CRIMINAL SANCTIONS APPLICABLE TO COMPANIES IN BOLIVIA
Bolivian law defines several categories of sanctions applicable to legal entities involved in corruption or related crimes. These are grouped into four main types:
1. LOSS OF LEGAL STATUS
This is the most severe penalty. It applies when a company was created for illicit purposes or its structure is systematically used to commit crimes.
- Consequence: The company ceases to exist legally.
- Process: A judge appoints a liquidator to shut down the company, settle debts, and fulfill outstanding legal obligations.
This measure ensures that entities posing a threat to legality and public interest do not remain operational.
2. FINANCIAL PENALTIES
These sanctions are designed to impact the company’s capital and future earnings:
Punitive Fines
- Calculated on gross profits from the year preceding the offense (between 1% and 1.5%).
- If the company incurred losses, the fine is 3% of its declared net equity.
- Payments can be made in installments over a maximum period of 12 months.
Loss of State Benefits
- Suspension of tax exemptions, credits, subsidies, or other government incentives for a period of 1 to 3 years.
Asset Forfeiture
Assets used in or obtained through the offense are subject to confiscation. This includes:
- Property acquired with illicit funds.
- Donations or transfers to third parties unless good faith is proven.
- Example: If a company purchases machinery using funds obtained via bribes, that equipment may be seized by the State.
The law ensures that assets cannot be concealed to avoid confiscation and even allows for the seizure of the economic equivalent of missing property.
3. PROHIBITIVE SANCTIONS
These measures directly restrict the company’s commercial operations:
Partial Suspension of Activities
Certain company operations may be suspended for 2 to 12 months, excluding those necessary to maintain employment or core business functions.
Prohibition on Engaging in Certain Activities
The company is barred from participating in public contracts, bidding processes, or business activities similar to those involved in the offense. This restriction lasts between 6 months and 2 years.
4. RESTORATIVE SANCTIONS
Beyond punishment, the law also seeks to ensure that companies repair the harm done and prevent future offenses:
Damage Reparation
The company must restore the situation to its pre-offense state. If this is not possible, measures must be taken to mitigate the impact.
Implementation of Preventive Mechanisms
Companies are required to adopt internal controls, codes of ethics, audits, and anti-corruption policies. The deadline to comply with this measure is one year.
LEGAL LIMITATIONS ON CORPORATE SANCTIONS FOR CORRUPTION
Certain exceptions exist under Bolivian law:
- Public or mixed-ownership companies whose suspension would impact basic services.
- Entities providing essential services such as electricity, healthcare, or drinking water.
- Institutions performing strategic public functions.
In these cases, specific sanctions such as the loss of legal status or activity suspension do not apply, to prevent adverse effects on the general population.
AGGRAVATING AND MITIGATING FACTORS IN CORPORATE CORRUPTION CASES
The law recognizes circumstances that may increase or reduce the severity of sanctions:
Mitigating Circumstances:
- Voluntarily reporting the offense before legal proceedings begin.
- Cooperating with investigations.
- Repairing the damage before trial.
- Providing useful information about other parties involved.
These actions can reduce sanctions by up to 50%.
Aggravating Circumstances:
- Existence of multiple victims.
- Recidivism in similar offenses.
Under such conditions, the imposed sanction may be increased by up to 50% of the maximum limit.
CONCLUSION
Bolivia’s legal framework has taken a significant step forward in addressing corporate criminal liability by establishing clear, proportionate, and enforceable sanctions against legal entities involved in corruption. These measures ensure that companies are held accountable, reinforce transparency, and strengthen public trust in legal institutions.
At the same time, the law encourages private sector compliance through the adoption of internal controls, ethics manuals, and compliance programs aimed at reducing legal and reputational risks.
If your company is facing corruption allegations or needs legal guidance to mitigate compliance risks, contact our legal team today for expert support.
Frequently Asked Questions (FAQs)
Can a company be sanctioned for offenses committed by its employees?
Yes, if it is proven that the organization facilitated, tolerated, or benefited from the crime committed by one of its members.
How is the fine calculated if the company had no profits?
In such cases, the fine is calculated based on the company’s declared net equity from the fiscal year prior to the offense.
What company assets can be forfeited due to corruption offenses?
All assets obtained directly or indirectly through the crime can be seized, including those transferred to third parties who cannot prove they acquired them in good faith.
What happens if the company fails to pay the imposed fine?
The State may enforce precautionary measures and seize assets until the full payment of the financial penalty is completed.
Can a company receive multiple criminal sanctions at the same time?
Yes. Sanctions may be applied alternatively or concurrently, as long as each one can be enforced simultaneously.
The content of this article does not reflect the technical opinion of Rigoberto Paredes & Associates and should not be considered a substitute for legal advice. The information presented herein corresponds to the date of publication and may be outdated at the time of reading. Rigoberto Paredes & Associates assumes no responsibility for keeping the information in this article up to date, as legal regulations may change over time.
