Compliance sea change in Spain

Compliance sea change in Spain

Turning negatives to positives has always been close to our heart at Impact on Integrity España. It now looks like the rest of Spain is with us. Let me explain.

Transparency International commented in their latest Global Graft Report that “corruption is everywhere in Spain”. Oh dear. On their latest Corruption Perception Index, taking in all players from lowly Somalia to mighty Denmark, Spain sits now in 37th spot – certainly a ‘could do better’ on this year’s report card. The Q4 political scandal season didn’t even make the print deadline for the 2014 GGR. For example, the Health Minister was sacked in November after being named as a “profit-seeking participant” in connection with the Gürtel corruption case. This was a case implicating various politicians in accusations of bribery, money laundering and tax evasion. The allegations related to party funding and the awarding of public works contracts by various regional governments including Madrid itself. Estimated cost to the public finances? At least €120 million at the last count. According to El País, the government delayed corruption reform on 27 separate occasions, and on 41 occasions it delayed reform to the penal code. All this led TI to label the situation here in Spain “overwhelming”.

As this is election year, it is worth noting that TI’s 2013 Global Corruption Barometer reported that 83% of Spaniards felt their political parties were “corrupt or extremely corrupt”. Not much had improved for the voting public a year later then. This is supported by the Sociological Research Centre’s most recent Q1 2015 data for Spain. This shows corruption and fraud stubbornly holding onto second place in the public poll of the top three problems besetting the country, with nearly 50% of those polled flagging this issue, topped only by unemployment at 80%.

So what good news do we now have to report internationally?

Well, four years after Her Majesty’s Government implemented the UK Bribery Act, in July 2015 Spain’s long awaited penal code reform takes effect. Hurrah, I hear you say! The reform finally voted through Congress last week, on March 26th, firmly raises the compliance bar for all Spanish companies.

As we commented in our earlier LinkedIn Post ‘Compliance: Spain looks ahead’, all Spanish companies must now have Compliance Programmes and Compliance Officers. The reformed penal code absolves companies from liability for misconduct provided the directors have implemented a corporate programme and ensured that it has been supervised appropriately. Training becomes essential, as does proper record-keeping, which of course is already seen as vital in other jurisdictions. Risk assessments, standards and controls, whistleblowing systems, disciplinary sanctions (consequential management) and continuous improvement through regular reviews: all this is now required aquí en España! Start your engines…effective date is July 1st!

The new requirements here in Spain are closely aligned with ‘Adequate Procedures’ under the UKBA and ‘Effective Ethics & Compliance Programs’ under the US Federal Sentencing Guidelines. International best practices are therefore now firmly in sight. If the new government puts enforcement dollars behind the new law, Spain’s public coffers could even look distinctly healthier by the time the next election comes around.

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