What are the consequences for a company if a crime is committed within it?
ComplianceKeys#5
Having analyzed in other Compliance Keys the legal entities that can be criminally liable in Spain (ComplianceKeys#2), the crimes that can generate criminal liability for legal entities in Spain (ComplianceKeys#3) and, finally, the requirements for the attribution of such liability to legal entities (ComplianceKeys#4); we will now study the specific consequences that can be generated for legal entities by the commission of criminal conduct within them.
First, obviously, the conviction of a legal person for the commission of a crime is associated with the imposition of penalties. These penalties necessarily differ from those attributable to their flesh-and-blood counterparts, the natural persons.
Thus, Article 33.7 of the Criminal Code lists the possible penalties to be imposed on legal entities:
- Daily fine of between thirty (30) and five thousand (5,000) euros for a period of up to five (5) years or proportional, i.e., between twice and more than six times the profit obtained or the damage caused.
- Dissolution of the legal entity (definitive penalty).
- Suspension of its activities for up to five (5) years.
- Closure of its premises and establishments for up to five (5) years.
- Prohibition to carry out in the future certain activities definitively or up to fifteen (15) years.
- Disqualification to obtain public subsidies and aid, to contract with the public sector and to enjoy tax or Social Security benefits and incentives for up to fifteen (15) years.
- Judicial intervention for up to five (5) years.
However, the commission of criminal conducts is also associated with other negative consequences for the legal entity different from the penalties established in Article 33.7 of the Criminal Code:
- The prohibition to contract with the public sector: in accordance with Article 71.1 of the Public Sector Contracts Law, in the event that the offenses committed are any of the following:
- Crimes of terrorism, constitution or integration of a criminal organization or group, illicit association;
- Illegal financing of political parties;
- Trafficking in human beings;
- Corruption in business;
- Influence peddling;
- Corruption;
- Fraud;
- Offenses against the Public Treasury and Social Security;
- Offenses against workers’ rights;
- Embezzlement;
- Money laundering;
- Crimes related to land and urban planning, protection of historical heritage and the environment.
- Imposition of accessory consequences: According to certain jurisprudential sectors, the imposition of accessory consequences to the penalty of Article 129 of the Criminal Code, as will be explained in the following Compliance Keys.
- Civil liability derived from offenses and other associated costs: the commission of criminal conduct, in addition to the specific penalties of fines that may be imposed, may give rise to other economic costs such as civil liability derived from the crime (i.e. the compulsory reparation of the damages generated by the criminal conduct), expenses associated with litigation, etc.
- Reputational and business impact: the commission of criminal conduct also has negative consequences with respect to the development of the corporate purpose or activity of the legal entity within which it was committed.
These impacts are not trivial, and may involve damages with an economic cost whose scope is indeterminable and uncontrollable, long-term economic burdens and, ultimately, result in the legal entity being unable or less able to produce or market its core business (elimination of demand or elimination of the ability to provide products and services).
To sum up, it has been observed in this Compliance Key the seriousness of the consequences associated with the commission of criminal conduct and the need to prevent and mitigate them, being the Compliance Systems the tools to do so.
Compliance Department of Molins Defensa Penal.