Corruption in Portugal
Corruption in Portugal
The huge economic impact of corruption is well known. According to a 2012 OECD’s statement, it is estimated that the cost of corruption equals more than 5 % of global GDP (US$ 2.6 trillion, World Economic Forum) with over US$ 1 trillion paid in bribes each year (World Bank).
Corruption, however, is not only detrimental to the economy, but also to the political and moral well-being of countries. In effect, it is a cancer in the social body, which deviates the public officials from the pursuance of public interests, threatening political stability and government legitimacy, prevents or slows down economic development, diverts resources from the satisfaction of collective needs to private appropriation, and undermines ethical standards in society.
All countries are affected by this cancer, and Portugal is no exception. According to the Corruption Perception Index 2014 of Transparency International, corruption in the public sector ranks Portugal at 31st position in an increasing scale of corruption out of 175 countries and territories surveyed, ex aequo with Botswana, Cyprus and Puerto Rico.
Although more visible in the public sector, corruption also occurs in the private sector, namely when an agent or manager of an enterprise violates his professional ethics by favoring a third party against the interests of the principal.
Action to fight corruption has been taken by States, Intergovernmental and Supranational Organizations and Non-Governmental Organizations. States have primarily resorted to Criminal Law to prosecute and sanction corrupt behavior. In Portugal, corrupt conducts are criminalized in a very comprehensive way, including corruption in international trade and in the private sector (below Sect. 12.1.2). The enforcement of this legislation has, however, met many difficulties. Administrative Law tools have also been used to prevent and sanction corruption, namely special rules on public procurement, anti-bureaucratic measures, disciplinary sanctions for corrupt public officials and supervision by the Court of Audit (Tribunal de Contas).
Several Intergovernmental Organizations have been active in fighting corruption, namely the UN, the OECD, the World Bank and the Council of Europe. The same may be said, at a supranational level, of the EU. Some of these organizations have adopted International Conventions fostering the definition of international standards on the matter.
Portugal is party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of 1997,4 to the Council of Europe Criminal Law Convention on Corruption of 1999,5 and to the United Nations Convention against Corruption of 2003,6 but not to the Council of Europe’s 1999 Civil Law Convention on Corruption.7 Portugal is also party to the Convention drawn up on the basis of Art K.3 (2)(c) of the Treaty on European Union on the Fight Against Corruption Involving Officials of the European Communities or Officials of Member States of the European Union of 1997.
Many Non-Governmental Organizations are engaged in this matter, namely Global Financial Integrity, Global Witness and Transparence International. Reference shall also be made to the UNCAC Coalition of Civil Society Organizations, which is a network committed to promoting the ratification, implementation and monitoring of the United Nations Convention against Corruption. Specifically in the field of international trade, the International Chamber of Commerce has adopted the ICC Rules on Combating Corruption 2011 and drafted the ICC Anti-Corruption Clause which is available for international contracting.
Private law issues of corruption have received less attention than criminal and administrative aspects. Nevertheless, there are many private law issues involved in corruption, not only in the private sector but also in the public sector. The invalidity of bribery contracts, and its consequences, as well as the civil responsibility claims of honest competitors who have suffered losses due to corruption, are common issues. The invalidity or non-binding effect to the innocent party of the contract obtained through corruption (main contract) is also an issue which may arise in both sectors, but which is dealt with differently regarding private law contracts and administrative contracts in those systems, such as the Portuguese, which draw a clear distinction between these categories.
The role of private law, in respect to these issues, is not only to protect private rights and interests of persons who have suffered losses due to the corrupt behavior of others, but also to implement the public policies pursued by the State in its combat against corruption.
Corruption as a Criminal Offence
Within the framework of the Criminal Code [Código Penal], corruption is a criminal offence only in the public sector. A distinction is drawn between passive corruption and active corruption.
Passive corruption is defined as the requirement or acceptance by a public official of a pecuniary or non-pecuniary advantage for himself or for a third party – or the promise thereof – for committing a particular act or omission (Art 373). The sanction is attenuated if the act or omission is not contrary to the duties of the office and/or if the advantage benefits a third party.
Active corruption is defined as the offer or promise to a public official, or a third party by designation or with the public official’s knowledge, of pecuniary or non-pecuniary advantage for committing an act or omission (Art 374). In this case as well, the sanction is attenuated if the act or omission is not contrary to the duties of the office and/ or if the advantage benefits a third party.
Furthermore, the requirement or acceptance by a public official, or the offer or promise to a public official or third party by designation or with the public official’s knowledge, of an undue advantage for himself or a third party, in the exercise of his functions or by virtue of them, is a criminal offence, even if no act or omission is carried out. An exception is made for conduct that is socially appropriate and in conformity with local usages and customs (Art 372).
In these articles, the expression “public official” includes officials of the European Union, regardless of their nationality and residence, as well as public officials of other Member States of the European Union; and officials of public law international organizations of which Portugal is a member, where the infraction occurred totally or partially in Portugal (Art 386(3)).
The requirement or acceptance of a pecuniary or non-pecuniary advantage – or the promise thereof – for the abuse of influence over a public entity with the purpose of obtaining a favorable decision, and the offer or promise of such an advantage with the purpose of obtaining an illegal favorable decision, is also a criminal offence (Art 335 – traffic of influence).
However, certain corruption practices in the private sector can activate provisions of the Criminal Code, such as the commitment of the crime of betrayal of trust [infidelidade] by the person in charge of the disposition, administration or supervision of the pecuniary interests of others (Art 224).
A special regime with aggravated sanctions applies to holders of political office and high public office (Arts 16-18 of the Lei no 34/87 of 16 July, as amended by the Leis nos 41/2010 of 3 September and 4/2013 of 14 January).
Another special regime applies to corruption in international trade and the private sector (Lei no 20/2008, of 21 April). This regime only applies if the conduct is not sanctioned more severely by another legal regime (Art 6(1)).
According to this regime, the active corruption of a public official or holder of political office, national or foreign, in order to obtain or maintain a transaction or other undue advantage in the international trade, is a criminal offence (Art 7). This charge applies to conducts occurring in Portugal, aboard Portuguese ships and airplanes and, in principle, to the conduct of Portuguese nationals (including corporations seated in Portugal) and foreigners present in Portugal, even if it occurred in a foreign country (Art 3(a) and Art 4 of the Criminal Code).
The active or passive corruption of a private sector “worker” to commit an act or omission in breach of his functional duties is also a criminal offence (Arts 8 and 9). Members of corporate bodies and independent professionals “serving” a private sector entity are deemed to be “workers” for this purpose (Art 2(d)). This charge applies mainly to conducts occurring in Portugal or aboard Portuguese ships and airplanes (Art 4 of the Criminal Code) and, in principle, to acts committed by corporations or against corporations seated in Portugal (Art 5(1)(g) of the Criminal Code) and by national public officials, holders of national political office and the Portuguese officials of international organizations even if the event occurred in a foreign country (Art 3(b) of Lei no 20/2008).
Therefore, when fulfilling some prerequisites, corruption is also a criminal offence if committed in a foreign country:
- in the public sector, where committed by a Portuguese national, including corporations seated in Portugal, or by foreigners present in Portugal;
- in the private sector, where committed by corporations seated in Portugal, holders of national public or political office, and Portuguese officials of international organizations.
However, Portuguese criminal law is only applied to conducts occurring outside Portuguese territory when the offender has not been tried in the country where the conduct occurred or has failed to comply with the judicial sentence (Art 6(1) of the Criminal Code).
In light of this special regime, the Industrial Property Code’s prohibition of unfair competition (Arts 317 and 318) – which is not deemed a criminal offence but an illegality sanctioned by a “fine” that is not convertible to imprisonment in case of non-payment – does not seem to play a significant role in the context of corruption in international commercial contracts. The issue of civil responsibility claims for losses caused by unfair competition will not be dealt with in the present contribution.
Source: Bonell M., Meyer O. (eds) The Impact of Corruption on International Commercial Contracts. Ius Comparatum – Global Studies in Comparative Law, vol 11. Springer, 2015