More businesses in Spain and Portugal instructing white
collar crime lawyers as investigations into financial mismanagement
during the crisis increase.
Law firms in Spain are experiencing an increase in instructions
related to white collar crime with board directors in fear of being
held retroactively liable for companies entering into receivership
during the crisis. Similarly in Portugal, clients –
particularly those in sectors such as pharmaceuticals and banking
– are increasingly turning to lawyers for advice due to a
surge in investigations into white collar crime.
Europe's economic crisis, causing bankruptcy proceedings,
divestments and subsequent restructuring, has spawned
investigations into financial mismanagement, including financial
manoeuvres enacted for the company's good, resulting in
proceedings against individuals for negligence.
Spain's 2010 legal reforms have put more crimes on the
statute books, such as investment fraud, disloyal management and
the illegal funding of political parties, causing concern among
board members whose actions are up for scrutiny, says Jesús
Santos, a partner in criminal law at Baker & McKenzie in
"Apart from procuring a solid defence lawyer, clients also
seek legal advice on implementing control mechanisms to prevent
such crimes from taking place," Santos adds. "Our clients
know that if they implement an effective compliance mechanism, they
can avoid potential conviction."
"Concerned by the extension of criminal law and an increase
in the criminalisation of conduct, clients are eager to find a
prestigious and experienced law firm to defend them," he
As a result, Santos perceives an increase in the firm's
workload going forward. "More people will require defence and
counselling in financial crime, given the new regulations regarding
legal responsibility," he says.
Spain's insolvency law contains a clause establishing
criminal responsibility, allowing members of a board to be held
liable for entry into receivership, for example. "This causes
concern because the law is retroactive," Alfredo Guerrero, a
partner at King & Wood Mallesons in Madrid, says, pointing out
that punishments go beyond fines and forbid executives from holding
board membership, particularly in listed companies.
Directors named members of the board are now concerned they
could be implicated in crimes while acting in the best interests of
the company, particularly companies that faced insolvency during
the crisis, Guerrero explains. "And the fact that a company
has recovered and restructured, or even been acquired by a third
party, does not eliminate the possibility of prosecution for a
financial crime committed during that process."
Striving for greater transparency, the law obliges more
investigations into companies' financial affairs, potentially
uncovering acts of negligence punishable as so-called white collar
crimes. He cited the case of Barcelona FC, implicated in the tax
evasion committed by its Brazilian striker Neymar through
undeclared transfer payments, though the football club has denied
The law will also lead to the scrutiny of contracts awarded to
firms through public tenders, and in which both the private and
public sectors may be implicated, Guerrero said. And even though a
similar law does not exist in Portugal, compliance remains key,
says Sofia Ribeiro Branco, a partner at Vieira de Almeida &
Associados in Lisbon.
"If we can show evidence to the court that a company has
implemented compliance measures, it could be acquitted in
corruption proceedings, even though the courts are not always
sensitive to our arguments," she explains.
Ribeiro Branco says investigation of white collar crime is
increasing in Portugal. "A board of directors' main
concern is to investigate the causes and find out how such crimes
can be prevented, and they ask us to design compliance
programs," she adds, with the result that the law firm's
workload is increasing.
She cites cases of alleged "fraudulent insolvency",
where the crisis served as an excuse for bankruptcy, but the
increase in scrutiny by the courts has yet to result in
convictions, given the lengthy legal proceedings.
Though the sectors most prone to financial crimes in Portugal
are the pharmaceutical industry and public hospitals, Ribeiro
Branco says that investigations are increasingly focused on the
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