The crime of private corruption
Omar Rodríguez

Private corruption is a manifestation of corruption within the business world or between individuals, in which the public administration is not directly involved. Unlike public corruption, where officials or authorities abuse their positions, in private corruption, acts occur between individuals or private entities, affecting free competition, business transparency, and business ethics. Its prosecution is essential to ensure a transparent and competitive market and to promote business integrity.

The crime of private corruption essentially consists of offering, promising, or providing an undue benefit or advantage to an employee or manager of a private company in exchange for the employee favoring the corruptor in the acquisition or contracting of products or services, or in any type of business relationship. The conduct of the employee or manager who requests or accepts such an advantage is also punishable. This type of crime occurs without the intervention of public officials.

From a doctrinal perspective, private corruption should be penalized because it distorts the free market, affects fair competition between companies, economically harms shareholders, clients, and employees, and fosters a culture of impunity in the private sector. International conventions, such as the United Nations Convention against Corruption (UNCAC), recommend that States criminalize these crimes (see Article 21 of the UNCAC: “Corruption in the Private Sector”). So do the OECD Convention against Bribery in International Business Transactions (1997), which specifically addresses bribery of foreign economic agents, including in private contexts, and the Inter-American Convention against Corruption (IACC) – OAS (1996), ratified by Panama in 1998. Although it focuses on public corruption, it invites States to criminalize acts of corruption in the private sector when they have public repercussions, especially if they affect the economy, transparency, or state resources.

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Private corruption is criminalized in many contemporary criminal laws, especially in countries that have adapted their legislation to international anti-corruption guidelines. For example, in the Spanish Penal Code, this conduct is regulated in Articles 286 bis et seq., introduced through reforms to combat unfair practices in the private sector.

Unlike public corruption, which is clearly regulated in Articles 345 to 350 of the Panamanian Penal Code, corrupt conduct between private individuals is not directly penalized. This leaves a legal loophole that makes it difficult to prosecute certain acts of corruption between private individuals, unless other related offenses, such as fraud or unfair competition, are involved. Corruption between private individuals, especially in the context of business relationships, is a reality that Panamanian criminal law must address.

In Panama, there is a crime similar to private corruption, called “undue benefits in the private sector.” This crime is classified under the heading of crimes against the economic order, in the chapter on financial crimes. The legally protected asset is the national economy. The criminal offense establishes:

Article 253. Anyone who, directly or indirectly, promises, offers, grants, requests or accepts from a person who directs a private sector entity or performs any function in it, an undue benefit that results in his own benefit or that of another person, so that, failing in the duty inherent to his functions, he acts or refrains from acting, shall be punished with a penalty of two to four years of imprisonment or its equivalent in days-fine or community service.

Despite this regulation, the need to criminalize private corruption has emerged as a modern response of criminal law to new forms of economic crime. Its origin lies in the expansion of the principles of transparency, business ethics, and fair competition, promoted by international organizations and adopted by advanced legal systems.

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Countries like Panama, which have not yet criminalized it, face the challenge of reforming their criminal laws to combat this form of corruption, which, although silent, profoundly affects the economy and the integrity of the private sector. Therefore, an independent criminal offense for corruption between individuals must be incorporated.

The following wording is suggested:

“Anyone who, within the scope of a private economic, industrial, or commercial activity, offers, promises, or grants, directly or through an intermediary, an undue benefit to a director, representative, administrator, or employee of a company, with the aim of benefiting them to the detriment of other offerers or the company’s interests, shall be punished with imprisonment of two to four years or its equivalent in days-fine or community service. The same penalty shall apply to any director, representative, administrator, or employee who receives, requests, or accepts such benefit.”

Consequently, and based on the provisions of Article 165, paragraph 1, of the Constitution, it is up to the authorities designated therein, especially the Supreme Court of Justice or the Attorney General of the Nation, to undertake the task of submitting a draft reform to the Penal Code that would criminalize the crime of private corruption. This is essential to consolidate a fair, competitive, and ethical legal order, in which private sector actors are also held accountable for abuses of power and dishonest acts. Its criminal sanction would represent a step forward toward transparency, economic equity, and the strengthening of the rule of law.

The author is a partner and leader of Criminal Law at Morgan & Morgan.

Omar Rodríguez