Venezuela: overview

The use of intermediaries to obtain licences, authorisations or permits from the goverment and the Venezuelan Law against Corruption

Regrettably, it has become very common for multinational and Venezuelan corporations to hire ‘service providers' who have or pretend to have influence on public officials to obtain authorisations, licences or permits to which the corporations are entitled from the Venezuelan government. In such cases, the corporations may sign ‘service agreements' to support payments whose only justification is the influence that the ‘service providers' can exert on public officials.

Crimes perpetrated

If the funds paid to the ‘service providers' were totally or partly used to bribe public officials, we are facing a crime called improper corruption, whose punishment for the ‘service providers' and the public official receiving the funds may be from one to four years' imprisonment and a fine of up to 50 per cent of the bribe.¹ In that case, directors or employees of the corporations who hired and paid the ‘service providers' may be punished with the same sanctions as necessary accomplices.²

If the funds paid to the ‘service providers' were not used to bribe public officials, but just paid by those directors or employees to the ‘service providers' to exert undue influence on public officials, such directors or employees may be punished with imprisonment from six months to up to two years. In this case, if the directors and employees report the facts with the Venezuelan Public Prosecutor's Office or the Venezuelan Judicial Police before the criminal investigation begins, they may be released from this specific criminal charge. However, this release for the directors and employees would not be automatic since a criminal investigation must be opened by the Venezuelan Public Prosecutor's Office to determine which crimes were really committed. If there are elements to believe that the funds were totally or partly used to bribe public officials, the Public Prosecutor's Office would probably file criminal charges for improper corruption.³

In order to determine which crime was really committed by the directors and employees of the corporation, the analysis of malice is the key element. If there was a bribe and those directors and employees knew that the funds were going to be totally or partly used to make illegal payments to public officials, they should be charged for improper corruption.

If the directors and employees of the corporations were not aware that the funds were going to be totally or partly used to bribe public officials, even if the bribe took place, they should be charged only for making payments to persons to exert undue influence on public officials.

Additionally, even if the funds were not used to bribe public officials, the ‘service providers' should be also charge for pretending to have undue influence on public officials, which is punished with imprisonment for between two and seven years.⁵

Confiscation of cash holdings of the corporations paid to the funds paid to the ‘service providers' or the assets bought with those funds can also be applied as a result of final conviction judgment for improper corruption.⁶

‘Social acceptance' as a justification for improper corruption

There is no specific legal rule on this matter in Venezuela. Modern Venezuelan scholars under the influence of German and Spanish scholars have argued about this exception based on the theory of objective imputation. However, this argument is not well understood by the Venezuelan Public Prosecutor Office's and the Venezuelan criminal courts.

In this regard, we believe that even in the difficult Venezuelan business environment, it would be very complicated to argue that bribing public officials or paying to exert undue influence on public officials is ‘socially acceptable' before a prosecutor or a criminal court.

Additional charges for organised crime

Since the crimes described may have been perpetrated by three or more persons temporarily associated for that purpose, including the directors and employees of the corporations, it is possible that there would be charges for criminal association, which can be punished with imprisonment from six to 10 years.⁷

If the corporation obtains public funds as a consequence of the authorisations, licences or permits granted by the Venezuelan government, we cannot discard criminal charges of money laundering for the directors and employees of the corporations since they may have received and managed funds that are the result of illegal activities in Venezuela knowing the source of those funds, which may lead to sanctions of imprisonment from 10 to 15 years and a fine equivalent to the increase of wealth of the beneficiaries.⁸

If there are charges for organised crime, the corporations may be criminally liable for criminal association and/or money laundering and face the following sanctions:

• definitive closure;
• prohibition from carrying out commercial, industrial, technical or scientific activities;
• confiscation of assets;
• publication of the ruling in a high circulation newspaper;
• fines; and
• withdrawal of governmental concessions, permits and administrative authorisations.⁹

Nevertheless, we should point out that the classification of infractions as organised crime is at the discretion of the Public Prosecutor's Office.

Plea bargain, non-prosecution agreements and conditional suspension of the criminal proceeding (deferred prosecution agreements)

Once the Public Prosecutor files corruption charges with the criminal judge and until the moment prior to the beginning of the examination of the evidence during the trial, an individual person accused may plead guilty. In that case, the criminal judge may change the criminal charges and reduce the penalty established in the law up to one-third.¹⁰

Non-prosecution agreements for individual and corporations do not exist in Venezuela. Under certain circumstances the Venezuelan Public Prosecutor's Office can request authorisation from a Venezuelan criminal judge for not filing charges even if there is evidence that a crime was perpetrated (discretionary principle). However, this principle does not apply to corruption and organised crime.¹¹

Furthermore, the conditional suspension of the criminal procedural (deferred prosecution agreements) does not apply to corruption and organised crime either.¹²

Authority in charge of filing criminal claims and statute of limitations

The Venezuelan Public Prosecutor's Office can initiate a criminal investigation in this case ex officio without any previous report from another person or authority.¹³ Then, the Venezuelan Public Prosecutor's Office may request preliminary measures from a criminal judge, which may include the preliminary arrest of the persons subject to the investigation. At the end of the investigation, before the criminal judge, the Venezuelan Public Prosecutor's Office can file criminal charges or request the definitive closure of the investigation and release the persons investigated from any liability as well as temporarily close the investigations until new evidence is found.

Corruption crimes and organised crime offences are not subject to any statute of limitations.¹⁴

No obligation to report

Neither the corporation hiring the ‘service providers' nor its directors or employees have a duty to report these crimes under Venezuelan law.¹⁵

However, although there is no duty to report those crimes, the corporation, its directors and employees should take care that they do not obtain profits or gains from such crimes, as this may entail the commission of crimes such as money laundering¹⁶ or benefiting from assets obtained through crime.¹⁷

Those who destroy, alter or conceal evidence or information related to these crimes would be criminally liable for (i) obstruction of justice and punished with imprisonment of up to 12 years if it is for the benefit of an organised crime group¹⁸ or (ii) concealment if such actions are not related to organised crime, in which case the applicable penalty is up to five years' imprisonment.¹⁹

Whistle-blowers, witnesses and experts

If a person participating in the perpetration of an infraction related to organised crime or violent crime cooperates with the Public Prosecutor's Office providing information that prevents the continuation of the crime, the perpetration of new crimes or facilitates the prosecution of the perpetrators, the Public Prosecutor's Office can request the authorisation of a criminal judge to put that person into an special programme. However, this special programme only applies if the penalty applicable to that person is equal or lower to that applicable to the persons whose prosecution he or she is facilitating. If the cooperation provided by that person is useful, the applicable penalty will be reduced by half and the Venezuelan authorities must protect his or her physical integrity.²⁰

Under Venezuelan law, victims, witnesses and experts who are at risk owing to their participation in a criminal investigation must be given protection by the Venezuelan authorities, which may include their participation in a ‘special protection programme'.²¹

Criminal liability of partners and managers under the fair prices decree with rank, value and strength of organic law

In Venezuela, there is a control system of production and prices which is particularly strange for multinational and national corporations since it constitutes a serious obstacle to developing their business within the parameters of their parent companies as well as within common business practices in other jurisdictions.

Recently, the President of Venezuela approved the Fair Prices Decree with rank, value, and strength of Organic Law (the Fair Prices Law), which created the following crimes related to commercial activities in Venezuela:

• sale of expired food or products;
• import of unhealthy products;
• fraudulent alteration;
• hoarding;
• boycotting;
• destabilisation of the economy;
• resale of products of first necessity;
• conditioned sales;
• extraction smuggling;
• usury;
• alteration of goods and services;
• speculation;
• fraudulent alteration of prices; and
• corruption between private parties.

Those crimes may be punished with imprisonment of between six months and 14 years.

Most of those crimes were contained in previous legal rules related to consumer protection matters. However, the Fair Prices Law establishes new rules regarding the criminal liability of the partners and other instances of direction, management, execution and oversight of corporations (high-level positions), which have caused great concern in the commercial community since they may imply criminal risks for persons who have not been directly involved in the perpetration of any crime contained in the Fair Prices Law.

In addition, administrative investigations based on the Fair Prices Law are the most common tool used by the Venezuelan government to control private commercial activities and have also been used as an instrument to boost the support of the Venezuelan government in electoral campaigns. In several cases, such administrative investigations have led the Public Prosecutor's Office to open criminal investigations against high-level positions of commercial corporations.

Such new rules on the criminal liability of high-level positions are inspired in the legislation of some European countries with civil law systems. However, those rules were poorly drafted, which could be a source of uncertainty and arbitrariness.

We will make our best effort to interpret those new rules on the criminal liability of high-level positions contained in article 66 of the Fair Prices Law²¹ based on the categories developed by German and Spanish scholars on criminal law.

Criminal liability for approving decisions issued by persons in high-level positions that imply the commission of crimes established in the Fair Prices Law

Persons in high-level positions will be criminally liable if they: (i) approve the commission of a crime and they execute it themselves, or (ii) if they approve the commission of a crime and the execution is left to other persons that are not in high-level positions.

However, criminal liability is personal. Therefore, if, for example, a board of directors approves the commission of a crime, but one of the directors did not participate in that meeting, said director cannot be held criminally liable for that decision. Nevertheless, the absent director may be held criminally liable for having been aware of the commission of a crime.

Criminal liability of persons in high-level positions for being aware of the commission of crimes established in the Fair Prices Law

Awareness prior or during the commission of the crime

Persons in high-level positions have ‘special supervision duties' that imply an obligation to act with the greatest possible diligence in order to undertake all possible actions within their faculties to avoid the commission of crimes established in the Fair Prices Law. Thus in this case the criminal liability originates in their having omitting the actions necessary to thwart the commission of crimes.

It should be noted that, in some cases, the necessary action to thwart the commission of a crime may be to report the crime before the corresponding authorities, particularly if the persons in senior positions are not capable of stopping the crime.

Awareness after the commission of the crime

Based on the ‘special supervision duties' of the persons in high-level positions, if they become aware of the commission of a crime after it has been carried out, they have the duty to undertake all necessary actions required to revert the negative consequences of the crime committed.

If it were not possible to completely revert all the damages caused by the crime, we consider that the persons in high-level positions have the obligation to report the crime to the corresponding authorities and to provide all the cooperation necessary for the prosecution and conviction of the perpetrators.

In addition, in these cases the persons in high-level positions must take all necessary measures to ensure that such crimes are not committed again. They must also make sure that the corporation does not obtain profits or gains from such crime, as this may entail the commission of crimes not established in the Fair Prices Law, such as money laundering²² or benefiting from assets obtained through crime.²³

Organised crime

Because most of the high-level positions are collegiate, there is a possibility that when charges for the commission of crimes established in the Fair Prices Law are pressed against members of such collegiate high-level positions, charges of association to commit crimes may also be pressed, based on articles 37 and 4(9) of the Law Against Organised Crime and Financing of Terrorism.

If persons who are in high-level positions are not only charged for crimes established in the Fair Prices Law, but also for those established in the Law Against Organised Crime and Financing of Terrorism, the following sanctions against the corporation could be also applied:

• definitive closure;
• prohibition from carrying out commercial, industrial, technical or scientific activities;
• confiscation of assets;
• publication of the ruling in a high-circulation newspaper;
• fines;
• withdrawal of governmental concessions, permits and administrative authorisations.²⁴

However, we should reiterate that the classification of infractions as organised crime is at the discretion of the Public Prosecutor's Office.

Plea bargains, non-prosecution agreements and conditional suspension of the criminal proceeding (deferred prosecution agreements)

Regarding the crimes contained in the Fair Prices Law, once the Public Prosecutor files charges with the criminal judge and until the moment prior to the examination of the evidence at the trial, an individual person accused can plead guilty. In that case, the criminal judge can change the criminal charges and reduce the penalty established in the law from one-third to a half. If there are additional charges for organised crime, the reduction must not exceed one-third of the applicable penalty.²⁵

Non-prosecution agreements for individual and corporations do not exist in Venezuela. Under certain circumstances the Venezuelan Public Prosecutor's Office can request authorisation from a Venezuelan criminal judge for not filing charges even if there is evidence that a crime was perpetrated (discretionary principle). This principle may apply to the prosecution of the crimes contained in the Fair Prices Law if (i) the maximum penalty for the crime does not exceed eight years' imprisonment and (ii) there are not multiple victims among other circumstances to be analysed by the Public Prosecutor's Office.²⁶

The conditional suspension of the criminal procedural (deferred prosecution agreements) may apply to the prosecution of the crimes contained in the Fair Prices law if (i) the maximum penalty for the crime does not exceed eight years' imprisonment and (ii) there are not multiple victims.²⁷

Neither the discretionary principle nor the conditional suspension of the criminal procedure would apply if there are additional charges for organised crime.

Whistle-blowers, witnesses and experts

As explained in the section related to corruption matters, regarding the crimes contained in the Fair Prices Law, the whistle-blowers' special programme would apply only if there are additional charges of organised crime or violence crimes. However, regarding the crimes contained in the Fair Prices Law, witnesses and experts may qualify for the ‘special protection programme' in that section.

Notes

1. Article 61 of the Venezuelan Law against Corruption. ‘Improper corruption' implies using bribery to obtain something to which somebody is entitled.
2. Article 84 of the Venezuelan Criminal Code.
3. Article 79 of the Venezuelan Law against Corruption.
4. Article 79 of the Venezuelan Law against Corruption.
5. Article 95 of the Venezuelan Law against Corruption.
6. Articles 4(9) and 37 of the Venezuelan Organic Law against Organised Crime and Terrorism Financing.
7. Articles 3 and 35 of the Venezuelan Organic Law against Organised Crime and Terrorism Financing.
8. Article 32 of the Organic Law Against Organised Crime and the Financing of Terrorism.
9. Article 375 of the Venezuelan Criminal Procedural Code.
10. Article 38 of the Venezuelan Criminal Procedural Code.
11. Article 43 of the Venezuelan Criminal Procedural Code.
12. Article 265 of the Venezuelan Criminal Procedural Code.
13. Article 271 of the Venezuelan Constitution; article 30 of the Venezuelan Organic Law against Organised Crime and Terrorism Financing.
14. Article 269 of the Venezuelan Criminal Procedural Code.
15. Article 35 of the Organic Law Against Organised Crime and the Financing of Terrorism, which establishes imprisonment of 10 to 15 years.
16. Article 470 of the Criminal Code¸ which establishes imprisonment of three to eight years.
17. Article 45 of the Venezuelan Organic Law against Organised Crime and Terrorism Financing.
18. Article 254 of the Venezuelan Criminal Code.
19. Article 40 of the Venezuelan Criminal Procedural Code.
20. Venezuelan Law on Protection of Victims, Witnesses and other persons participating in criminal investigations
21. ‘The partners, as well as the members of the bodies in charge of direction, management, execution, and oversight of legal entities will be personally responsible when it is proven that the crimes established in this chapter were carried out with their knowledge or approval'.
22. Article 35 of the Organic Law Against Organised Crime and the Financing of Terrorism, which establishes imprisonment of 10 to 15 years.
23. Article 470 of the Criminal Code¸ which establishes imprisonment of three to eight years.
24. Article 32 of the Organic Law Against Organised Crime and the Financing of Terrorism.
25. Article 375 of the Venezuelan Criminal Procedural Code.
26. Article 38 of the Venezuelan Criminal Procedural Code.
27. Article 43 of the Venezuelan Criminal Procedural Code.