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APRIL 2013Legal Focus 93Bribery Compliance inOil and Gas IndustryDue to the nature of the oil and gas industry, companies are far more exposed to the risk of corruption thanother types of business. With this in mind, Lawyer Monthly speaks to Glenn Faass and Mauricio Zagarra-Cayónfrom the Bogotá office of Norton Rose. Here they discuss with us the issues surrounding affecting briberycompliance in Colombia currently.Please introduce yourself, your role and your firm.G. Faass: Since 2005, Norton Rose has been activeon international aspects of Colombian transactionsrepresenting parties in many of the market's marqueeM&A transactions. This naturally led to commencingon-the-ground operations in September 2010. NortonRose in Bogotá now offers a 20-lawyer team deliveringan integrated package of international and domesticlegal services for Colombia-based assets or parties.Our focus is in natural resource investments andtransactions and therefore our experience is heavy withsuccessfully completed and ongoing engagements inthe oil and gas, mining, real estate, electricity and powerindustries throughout Colombia.Please give me an outline of the developments in briberyregulation and the impact they will have on operatorswithin the oil and gas sector?M. Zagarra: Our “top of mind” anti-corruption point in2013 is the likelihood of increased focus and investigationby Colombian authorities of their new anti-corruptionlegislation. New measures in 2011 include: (i) extensionof the anti-corruption regulation to offences involvingbribery of private companies and individuals, and notonly government entities or employees; (ii) imprisonmentof up to 18 years upon conviction; (iii) the enlisting of thepublic to denounce corrupt acts; and (iv) necessaryamendments to the Contracting Statute, a legalinstrument which regulates agreements to be enteredinto between the government and private entities.G. Faass: Simultaneously, “new generation” legislation,such as the Bribery Act (UK), tends to be stricter, andolder legislation (such as Canada’s law) is beingamended to bring it in line with a lower or no toleranceenvironment. Where the legislation is not new oramended, increased and stricter enforcement mayachieve a similar result. This is the case in the US, wherethe Department of Justice is interpreting the FCPA morerestrictively, while simultaneously commencing moreinvestigations and proceedings.legislative and enforcement environment. Companieswhich take their eye off this ball are risking costs andpenalties, significant damage to their share value andreputation, and also prison terms for their executives.How rife is the problem of bribery and corruption in theoil and gas industry?M. Zagarra: Colombia has come a long way fighting corruptionand bribery in every sector of its economy, andparticularly in the oil and gas industry. However, there ismuch left to do, as evidenced by Colombia’s modestranking in the Corruption Perceptions Index in 2011, andits decline in the 2012 rankings.As a result of scandals in previous years, including overallegedly falsified documentation, some Colombiangovernmental agencies, including the petroleumregulator, are now more careful. Proof arrived in theterms and conditions of the 2012 Ronda Colombia,where standards for awarding of E&P contracts were sostrict that the ANH was criticized for scaring off small andmid-size companies. On the flipside, our clients, whooften have participated in many countries’ bid rounds,told us that they had never seen a more professional ortransparent petroleum bidding process.This is part of the reason for the Colombian government’sinitiative to apply lessons learned from petroleumbidding rounds to a proposed mining bidding round.Time will tell to what extent this experience transfers tothe mining industry.What, if any, further legislative progressions do you seefor oil and gas law in the next 5 years?M. Zagarra: Bribery regulation in Colombia, regardlessthe industry, will be covered by the 2011 Statute.Because that law is recent and strict, we are notexpecting significant legislative initiatives over the next5 years. Instead, we believe the authorities will focus onimproving enforcement, and we likely will see high profilecases, including potentially against foreign companiesand their officers.integrate the requirements of both domestic andapplicable foreign laws. Accordingly, it is indispensablethat counsel can understand and cover bothdimensions. This is much more difficult for a purelydomestic law firm, and one of the value-added featuresthat an international firm alone canprovide. LMNorton Rose Colombia S.A.S.Edificio K2, 7° PisoCalle 97A, #9A - 50Bogotá DCColombiaTel +57 1.746.4666Glenn FaassContact Details:Fax +57 1.746.4620Glenn Faass is the managing partner of theBogotá office of Norton Rose and is one ofthe co-founders of the office in 2010. Hepractices principally in the area of energy,mining and anti-corruption/business ethics.Mauricio Zagarra-CayónPrior to joining the Bogotá office of NortonRose, Mauricio Zagarra-Cayón workedboth in Colombia and the Andean Regionas legal vice-president, general secretary,and associate general counsel for LatinAmerica for several multinational corporations. His practiceareas are focused on corporate, commercial, transactionaland telecommunications/IT.The general message is that companies need to makesure that anti-corruption monitoring and programmesremain on their “to do” checklist. Programmes whichwere sufficient some years ago now need to bereviewed, and often overhauled, to deal with the newIs there anything else you would like to add that you feelour readers may be interested to know?G. Faass: Anti-corruption analysis and complianceprogrammes for foreign investors in Colombia need towww.lawyer-monthly.com