions imposed by your jurisdiction.
Chilean law has not implemented a sanctions programme, similar to those adopted and enforced by the United States, the United Nations or the European Union.
17 What is your country’s approach to sanctions enforcement? Has there been an increase in sanctions enforcement activity in recent years, for example?
Since Chile does not have a sanctions programme, local authorities do not have an enforcement approach in this matter. However, since Chile is a member of the United Nations (UN), local authorities seek to comply with the economic sanctions imposed by the Security Council Sanctions Committees. For example, the UAF, the local specialist agency on money laundering, monitors UN sanctions to detect money laundering offences in Chile and co-operate with foreign authorities.
18 Do the authorities responsible for sanctions compliance and enforcement in your country co-operate with their counterparts in other countries for the purposes of enforcement?
Although Chile has not implemented a sanctions programme, agreements signed by several local institutions can allow them to co-operate with the foreign authorities in charge of sanctions compliance and enforcement. For example, that could be the case with the UAF, for which one of the primary purposes is to co-operate with foreign financial entities to prevent and detect money laundering and financing of terrorism.
19 Has your country enacted any blocking legislation in relation to the sanctions measures of third countries? Describe how such legislation operates.
Not that we are aware of.
20 To the extent that your country has enacted any sanctions blocking legislation, how is compliance enforced by local authorities in practice?
Before an internal investigation
21 How do allegations of misconduct most often come to light in companies in your country?
They usually come to light through self-reporting in the context of a company’s internal investigation, whistleblowing and media reports. Also, during the past few years, the use of social media has become increasingly important in this respect.
22 Does your country have a data protection regime?
Yes. As mentioned in question 9, Law No. 19,628 governs the management and treatment of personal data and databases by private and public entities.
23 To the extent not dealt with above at question 9, how is the data protection regime enforced?
Chile does not have a specialist data protection agency. Therefore, the enforcement of data protection provision under Law No. 19,628 is mainly addressed by courts in the context of civil suits that seek compensation for possible violations of data protection rights.
24 Are there any data protection issues that cause particular concern in internal investigations in your country?
The most pressing issue is the general lack of regulation, which has caused a certain degree of uncertainty on the limits of an employer’s rights and powers when conducting internal investigations. For example, there is no clarity on the limits of digital discovery through an employer’s information technology systems (e.g., employees’ emails). Although these systems are the employer’s property, it is not clear whether the employer can freely search and use an employee’s communications as part of an internal investigation because they can contain private information about the employee.
25 Does your country regulate or otherwise restrict the interception of employees’ communications? What are its features and how is the regime enforced?
There is no regulation in this respect (see question 24). Nevertheless, case law from the labour courts and the Labour Department has provided some criteria. As a general rule, there is an expectation of privacy in respect of employees’ communications (including emails) under the Chilean Constitution, which protects them through intimacy rights and inviolability of communications guarantees. Thus, any interception of employees’ communications by employers, without prior employee consent, would be banned. Sometimes employers seek to address this limitation in employment contracts, but local courts have questioned the validity of such agreements regarding non-business-related communications.
Dawn raids and search warrants
26 Are search warrants or dawn raids on companies a feature of law enforcement in your country? Describe any legal limitations on authorities executing search warrants or dawn raids, and what redress a company has if those limits are exceeded.
Yes. As a general rule, search warrants and dawn raids must be authorised by a judge. Usually, the law requires the authority that is conducting the investigation (for example, a prosecutor in a criminal investigation) to provide grounds on the possible infraction that is under investigation, and to state the necessity and utility of the warrant for the success of the investigation. Typically, the warrant must be executed by the public officials designated by the judge in the order, within a set time provided by the judge, and after the affected party is properly notified of the warrant. Authorities are required to maintain strict custody of, and record, all seized items.
In criminal investigations, Article 220 of the Code of Criminal Procedure bans authorities from seizing all communications, or documents and notes about them, from the defendant or his or her close relatives or lawyer. In respect of a defendant’s lawyer, the prohibition is extended to offices where the lawyer works (law firm).
If the authorities exceed the limits fixed by the law, companies can ask a judge to consider that the evidence obtained is null and should be excluded from the trial. Companies might also file a constitutional complaint in order to cease any excessive behaviour based on a violation of fundamental rights.
27 How can privileged material be lawfully protected from seizure during a dawn raid or in response to a search warrant in your country?
As a general rule, the law does not establish a special mechanism to protect privileged material during a dawn raid or when the relevant enforcement authority is executing a search warrant that has been authorised by a judge. Thus, in practice, the only way to protect privileged material would be by opposing the seizure of items during a dawn raid or by refusing to fully comply with the search warrant, based on its privilege nature, and later trying to challenge the warrant (or limit its scope) in court.
In criminal investigations, the defendant can request a hearing to discuss how the seizure of those items affects constitutional due process guarantees and, consequently, his or her constitutional right to a defence. At this hearing, the defendant could request the judge to order the return of any privileged material that has been seized by authorities.
28 Under what circumstances may an individual’s testimony be compelled in your country? What consequences flow from such compelled testimony? Are there any privileges that would prevent an individual or company from providing testimony?
As mentioned in question 5, all private parties must respond to a summons and give testimony to authorities in their own proceedings. Otherwise, they can be compelled to do so by courts – typically, the courts will impose a fine or issue a warrant for the arrest of non-compliant parties. Exceptionally, a private party can refuse to answer a particular question if there is a risk of self-incrimination, incriminating close relatives, or breaching his or her professional secrecy duties (e.g., the attorney–client privilege). Also, in criminal investigations, defendants cannot be forced to give testimony; they can use their constitutional right to remain silent.
Whistleblowing and employee rights
29 Describe the whistleblowing framework in your country. What financial incentive schemes exist for whistleblowers? What legal protections are in place for whistleblowers?
Chile does not have a particular regulation regarding whistleblowing proceedings within a company. However, pursuant to Article 4 of Law No. 20,393, an effective compliance programme must include, among other elements, an adequate and effective channel to report improper conduct by the company’s employees and agents.
In practice, financial incentives for whistleblowers are not common in Chile.
Finally, according to Chilean labour case law, employers must take appropriate measures to guarantee that their internal investigation proceedings respect and protect the employee’s constitutional rights to privacy, honour and due process, among other things.
30 What rights does local employment law confer on employees whose conduct is within the scope of an investigation? Is there any distinction between officers and directors of the company for these purposes?
The law does not explicitly grant special rights for employees whose conduct is under the scope of an investigation. However, as stated in question 29, under Chilean labour case law, these proceedings should always respect due process guarantees and employees’ constitutional rights. Otherwise, disciplinary measures taken by a company against implicated employees (e.g., suspension or dismissal) might be refused by a judge. In this regard, employment law does not distinguish between employees, officers and directors.
31 Do employees’ rights under local employment law differ if a person is deemed to have engaged in misconduct? Are there disciplinary or other steps that a company must take when an employee is implicated or suspected of misconduct, such as suspension or in relation to compensation?
As a general rule, during an investigation, an employee who is suspected of misconduct retains the same primary labour rights that are available to all other employees. Thus, for example, the employer may not stop paying his or her salary. However, the employer should take appropriate action to prevent further misconduct by the same employee. For example, in cases of sexual harassment, the employer must take measures to protect the injured party, which could include the possible suspension of the implicated employee while an investigation is under way. The precautionary measures that an employer can take will depend on each particular case. In any event, the measures must be proportional to the investigated misconduct and the fundamental labour rights of the employee (such as due process guarantees).
32 Can an employee be dismissed for refusing to participate in an internal investigation?
Only if the employee has voluntarily accepted in his or her contract (or in another mandatory internal regulation) that he or she will participate, co-operate and testify in internal investigations. In this situation, an employee who refuses to participate in an internal investigation will be in breach of contract, which provides a legal ground for dismissal.
Commencing an internal investigation
33 Is it common practice in your country to prepare a document setting out terms of reference or investigatory scope before commencing an internal investigation? What issues would it cover?
There is no general standard or common practice on these matters. However, during the past few years, it has become increasingly common for internal investigations to be conducted within major corporations. In these situations, the documentation will usually identify the main parties involved in the inquiry (the claimant and the accused), a summary of the facts and the basic procedural terms, such as the duration of the investigation, its phases and the investigator in charge.
34 If an issue comes to light prior to the authorities in your country becoming aware or engaged, what internal steps should a company take? Are there internal steps that a company is legally or ethically required to take?
As a general rule, the law does not force companies to report misconduct to the authorities. However, in some cases, self-reporting could be advisable. For example, to obtain the legal benefits established by a leniency programme (see question 6), the law usually requires the provision of sufficient information to the authorities regarding a possible infraction. Generally, to comply with that requirement, it would be necessary to carry out an internal investigation and to collect the evidence that will be presented to the authorities at a later stage.
Notwithstanding the above, companies are required by law to investigate any allegation of sexual harassment and to provide the results of that investigation to the Labour Department.
Finally, when an issue involves a listed company, reporting up or briefing the board could be a necessary step to comply with basic corporate governance rules. The decision to take this step will depend on the nature of the issue and must be evaluated in each case.
35 What internal steps should a company in your country take if it receives a notice or subpoena from a law enforcement authority seeking the production or preservation of documents or data?
As explained in question 5, companies are generally required to comply with notices or subpoenas that seek to produce documents that are in the companies’ custody. Although the law does not regulate the steps a company should take to comply with this type of request, it is advisable to take reasonable measures to collect and preserve the documents that are in the company’s possession at the time it receives the notice or subpoena. Individuals who deliberately destroy or alter documents requested by authorities can face criminal charges under obstruction of justice provisions (e.g., Article 269 bis of the Criminal Code and Article 7 of Law No. 19,913). The criminalisation of this type of conduct is becoming increasingly common in Chile (e.g., Bill No. 12,398-12 relating to environmental crimes).
Further, some administrative agencies (such as the Commission for the Financial Market and the Internal Revenue Service) can impose sanctions on people who destroy relevant documents and cause difficulties in executing the auditing powers of those entities.
36 At what point must a company in your country publicly disclose the existence of an internal investigation or contact from a law enforcement authority?
As a general rule, it is not mandatory for companies to disclose an internal investigation to law enforcement authorities (see question 34). Nevertheless, it is relevant for companies to evaluate the benefits of self-reporting in the case of leniency programmes, such as those established for investigations conducted by the CMF or the FNE. In that regard, it would be advisable to disclose evidence and to contact the relevant authorities.
37 How are internal investigations viewed by local enforcement bodies in your country?
As long as they do not interfere with local enforcement investigations, internal investigations are welcomed, especially if their results are later shared with the authorities.
As explained in questions 31 and 34, regarding sexual harassment allegations, companies are required by law to conduct internal investigations and share the results with authorities. In other types of cases, sharing internal investigations with authorities can allow a company to obtain a legal benefit (e.g., an attenuating circumstance under Law No. 20,393), or can be a requirement to gain access to a leniency programme.
38 Can the attorney–client privilege be claimed over any aspects of internal investigations in your country? What steps should a company take in your country to protect the privilege or confidentiality of an internal investigation?
The law does not explicitly address this matter. However, under general rules and fundamental due process guarantees, it could be argued that lawyers are permitted to assert the attorney–client privilege over internal investigations they have conducted on behalf of their clients.
To protect the privilege or confidentiality of an internal investigation, it would be advisable to state explicitly the protected nature of the communications and documents that are part of the investigation (for example, by labelling them as confidential, attorney work-product or privileged).
39 Set out the key principles or elements of the attorney–client privilege in your country as it relates to corporations. Who is the holder of the privilege? Are there any differences when the client is an individual?
Chilean law does recognise the attorney–client privilege, but it does not define it or state its key elements or principles. However, the Chilean Bar Association’s Code of Ethics provides the following general principles on this matter, without making any distinction between individual clients or corporate clients:
- the only person who can consent on the disclosure of a client’s secrets is the client;
- prohibition on disclosure: lawyers cannot disclose to third parties a client’s confidential information, or facilitate the documents and other materials in which that information is contained. Lawyers can reveal confidential information without the consent of the client only in exceptional and grave circumstances (for example, to prevent a felony being committed);
- duty of care in respect of all information received or disclosed: lawyers must take reasonable steps to secure the confidentiality of the client’s information;
- duty of care towards those who assist an attorney: lawyers must adopt measures to guarantee that those who collaborate with them will maintain the client’s confidentiality; and
- the client’s confidentiality must be maintained indefinitely, even after legal service.
Finally, the attorney–client privilege is recognised by the Code of Criminal Procedure as an exception to refuse to answer particular questions on criminal proceedings (see question 5). Likewise, Article 231 of the Criminal Code punishes with fines and temporary (or even permanent) debarment lawyers who abuse their position by disclosing their clients’ secrets.
40 Does the attorney–client privilege apply equally to in-house and external counsel in your country?
It could reasonably be argued that the attorney–client privilege applies equally to both in-house and external legal counsel since the law does not make any distinction between them. In this regard, Article 220 of the Code of Criminal Procedure bans the seizure of communications (and documents that contain communications) between a defendant and a lawyer by prosecutors, extending that privilege to the premises where the lawyer works.
41 Does the attorney–client privilege apply equally to advice sought from foreign lawyers in relation to (internal or external) investigations in your country?
There is no regulation or official guideline on this issue yet. Even though the law and the Chilean Bar Association’s Code of Ethics does not make any distinction in this regard, it is unclear whether a court will recognise attorney–client privilege in respect of foreign lawyers who are not legally authorised to practise in Chile.
42 To what extent is waiver of the attorney–client privilege regarded as a co-operative step in your country? Are there any contexts where privilege waiver is mandatory or required?
There are no contexts in which the waiving of attorney–client privilege is mandatory or required as a form of co-operation. Further, enforcement authorities will not automatically deem those who refuse to waive attorney–client privilege as unco-operative.
Co-operation credit is always an issue that is evaluated by authorities in each case. In this regard, authorities can deem that an individual who is voluntarily waiving attorney–client privilege is effectively co-operating with an investigation conducted against that individual. As a general rule, only clients can free their lawyer from their duties of confidentiality.
43 Does the concept of limited waiver of privilege exist as a concept in your jurisdiction? What is its scope?
The concept of limited waiver of privilege does not exist in Chile.
44 If privilege has been waived on a limited basis in another country, can privilege be maintained in your own country?
There are no laws, case law, regulations or guidelines that address this matter as yet.
45 Do common interest privileges exist as concepts in your country? What are the requirements and scope?
The concept of common interest privileges does not exist in Chile.
46 Can privilege be claimed over the assistance given by third parties to lawyers?
According to the Chilean Bar Association’s Code of Ethics, lawyers must take reasonable measures to guarantee that those who collaborate with them will maintain a client’s confidentiality. However, it is not clear that those collaborators can claim any privilege over their work, or that lawyers can claim that their attorney–client privilege is extended to cover the work performed by those collaborators.
47 Does your country permit the interviewing of witnesses as part of an internal investigation?
Chilean law does not regulate this type of procedure. However, it is common practice for employees or other witnesses to be interviewed as part of internal investigations.
48 Can a company claim the attorney–client privilege over internal witness interviews or attorney reports?
This matter is not explicitly addressed by Chilean law. However, it could be argued that a company could claim the attorney–client privilege over attorney reports, as long as the facts that are under investigation entail a risk of criminal liability for the company itself. In that situation, the company could claim that those documents are protected by Article 220 of the Code of Criminal Procedure, which forbids the seizure of notes or reports that are drawn up by attorneys and give an account of the communications between a defendant and an attorney.
49 When conducting a witness interview of an employee in your country, what legal or ethical requirements or guidance must be adhered to? Are there different requirements when interviewing third parties?
There is no specific regulation on this issue. However, companies should consider guidelines provided by labour case law, according to which, when conducting internal investigations, employers must respect their workers’ constitutional rights. They should avoid threats, coercion and retaliation against employees who refuse to testify. Also, they should guarantee that employees testify voluntarily and secure the confidentiality of employees’ testimony.
50 How is an internal interview typically conducted in your country? Are documents put to the witness? May or must employees in your country have their own legal representation at the interview?
Companies usually design their own internal investigation procedures; these can vary depending on the size of the company and the complexity of the matter involved. Typically, a specially designated member of the company (or sometimes a committee) will interview possible witnesses and review relevant documentation.
Interviews are generally conducted under confidentiality conditions. Depending on the complexity of the case, relevant documents might be put to the witness for further clarification.
Legal representation for employees is not mandatory nor a common practice. If an employee wishes have their own attorney with them during an interview, the company should base its decision whether to grant such a request on fundamental due process guarantees.
Reporting to the authorities
51 Are there circumstances under which reporting misconduct to law enforcement authorities is mandatory in your country?
As a general rule, reporting misconduct to law enforcement is voluntary. Exceptionally, the Code of Criminal Procedure mandates public officials and directors of private clinics and educational institutions to report offences of which they become aware while performing their functions (Article 175).
52 In what circumstances might you advise a company to self-report to law enforcement even if it has no legal obligation to do so? In what circumstances would that advice to self-report extend to countries beyond your country?
Self-report would be advisable when a company can access to a leniency program, for in these cases, the company could obtain an exception or reduction of its sanction. This happens with certain violations investigated by the Commission for the Financial Market (infractions to securities or insurance regulations), the National Economic Prosecutor’s Office (cartel offences), and the Superintendency of the Environment (environmental violations). However, each case must be evaluated on a case-by-case basis; the same criteria apply to extend self-reporting to another country.
53 What are the practical steps you need to take to self-report to law enforcement in your country?
Self-reporting has become increasingly common in Chile since the CMF and the FNE created regulations for accessing a leniency programme. Generally, it is important to collect and provide sufficient evidence regarding the infraction. Likewise, companies are usually prevented from disclosing that they have applied to a leniency programme. In practice, companies submit a brief to the authorities, describing the infractions and presenting the evidence they have collected. As a general rule, to obtain the benefits provided by the leniency programme, it is necessary to self-report before authorities open an investigation against the company.
Responding to the authorities
54 In practice, how does a company in your country respond to a notice or subpoena from a law enforcement authority? Is it possible to enter into dialogue with the authorities to address their concerns before or even after charges are brought? How?
Responses to subpoenas are usually made by submitting a letter to the authorities providing the required information.
The option to enter into dialogue with the relevant authority before answering a subpoena depends on a variety of conditions, such as the nature of the proceeding, the position the company holds in the investigation, the nature of the information requested, and the severity or urgency of the subpoena, among other things. For these reasons, this possibility needs to be assessed case by case.
55 Are ongoing authority investigations subject to challenge before the courts?
Usually, they are not. However, in criminal investigations, judges can review specific investigative measures adopted by prosecutors or police, to control whether they meet the standards required by law. In those cases, the judge will oversee particular acts, but it would not be possible to challenge the whole investigation.
56 In the event that authorities in your country and one or more other countries issue separate notices or subpoenas regarding the same facts or allegations, how should the company approach this?
It is not common for companies in Chile to receive subpoenas or notices directly from foreign enforcement authorities. These requests are always processed via local authorities. For this reason, companies should seek to respond to multiple subpoenas consistently. If that is not possible given the conflicting terms of the subpoenas, it would be advisable to try to negotiate a consistent disclosure package, either with local or foreign authorities.
57 If a notice or subpoena from the authorities in your country seeks production of material relating to a particular matter that crosses borders, must the company search for, and produce material, in other countries to satisfy the request? What are the difficulties in that regard?
As a general rule, companies must respond to subpoenas by providing the requested documents that are in their custody. The law does not force companies to seek and collect information that is not in their possession to comply with a subpoena.
58 Does law enforcement in your country routinely share information or investigative materials with law enforcement in other countries? What framework is in place in your country for co-operation with foreign authorities?
Currently, Chilean law enforcement authorities frequently share information with foreign agencies. In fact, in the case of criminal investigations, the MP has a special department (UCIEX), which has signed several co-operation agreements with authorities from other countries relating to criminal prosecution. This unit coordinates all foreign information requests.
Likewise, national agencies such as the CMF, the SII and the UAF also have co-operation units and their own international conventions for this purpose.
59 Do law enforcement authorities in your country have any confidentiality obligations in relation to information received during an investigation or onward disclosure and use of that information by third parties?
As a general rule, authorities must keep their proceedings secret from third parties and allow access only to parties with an interest. Several legal provisions establish secrecy duties for public officials who work in law enforcement agencies, regarding information they access in their official capacity. A breach of those duties usually entails criminal liability for the official involved.
60 How would you advise a company that has received a request from a law enforcement authority in your country seeking documents from another country, where production would violate the laws of that other country?
As explained in question 57, the law does not force companies to seek and collect information that is not in their possession to comply with a subpoena from authorities. For that reason, in such a case, it would be advisable to respond to the subpoena by stating that the company does not have the requested documents in its custody.
61 Does your country have secrecy or blocking statutes? What related issues arise from compliance with a notice or subpoena?
Chile does not have secrecy or blocking statutes as yet.
62 What are the risks in voluntary production versus compelled production of material to authorities in your country? Is this material discoverable by third parties? Is there any confidentiality attached to productions to law enforcement in your country?
Chilean law does not make any difference between voluntary or compelled production of documents. However, compelled production of material will usually entail a risk of a dawn raid by authorities.
As a general rule, documents collected by authorities will be kept secret from private third parties while the investigation is current. However, once it has been completed, the documents could be subject to public information requests. Should that be the case, authorities will disclose them if the affected party does not refuse disclosure on the basis that it would affect their safety, privacy, or commercial or economic rights.
Prosecution and penalties
63 What types of penalties may companies or their directors, officers or employees face for misconduct in your country?
Chilean law usually punishes individual misconduct with imprisonment, fines and bans to perform a profession or activity.
In the case of a company’s criminal liability, Law No. 20,393 establishes the following penalties:
- dissolution of the entity;
- a ban on entering into acts or contracts with the state either permanently or for an established period;
- partial or total loss of fiscal benefits;
- fines; and
- forfeiture of the benefits received as a consequence of the felony committed.
64 Where there is a risk of a corporate’s suspension, debarment or other restrictions on continuing business in your country, what options or restrictions apply to a corporate wanting to settle in another country?
Chilean law follows the principle of territoriality. Thus, there are commonly no options or restrictions that are applicable.
65 What do the authorities in your country take into account when fixing penalties?
Regarding fines, which are the most common sanction for companies, there is a large degree of discretion within the frameworks established by the law. However, regulations frequently include guidelines that authorities should follow. In general terms, those regulations take into account the severity of the violation, the benefits obtained by the offender, the extension of damage caused to third parties, among other things.
Resolution and settlements short of trial
66 Are non-prosecution agreements or deferred prosecution agreements available in your jurisdiction for corporations?
Chilean law regulates an alternative resolution mechanism for criminal cases, known as a conditional suspension of the procedure (CSP), which operates as a deferred prosecution agreement. Pursuant to Article 25 of Law No. 20,393, companies may obtain a suspension of the criminal proceeding for a fixed time (between from six months and three years) if they accept and agree to comply with one or more conditions proposed by the prosecutor and sanctioned by a judge. Those conditions can include paying an amount to the state or the victim, community service, implementing a compliance programme, or any other condition that is suitable to the case. If the company complies with those conditions during the period of suspension, the judge will terminate the criminal proceeding against the company without a conviction. The company can only access this alternative resolution mechanism after the prosecutor has ‘formalised’ the investigation against the company. In any case, the agreement must be approved by a criminal judge at a special hearing.
67 Does your jurisdiction provide for reporting restrictions or anonymity for corporates that have entered into non-prosecution agreements or deferred prosecution agreements until the conclusion of criminal proceedings in relation to connected individuals to ensure fairness in those proceedings?
It is not possible to ensure anonymity since deferred prosecution agreements (known in Chile as CSPs) must be requested by a prosecutor, agreed by the defendant and approved by a judge at a public hearing.
68 Prior to any settlement with a law enforcement authority in your country, what considerations should companies be aware of?
Probably one of the most important aspects that any company should consider is the publicity relating to the agreement. As mentioned in questions 66 and 67, according to criminal law, settlements (i.e., CSPs) are always presented to a judge at a public hearing, whereby the facts under investigation and the conditions of the agreement will be made public. In these cases, although there will be no guilty verdict, the public exposure may still damage the company’s corporate image.
69 To what extent do law enforcement authorities in your country use external corporate compliance monitors as an enforcement tool?
External corporate compliance monitors are not regulated in Chile. However, pursuant to Article 25 of Law No. 20,393, in the context of a CSP (see question 66), it would be possible to request that a company design and implement a compliance programme that includes an external compliance monitor, as a requirement of a deferred prosecution agreement.
70 Are parallel private actions allowed? May private plaintiffs gain access to the authorities’ files?
As a general rule, criminal law allows victims to present criminal complaints and participate in the criminal proceeding with complete access to the prosecutor’s files. Likewise, victims can file civil suits against the defendant to be decided in the context of the criminal trial.
Publicity and reputational issues
71 Outline the law in your country surrounding publicity of criminal cases at the investigatory stage and once a case is before a court.
According to the Code of Criminal Procedure (Article 182), investigations are not disclosed to third parties. However, victims, private complainants, defendants and their defence attorneys always have the right to access the file and obtain copies. Exceptionally, the prosecutor can establish the secrecy of certain proceedings or documents for the defendant and the other parties for a maximum of 40 days.
Once a case is before a court, judicial hearings are always public unless a judge rules to the contrary for specific and duly grounded reasons (Article 289).
72 What steps do you take to manage corporate communications in your country? Is it common for companies to use a public relations firm to manage a corporate crisis in your country?
In most cases, a company’s internal and external communications are handled by a managing director or a communications manager. Since the internet and social media have become an essential part of companies’ public relations, many companies have also appointed social media managers. Nevertheless, in times of crisis, frequently relating to criminal investigations, it is increasingly common for larger businesses to hire an external public relations firm to improve the control of the media and avoid severe reputational damage.
73 How is publicity managed when there are ongoing related proceedings?
There are no common standards in this respect. In practice, corporations usually try to minimise public exposure, even when there are current related proceedings.
Duty to the market
74 Is disclosure to the market in circumstances where a settlement has been agreed but not yet made public mandatory?
Pursuant to Law No. 18,045, only listed companies have to disclose to the market all material information relating to them that might ordinarily be relevant to investment decisions. Therefore, if a settlement is considered to be this type of information by the company’s board, they should inform the CMF.
75 Do you expect to see any key regulatory or legislative changes emerge in the next year or so designed to address corporate misconduct?
We expect to see an expansion of the scope of criminal liability for legal entities, under Law No. 20,393. Since 2018, there have been additions to the list of offences that can explicitly produce criminal liability for companies. We believe this trend will continue in the coming years.
 Alex van Weezel is a partner, and Rodrigo Romero and Julio Cifuentes are lawyers at Claro y Cia.