Regulatory Compliance 2012 e-report

May / June 2012 • IBERIAN LAWYER • www.iberianlawyer.com

EU & COMPETITION REPORT

IBERIAN LAWYER

REGULATORY COMPLIANCE REPORT 2012Ignore at your peril

An abstract from Iberian LawyerMay / June 2012

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• IBERIAN LAWYER • May / June 2012 www.iberianlawyer.com1

REGULATORY COMPLIANCE REPORT

Ignore at your peril

Across Iberia, companies are being exposed to more and more risks from increasing regulation and scrutiny from regulators. Given the sanctions for non-compliance, including personal liability, Spanish

and Portuguese law fi rms really need to start playing catch-up.

Compliance, worldwide, has increasingly become a must have for all companies, say lawyers. While in some jurisdictions, the US and UK for example, ‘compliance’ is very clear cut, in others, the concept is just taking off due to the pressures of increasing regulation and requirements with which businesses must comply.

Among law fi rms in Iberia, there are various methods of dealing with compliance, from dedicated departments to teams brought together as and when needed. What is clear is that there is currently no common approach, and that Portugal is currently a litt le further down the compliance road than Spain.

Sanctions have also changed recently across the Peninsular, meaning that the costs of non-compliance go further than before, even as far as imprisonment. However, lawyers agree that companies aren’t giving it the importance it deserves, particularly in the current climate, and that they may only be forced into action when they see others suff ering the consequences of non-compliance.

As compliance touches on so many practice areas and sectors, it seems diffi cult to narrow down a single defi nition. But while the specifi cs of each industry are diff erent, says João Teixeria Matos, Partner at Garrigues in Lisbon, there is a common approach to compliance among the sectors that can be shared throughout law fi rms, and those more dedicated to regulatory matt ers can share their methodology with others.

Where there is needFor companies, however, the compliance issues that aff ect them are much clearer, falling into two distinct categories. First are those related to the legal requirements to start a business activity or acquire companies

Las conclusiones en el informe anual sobre Regulación y Cumplimiento Normativo en la Península Ibérica indican que, en su mayoría, las compañías están muy expuestas a ser sancionadas a raíz del incremento de normativas y del escrutinio de los reguladores. La situación es aún más seria cuando en ciertos casos la sanción puede ser de carácter penal contra los administradores.

carrying out highly regulated activities, explains Carlos Vázquez, Partner in charge of Public Law at Gómez-Acebo & Pombo in Madrid, and second are legislative changes that could aff ect the requirements to be met by companies already carrying out these activities.

Companies doing business in the regulated markets, such as energy, telecoms, fi nancial markets and insurance face the most demanding compliance challenges, with a wider range of rules to contend with than others, say lawyers. Those activities with greater potential risks are those with the greater compliance needs.

For both Spain and Portugal, there is no doubt that the fi nancial sector has the most coordinated approach to compliance given its extremely regulated nature, with other regulated sectors slowly catching up. And a consequence of the crisis is the marked increase in regulatory compliance pressures that they face, for example, the upcoming MiFID II, which increases the pressure on companies to ensure their compliance houses are in order. What’s worrying clients in this sector is how to approach the regulations, according to Paloma Fierro at Linklaters in Madrid. “They come to us wanting to know everything they need to do and to comply with.”

Other sectors increasingly on the compliance radar include the pharmaceutical and healthcare industry and business activities with an environmental impact. In Spain, new data protection laws also come into force later this year, while in Portugal, lawyers cite electronic communications, transportation and water as being high on the list.

Continually changing regulationIf companies have a bett er understanding of their compliance requirements, for many law fi rms, however, the situation is less than clear. One of the most relevant and complex challenges faced by internal and external compliance teams, says Casto González-Páramo, Counsel at Hogan Lovells International responsible for the EU & Competition Department in Madrid, is knowing which areas of activities of the client are subject to compliance at any moment.

One of the big challenges for any business developing its activities in regulated sectors, according to Marta Cruz de Almeida, Consultant at Linklaters in Lisbon, is to keep updated as to the relevant regulation it has to comply with and the specifi c regulator’s


views on ambiguous issues.What makes that so diffi cult, lawyers

agree, is that over the past few years, regulations have been changing at a rather incredible pace. There is a regulatory frenzy all over the world and not only in the EU, trying to regulate everything and anything, says Teixeria Matos at Garrigues in Lisbon. Therefore, the main challenge clients are facing is to be able to rapidly adapt their business structures to new regulations that are being constantly approved, explains Gloria Hernández Aler, Financial Regulation Partner at Deloitt e in Madrid.

Clients do, however, tend to be very pragmatic when it comes to regulatory changes, says Paulo Costa Martins, Associate at Cuatrecasas, Gonçalves Pereira in Lisbon. “The immediate advice required is how changes, even if still under discussion, will impact on their current business model.”

While major multinationals know in advance what regulations are likely on the horizon and have the capacity to prepare, it’s the medium sized companies that are worrying. “They want to do business fast and are much less concerned with compliance,” according to Gonçalo da Cunha, Partner at F Castelo Branco & Associados in Lisbon. However, big companies don’t always stop because of regulatory changes, says Filipe Faria Of Counsel at ABBC in Lisbon, more often they just move forward and adjust when important business strategies are at stake.

Companies want to know how far the regulatory reforms can go, says José Giménez, Partner at Linklaters in Madrid, and that’s where lawyers can add value. “Clients want us to be ahead of the regulations and so participation in the discussion forums with regulators leading up to implementation is crucial.”

The regulatorsAcross Iberia, lawyers agree, regulators are adopting a much more intrusive approach. They are intensifying enforcement and cross-border cooperation between authorities, and increasing the number of actions being brought. “There are also an ever expanding number of authorities actively seeking to bring prosecutions with ever broadening powers to investigate and gather information,” according to Cecilia Pastor, Partner and Head of Compliance at Baker & McKenzie in Madrid.

In Portugal, the number of regulatory bodies is also on the rise, while many are more visible and active in monitoring compliance issues, says Ricardo Costa Macedo, Partner and Head of IP at Caiado Guerreiro in Lisbon, including, among others, Autoridade da Concorrência (Competition) and CMVM (securities and exchange).

A critical aspect, therefore, is maintaining good relations with regulators, he says, to get more responsiveness that makes a diff erence for their clients. And to provide a really good compliance service, you need to be respected by the regulator, says Magda Cocco, Partner at Vieira de Almeida & Associados in Lisbon, and to gain this respect you need to know your sector.

A criminal actA particular area of specialisation that is currently very much in demand is criminal law, as everything to do with compliance is linked to it, explains Pedro Duro, former member of the Ministry of Justice’s Legal Policy and Planning Offi ce and now at Sérvulo & Associados in Lisbon. In fact, the introduction in 2012 of regulation of corporate criminal liability for the fi rst time in Spain has been the biggest compliance challenge of the past few years, says Adriana de Buerba, Partner at Pérez-Llorca in Madrid.

Companies now have to adapt any control and compliance measures they had in place to the new criminal law framework, says David Velázquez, Partner at Cuatrecasas, Gonçalves Pereira in Barcelona, and considering the heavy sentences under the reform and the need to prove compliance to the courts, companies require assessments that cover the new criminal risks, and the implementation of eff ective compliance measures.

For Bernardo del Rosal, Of Counsel at Cliff ord Chance in Madrid, because of the nature of our ‘information society’, where news travels everywhere so quickly, the damage in terms of reputation that a criminal charge can cause to any corporation is huge.

A risky approachThe problem lawyers are having is that it is sometimes diffi cult to convince clients of the fact that the cost of a regulatory breach is much more expensive in terms of legal, economical and reputational damages than the cost of investing in preventative legal advice, says Antonio García Muñoz, Head of the Public, Regulatory, Environmental and Competition Law Department at Lener in Madrid.

At a time when companies cannot aff ord a loss in reputation or revenue, it is possible that these risks, coupled with the potential criminal liability of each and every employee, will prompt companies to pay more att ention to compliance, say lawyers.

Legal risks have also signifi cantly increased over the past years as a consequence of the crisis, says Pablo García Montañés, Manager of Regulatory Compliance at Deloitt e in Madrid, plus the fact that law fi rms haven’t been giving the compliance issues the weight they deserve. “Compliance is not just a back-offi ce function as it plays a relevant role in terms of advance impacts on business, which can result in saving millions for the business.”

Prevention, therefore, is key, lawyers stress. A comprehensive risk management system is the basis of any

2


Companies want to know how far the regulatory reforms can go. Clients want us to

be ahead of the regulations and so participation in the discussion forums with regulators leading

up to implementation is crucial. .José Giménez, Partner,

Linklaters, Madrid

“”



good compliance programme, and lawyers must impress on clients the importance of preventative advice to avoid or mitigate the risks of non-compliance.

For de Buerba at Pérez-Llorca in Madrid, it is also important that risk analysis is as tailor-made as possible, allowing the client to implement the appropriate measures to eliminate or at least minimise the risks specifi cally associated with its activity.

Internal versus externalCompliance, however, is not at the top of the agenda for business given the current climate. So it´s up to their lawyers to step in and take the lead. However, this can be diffi cult, they say, because of an imbalance between client knowledge and that of their external advisers. Lawyers agree that they cannot know more than their clients. However, there isn’t such a great imbalance these days, says Cocco at VdA in Lisbon. “If you know the technical and economic aspects of your clients’ businesses, and keep up to date with any changes, this will go some way towards reducing it.”

One way of doing this is by gaining fi rsthand experience in-house, something that Iberian law fi rms agree brings an important addition to their skill set and value to the client. When faced with compliance issues, clients come to lawyers not just to prevent liabilities but to know how complying with regulations, or not doing so, could aff ect the value of their businesses, explains Faria at ABBC in Lisbon. It is therefore essential to have deep knowledge of the clients’ business and incorporated value in order to meet these needs.

Placing lawyers within a client organisation can be very

advantageous. Law fi rms should regard secondments not as a loss, but rather as a gain, according to Hugo Rosa Ferreira, Partner at PLMJ in Lisbon, as this brings back invaluable knowledge of the clients’ business, internal workings and culture. Firms may also benefi t from lateral hires from regulators, to bring them regulatory insight.

So, while acknowledging that they can never be on an even applying fi eld with an in-house legal department, lawyers are very aware of where they can add value. Every big business has an internal compliance department and in-house team dealing with the day-to-day, we cannot compete, says Giménez at Linklaters in Madrid. “However, when it comes to specialised knowledge, such as court proceedings, this is where we can provide value-add through our experience.”

Legal ‘fi ne tuning’In heavily regulated sectors, however, in-house lawyers tend to have the same knowledge as external on what concerns the applicable regulations – in a few cases more so. “What we do in these cases is the ‘fi ne tuning’,” explains Bruno Azevedo Rodrigues, Partner at ABBC in Lisbon, “providing them with specifi c specialised advice and training”.

The fundamental thing, lawyers agree, is to develop and implement compliance plans and protocols, including, among others, internal reviews and audits, identifying and assessing industry specifi c risks, prioritising compliance obligations and training employees on their responsibilities and potential liabilities. One key issue above all, is that compliance needs to be instilled

Approaching compliance from withinRisk management practices have spread from the fi nancial sector to other areas, says Carlos Alberto Sáiz, Partner at Ecix Group in Madrid, therefore companies must now evaluate and minimise their legal, reputational, information security and/or globalisation risks.

Across Iberia, however, while law fi rms agree on the importance of compliance in today’s market, they approach it in three ways. Some have a dedicated compliance department or team within the fi rm, several bring together a team or task force as and when needed, while others deal with it by practice area or industry sector. For example:

Groups or departments• Linklaters in Spain coordinates

fi nancial regulation at a European level through their Financial Regulation Group covering regulatory compliance, says Fierro at Linklaters, with a representative in each Linklaters offi ce, so it’s a coordinated effort across the whole fi rm;

• At Baker & McKenzie, they approach compliance from a global perspective, forming multijurisdictional teams with experts from the relevant client jurisdictions to help the client to do a proper risk assessment, says Rafael Jiménez-Gusi, Partner and Head of Compliance at Baker & McKenzie in Barcelona;

• Deloitte in Madrid has a dedicated team in charge of Corporate Defence projects, says Hernández Aler at Deloitte, assisting clients to establish compliance programmes in order to prevent any criminal liability that they may face;

• And Cuatrecasas, Gonçalves Pereira has a Corporate Compliance Practice covering all areas of business activities and unlawful acts related to corruption, says Velázquez at Cuatrecasas, Gonçalves Pereira in Barcelona.

Task forces• Clifford Chance brings together an

expert in the criminal law, with others in corporate, banking & fi nance, taxes,

public law, and labour & employment, as a multidisciplinary task force to assist clients, says del Rosal at Clifford Chance in Madrid.

• At PLMJ, if there is a new regulation or public consolation, they bring together a multi-practice team to respond to such a consultation, says Rosa Ferreira at PLMJ in Lisbon, sometimes in a joint effort with a client, to advise the client as soon as possible on how to be compliant.

Industry and sector specifi c• The Department of Public Law at

Gómez-Acebo is responsible for advising the fi rm’s clients in matters of a regulatory nature that could arise in the course of their business activities, says Vázquez at Gómez-Acebo & Pombo in Madrid.

• In terms of assistance with legal compliance, Vieira de Almeida is structured by industry practice, with sector-specifi c teams working closely with their clients’ compliance departments, says Cocco at VdA in Lisbon.

May / June 2012 • IBERIAN LAWYER • www.iberianlawyer.com 4


throughout the client’s business, as the only way to implement an effi cient compliance programme, says Sofi a Enrique, Partner at Raposo Bernardo in Lisbon, is to have the entire structure of the company involved, from top to bott om.

A big topic, particularly in Portugal, is the use of compliance manuals. These typically cover all areas and give instructions on how to monitor situations as they arise and implement a reporting structure to ensure the appropriate action is taken by those who are responsible, explains Miguel Bermudez de Castro, Partner at Jones Day in Madrid. A manual defi nes the possible risks and puts into action a number of recommendations to the Board of Directors, and, once in place is regularly reviewed by a fi rm on a periodic basis to ensure that compliance is taking place.

While lawyers agree on the need and the benefi ts, they warn about relying on a compliance manual as the sole form of protection.

For Rosa Ferreira at PLMJ in Lisbon “compliance manuals should exist, and it is our job to make them as complete as possible. When it comes to practical application, however, there is always something that isn’t covered.”

And while compliance manuals can certainly be a helpful risk management tool for clients, says Ana Sá Couto, Counsel at Uría Menéndez -Proença de Carvalho in Lisbon, each issue still has to be looked at on a case-by-case basis. You have to assume that what is on paper is not exactly what happens in real life.

However, compliance manuals are merely the ‘kick off ’ to pro-active involvement. Clients need to apply comprehensive compliance programmes and to implement procedural controls, says Armando Martins Ferreira, Partner at Abreu Advogados, to make sure that they have done everything reasonably required in advance to reduce the future exposure of the company as a whole, and also that of the respective leaders and directors as potentially liable decision makers.

‘Proactive’ versus ‘reactive’ Reducing future exposure, means taking a very ‘proactive’ approach to compliance, for both companies and their external advisers, ensuring they stay one step ahead of the game.

However, in Spain for example, the feeling among lawyers is that companies outside the fi nancial sector are not used to dealing with compliance. Businesses are reluctant to implement measures, whether in the form of risk management or compliance programmes, and this is mainly due to cost.

This puts the onus squarely on the law fi rms to impress on their clients the importance of compliance, and they are beginning to adopt, albeit slowly, a more

dynamic approach to compliance rather than to be asked.For Natalia Martí Picó, Partner at Roca Junyent in

Barcelona, this also means being ahead of their clients, rather than waiting for the clients to come to them. This means a monitoring of the European, Spanish and Autonomous legislation in order to off er the best services possible. And

always staying on top of any matt ers subject to regulatory compliance, says Dulce Franco, Partner at AAA Advogados in Lisbon.

This approach is now taking its fi rst steps in Portugal, say lawyers, although clients are not always willing to invest in compliance. There is only so much a law fi rm can do if their clients are unwilling to take their advice.

In particular, the current economic environment frequently brings additional pressure to do business quickly, which inevitably leads to law fi rms adopting a more reactive approach, explains Sá Couto at Uría Menéndez-Proença de Carvalho.

However, one has to be cautious in how proactive you are with clients, warns Giménez at Linklaters in Madrid. Lawyers don’t want to be seen as researchers but instead as advisers capable of identifying the key regulatory issues that may impact their clients´ business, adds Montañés at Deloitt e in Madrid.

At the end of the day, however, it is only when a business is concerned about compliance that they are more open to accept a proactive strategy from their lawyers, says José Luís Esquível, Partner at Esquível Advogados in Lisbon.

Prevention is keyIberian companies and law fi rms are clearly catching up with other jurisdictions on matt ers of compliance, which has been accelerated by the wave of new regulations and reforms brought on by the crisis.

There is no doubt that it is rising to the top of the agenda in all sectors. But with legal budgets being very tight at present, lawyers agree that businesses are leaving compliance to last. Clients are only passing out work that they see as absolutely essential, says de Castro at Jones Day in Madrid, and as a result, compliance issues are left at the bott om of in-house lawyers’ to-do lists.

Prevention and anticipation are key to any compliance programme. Law fi rms need to show clients that compliance, if introduced early in the investment and production chain, can bring competitive advantages, says Martins Ferreira at Abreu Advogados in Lisbon.

With the current diffi cult business climate, companies need all the advantages they can get. But more importantly they need to face the very real fact that non-compliance no longer leads to just fi nes and penalties. The possibility of anyone within the company facing a potential prison term is no joke, and, say lawyers, the potential to do so may be just what the market needs to wake up to the importance of compliance.

Prevention and anticipation are key to any compliance programme. Law fi rms need to show clients that compliance, if introduced early in the investment and production chain,

can bring competitive advantages. .Armando Martins Ferreira, Partner,

Abreu Advogados, Lisbon.

“”



The costs of not complyingWith corporate liability high on the agenda, Spanish businesses are having to confront the issue of compliance

The recession is intensifying the glare of the authorities, as well as the media, on Spanish business practices. Historically, this was not such an issue as many had few obligations in terms of corporate liability. However, Cecilia Pastor, Partner and Head of Compliance at Baker & McKenzie in Madrid, points to a “turning point” some 18 months ago that changed everything. “The Criminal Code was enacted in December 2010 and, for the fi rst time, Spanish companies were made liable for their business actions.”

Any corporate wrong-doings or compliance oversights could have serious ramifi cations in the criminal courts. It has prompted a sudden change of heart among Spanish businesses, says Pastor. Many of the larger companies that had expanded abroad had a bett er awareness of legal responsibilities, especially in regards to the tough laws in the US and UK, such as the amended Foreign Corrupt Practices Act or the Bribery Act 2010. More domestic players have been forced to confront the issue and

develop detailed compliance processes. Rafael Jiménez-Gusi, Partner and Head

of Compliance at Baker & McKenzie in Barcelona says that, while the Spanish system is not as strict as other international regimes, and enforcement has been minimal so far, companies and their legal departments need to increase awareness of compliance requirements.

“Businesses must know the rules in Spain as well as markets like the US, UK and Germany in order to protect themselves on a local and global level, and we recommend a fi ve-stage process,” he says. “Develop a clear strategy for leadership, undertake a thorough risk assessment, improve standards, controls, training and communications, and boost monitoring, auditing and responses.”

With possible sanctions, including prohibiting public tendering, the closure of the business, fi nes and even prison terms – abroad and now in Spain – non-compliance could be a costly, if not fatal, mistake for a company.

Cecilia Pastor

Rafael Jiménez-Gusi

It is always refreshing to approach a subject from a diff erent angle, in this case taking a criminal liability perspective on compliance; too many Portuguese companies ignore their compliance obligations and that is a serious concern, experts warn.

“In Portugal, international companies and those listed on the capital markets usually have decent compliance structures,” explains Pedro Duro, a Senior Associate at Sérvulo & Associados in Lisbon and former member of the Ministry of Justice’s Legal Policy and Planning Offi ce. “Organisations outside of these, only tend to approach compliance once they have a problem with it.”

Duro – a criminal lawyer advising on compliance liabilities – believes that some smaller companies think implementing a compliance system is too expensive so prefer to “take the risk”. Regulators, however, are increasingly looking at stronger enforcement across

the board, so companies need to be careful if they do not have an adequate compliance or reporting system in place.

Duro advises clients to “layer” responsibilities as the CEO and the Board do not want to be held liable for the actions of others. A clear framework allows everyone in a business to understand – and assume – their responsibilities and potential liabilities.

“I had one recent case where the CEO was called up by a regulator over some potentially unlawful pricing issues,” he says. “As there was a compliance framework, the CEO could identify that it was an acceptable administrative error by a certain individual, which satisfi ed the court.”

Duro has already tested clients by asking staff for something that contravenes the process and sees whether it gets reported. After all, he adds, it is bett er that he fi nds a fl aw rather than the regulator.

A different angle on compliance

Siempre es refrescante el poder tratar un tema desde otro ángulo, en este caso es la visión del cumplimiento normativo desde la responsabilidad penal. Son aún muchas empresas las que ignoran sus obligaciones y las consecuencias de su incumplimiento, afi rma Pedro Duro, de Sérvulo.

Pedro Duro



Keeping your regulators close Regulators need to be open to close relationships with lawyers to help them in interpreting Spain´s fast-changing regulations

El sector fi nanciero y el energético se han

mantenido muy activos en los últimos tiempos.

Sin embargo, para que las empresas se

adapten a las normativas instauradas y las cumplan,

una relación estrecha de los abogados con las autoridades reguladoras

es vital, dice José Giménez de Linklaters.

José Giménez

Experience within companies as an in-house counsel is something that few external counsel can claim; but, those lawyers who have seen both sides, such experience is invaluable in understanding clients’ regulatory compliance requirements.

Filipe Faria, Of Counsel at ABBC Advogados in Lisbon, in telecommunications, information technologies and outsourcing, has previously served as Legal Director at PT Prime and PT Corporate and as the Director of Legal and Regulatory Aff airs at Companhia Portuguesa Rádio Marconi. He says it can be harder for external counsel to see what is at stake within a big company when providing advice.

“Generally, clients feel that their law fi rms may not always understand their wider business needs enough, such as the risks and overall strategy,” he says.

In-house experience can deepen knowledge beyond the law, which is signifi cant when it comes to providing advice on specifi c practice area compliance

matt ers, says Faria. As he focuses on IT, telecommunications and outsourcing matt ers, he says this is vital in providing value-added advice.

“A lawyer needs to know the sector, the company and the business; it has to go beyond the analytical. Big companies have more than one head, more than one manager, more than one department and more than one compliance challenge.”

Faria points to the telecoms sector, where companies deal with a myriad of issues, such as data protection, telecoms infringement processes and the ever-changing compliance regime.

“Most compliance rules come from the EU but they are designed for an average European company, not those in Portugal,” Faria concludes. “The rules do not consider the size, structure or public involvement in local companies so clients are perplexed as to how to implement regulations.”

According to Faria, legal and business sector knowledge are a crucial combination.

Seeing both sides

Uno de los aspectos más valiosos para un

despacho es el integrar el conocimiento de sector

que posee un ex abogado interno. Esta experiencia es crucial para entender

los requisitos específi cos de cumplimiento normativo

de una empresa y los pormenores del sector, afi rma Filipe Faria, de

ABBC

Filipe Faria

Direct contact with regulators is crucial for many lawyers, says José Giménez, a Partner at Linklaters in Madrid. Whether it is fi nancial services, telecoms, energy or the media, he adds, having an open regulatory regime provides much-needed guidance for advisers.

The openness of the regulators has increased in recent years, says Giménez. “The att itude is changing. Less than 10 years ago, they were closed and confi dential, providing litt le guidance, which made it more complicated when advising clients on complying with procedures.”

Giménez says that fi nancial services and energy-related work has been busy recently, but that some regulators have started to restrict access and advice. This is based largely on the fact that the legislative and economic situation in both sectors is in a state of fl uctuation.

“Where the rules are clearer, regulators are approachable and provide feedback,” says Giménez. “The fi nancial regulators, however, have taken a diff erent approach

to others of late. The uncertainty in the fi nancial markets means that regulation keeps changing, and nobody quite knows what may happen next week.”

In the case of the energy sector, new regulations were approved in March that modify the operation of distribution and transmission grids in Spain, and the Government has announced a new modifi cation, but details are not expected until mid-June. There is litt le information being given out by the energy regulatory that is leading the modifi cation – the Ministry of Industry – which has led to many deals being delayed.

“It is important to have an open and honest dialogue with regulators, whether it is on a confi dential basis or not,” says Giménez. “An insight into the interpretation of regulations is very helpful. Otherwise it can be frustrating because, when a regulator refuses to provide advice, it means clients and their advisers have to att empt to interpret the rules and then wait to see if the regulator agrees.”



Taking corporate responsibilityCultural and structural weaknesses are still the main challenges in encouraging Spanish companies to address compliance requirements

Compared to other EU countries such as the UK and France, Spain has not been the most proactive in implementing standard guidelines and frameworks for compliance structures, says Rocío Merlino, a Partner in the Madrid offi ce of ISLAW Abogados. However, an interest in corporate social responsibility (CSR), increased international obligations and recent legislative initiatives are helping to reform att itudes.

To have an eff ective compliance programme, she says, companies must establish policies to prevent non-compliant conduct. ISLAW Abogados is in fact currently conducting internal audits of companies to prevent potential areas of non-compliance.

Businesses must promote a corporate culture including a commitment to comply with the law and standards of business integrity. The Board of Directors must have knowledge of the programme and ensure that middle management are assigned specifi c responsibilities in its implementation, says Merlino. “Spanish businesses tend to make the ethical commitment at a high level, but their governing authority usually fails to involve specifi c individuals and middle management in its execution.”

Merlino has experience of compliance both as an external lawyer and in-house, specifi cally as legal counsel for Spain and Portugal of Praxair, the US-listed industrial gases organisation. She says that this has helped her understand how compliance functions within a company.

“Compliance is very diff erent if you are a company insider,” she comments. “External law fi rms usually prefer to focus much more on legal processes, whereas in-house counsel are more focused on gett ing the job done. My background allows me to form an opinion on what the most important factors are for such a company operating in Spain.”

Cultural changesAny US company operating in Spain has to balance domestic and foreign matt ers, says Merlino. Compliance in the US is more advanced than the Spanish system. The post-Enron environment has led to a plain compliance structure for US companies, but clearly Spain is still lacking in standard guidelines for compliance programmes.

This lack of general guidelines has resulted in compliance being less of a priority in Spain. Merlino, however, thinks that things are starting to change, albeit slowly. Spanish companies, for instance, have begun to

embrace the notion of CSR more widely. CSR programmes will often involve clear

company-wide policies on issues such as the environment and workplace processes, which can form the foundation of a knock-on compliance initiative. As such, despite a lack of specifi c regulations, there is a cultural shift.

“Compliance is not quite a stand-alone sector within a company, but it is going that way,” says Merlino. “CSR is not the same as compliance as it tends to be more about the external perception of a fi rm as an ethical business rather than focusing on legal requirements. Even so, it is an important fi rst step in developing a compliance regime.”

Added benefi ts She believes that installing a proper compliance structure gives added benefi ts to many companies. For instance, a deliberate framework provides an eff ective corporate defence shield – for a company and the board – by mitigating any possible criminal responsibilities under the 2010 liability legislation.

“The benefi ts to the employees of a compliance programme are also noticeable,” Merlino adds. “There are clear communications throughout all levels of an organisation, it gives workers a bett er understanding of their responsibilities and also helps retain talent.”

An increasing challenge stems from the internationalisation of compliance. Anyone operating regionally needs to be fl exible because compliance requirements vary across jurisdictions, she adds, otherwise they run the risk of not complying with either local or international rules.

“There have been problems in the past between the regimes in the US and France, for example,” Merlino says. “The US Sarbanes-Oxley Act requires US-listed companies to have an employee hotline to report any non-compliance matt ers. This created a challenge for US companies operating in France as such a system had to deal with specifi c confl icts with local data protection regulations.”

Countries are starting to work together to ensure that such problems are avoided, but the increasingly complicated nature of diff ering legal regimes creates challenges, particularly in the areas of data protection, labour law and privacy protection. Merlino advises that a bett er compliance and communication structure can help immensely.

Los obstáculos culturales o estructurales son los que estimulan a las empresas españolas a priorizar los sistemas de cumplimiento normativo internos. Si lo comparamos con otros países europeos, España no ha sido de los paises más proactivos en introducir estándares y procedimientos para el cumplimiento normativo, con el riesgo que esto conlleva, afi rma Rocío Merlino, de ISLAW Abogados.

Rocío Merlino


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Address: Edifício Rodrigo Uría, Rua Duque de Palmela 23, 1250-097 LisbonTel: +351 21 351 53 61 Fax: +351 21 092 01 09Email: [email protected] Web: www.uria.comMain practice areas: Capital Markets, Corporate and M&A

Antonio García Muñoz, Lener

Address: Paseo de la Castellana 23, 1º, 28046 MadridTel: +34 91 391 20 66 Fax: +34 91 310 22 22Email: [email protected] Web: www.lener.esMain practice areas: Arbitration & Litigation, Administrative & Public Law, EU & Competition, Project Finance & PPP, Regulatory, Compliance, Insurance, Syndicated Loans, Corporate Finance and M&A

Bernardo del Rosal, Clifford Chance

Address: Paseo de la Castellana 110, 28046 MadridTel: +34 91 590 75 00 Fax: +34 91 590 75 75Email: [email protected] Web: www.cliffordchance.comMain practice areas: Arbitration & Litigation and Compliance

Carlos Vázquez Cobos, Gómez-Acebo & Pombo

Address: Paseo de la Castellana 216, 28046 Madrid Tel: +34 91 582 91 00 Fax: +34 91 582 91 14Email: [email protected] Web: www.gomezacebo-pombo.comMain practice areas: Public Law, Water, Residues, Energy, Environment, Administrative HR and Tax

Casto González-Páramo, Hogan Lovells

Address: Paseo de la Castellana 51, 28046 MadridTel: +34 91 349 82 99 Fax: +34 91 349 82 01Email: [email protected] Web: www.hoganlovells.comMain practice areas: Compliance Advice, Regulated Markets, Antitrust, Dominance, Merger Control, State Aid and Competition Litigation

Cecilia Pastor, Baker & McKenzie

Address: Paseo de la Castellana 92 , 28046 MadridTel: +34 91 230 45 00 Fax: +34 91 391 51 45 Email: [email protected] Web: www.bakermckenzie.comMain practice areas: Corporate Compliance, Pharmaceuticals & Healthcare and Trade & Commercial

Bruno Azevedo Rodrigues, ABBC & Associados

Address: Largo de S. Carlos 3, 1200-410 LisbonTel: +351 21 350 36 20 Fax: +351 21 315 94 34Email: [email protected] Web: www.abbc.ptMain practice areas: Derivatives, Project Finance & PPP, Capital Markets, Funds & Fund Formation, Compliance, Syndicated Loans, Corporate Finance, M&A, Energy and Foreign Investment




Dulce Franco, AAA Advogados

Address: Rua Alexandre Herculano 50, 9º, 1250-011 LisbonTel: +351 21 330 93 00 Fax: +351 21 330 42 33Email: [email protected] Web: www.aaa.ptMain practice areas: Compliance, Corporate Finance, M&A, Corporate, Contracts, Contractual Investment, Private Equity and Privatizations

Gabriela Rodrigues Martins, AAA Advogados

Address: Rua Alexandre Herculano 50, 9º, 1250-011 LisbonTel: +351 21 330 93 00 Fax: +351 21 330 42 33Email: [email protected] Web: www.aaa.ptMain practice areas: Project Finance & PPP, Capital Markets, Compliance, Corporate Finance, M&A, Corporate, Contracts, Contractual Investment, Private Equity, Public Procurement and Privatizations

Gloria Hernández Aler, Deloitte Abogados y Asesores Tributarios

Address: Plaza Pablo Ruiz Picasso s/n, Torre Picasso, 28020 MadridTel: +34 91 514 50 00 Fax: +34 91 524 51 80Email: [email protected] Web: www.deloittelegal.comMain practice areas: Banking & Finance, Regulatory and Compliance

Gonçalo da Cunha, F. Castelo Branco & Associados

Address: Avenida da Liberdade 249, 1º, 1250-143 LisbonTel: +351 21 358 75 00 Fax: +351 21 358 75 01Email: [email protected] Web: www.fcblegal.comMain practice areas: Corporate, Commercial and M&A

Jorge Brito Pereira, PLMJ

Address: Avenida da Liberdade 224, Edifício Eurolex, 1250-148 LisbonTel: +351 21 319 73 81 Fax: +351 21 319 73 99Email: [email protected] Web: www.plmj.ptMain practice areas: Capital Markets, Banking and Finance

Hugo Rosa Ferreira, PLMJ

Address: Avenida da Liberdade 224, Edifício Eurolex, 1250-148 LisbonTel: +351 21 319 73 81 Fax: +351 21 319 73 99Email: [email protected] Web: www.plmj.ptMain practice areas: Banking and Finance

David Velázquez, Cuatrecasas, Gonçalves Pereira

Address: Paseo de Gracia 111, 08008 BarcelonaTel: +34 93 290 54 85 Fax: +34 93 290 55 98Email: [email protected] Web: www.cuatrecasas.comMain practice areas: Corporate Compliance, Criminal Law, Financial Institutions, Food & Beverage, Foundations & Non-profi t Organisations, German Desk, Hotels, Tourism & Leisure, Insurance & Complementary Social Security and Litigation




José Luís Esquível, Esquível Advogados

Address: Avenida António Augusto de Aguiar 5, 2º B, 1050-010 LisbonTel: +351 21 384 53 10 Fax: +351 21 384 53 19Email: [email protected] Web: www.esquivel.com.ptMain practice areas: Administrative & Public Law, Project Finance & Infrastructure, Dispute Resolution, Energy & Utilities and Environmental

José Lobo Moutinho, Sérvulo & Associados

Address: Rua Garrett 64, 1200-204 LisbonTel: +351 21 93 30 00 Fax: +351 21 93 30 01Email: [email protected] Web: www.servulo.comMain practice areas: Litigation, Corporate Crime and Regulatory Compliance

Juan Santamaría Pastor, Gómez-Acebo & Pombo

Address: Paseo de la Castellana 216, 28046 Madrid Tel: +34 91 582 91 00 Fax: +34 91 582 91 14Email: [email protected] Web: www.gomezacebo-pombo.comMain practice areas: Administrative Law

Luís Pais Antunes, PLMJ

Address: Avenida da Liberdade 224, Edifício Eurolex, 1250-148 LisbonTel: +351 21 319 73 24 Fax: +351 21 319 73 57Email: [email protected] Web: www.plmj.ptMain practice areas: Technology, Media and Telecommunication

Natàlia Martí Picó, Roca Junyent

Address: Aribau 198, 08036 BarcelonaTel: +34 93 241 92 00 Fax: +34 93 414 50 30Email: [email protected] Web: www.rocajunyent.comMain practice areas: Banking & Finance, Corporate, Family Businesses and Insurance Law

Magda Cocco, Vieira de Almeida & Associados

Address: Avenida Duarte Pacheco 26, 1070-110 LisbonTel: +351 21 311 34 00 Fax: +351 21 311 34 06Email: [email protected] Web: www.vda.ptMain practice areas: Electronic Communications, Technology, Media, Regulatory Privacy & Data Protection

José Giménez, Linklaters

Address: Zurbarán 28, 28010 MadridTel: +34 91 399 60 00 Fax: +34 91 399 60 01Email: [email protected] Web: www.linklaters.comMain practice areas: Public Law, Energy & Utilities, Telecommunications and Litigation

• IBERIAN LAWYER • May / June 2012 www.iberianlawyer.com


GUIDE TO LEADING LAWYERS

11

Rafael Jiménez-Gusi, Baker & McKenzie

Address: Avenida Diagonal 652, Edifi co D, 08034 BarcelonaTel: +34 93 206 08 20 Fax: +34 93 205 49 59 Email: [email protected] Web: www.bakermckenzie.comMain practice areas: Compliance, Corporate Crime and Corporate & M&A

Ricardo Costa Macedo, Caiado Guerreiro & Associados

Address: Rua Castilho 39, 15º, 1250-068 Lisbon Tel: +351 21 371 70 00 Fax: +351 21 371 70 01Email: [email protected] Web: www.caiadoguerreiro.comMain practice areas: Corporate & Commercial, Banking & Finance, Investment Funds and IP

Ricardo Oliveira, PLMJ

Address: Avenida da Liberdade 224, Edifício Eurolex, 1250-148 LisbonTel: +351 21 319 37 34 Fax: +351 21 319 73 19Email: [email protected] Web: www.plmj.ptMain practice areas: EU and Competition

Rocío Merlino Sánchez-Elvira, Islaw Abogados

Address: Paseo Pintor Rosales 56, 1º Izq, 28008 MadridTel: +34 91 522 19 05 Fax: +34 91 523 54 58Email: [email protected] Web: www.islaw.esMain practice areas: Energy & Environmental, Corporate, International Compliance, Regulatory and International Transactions

Vítor Pereira das Neves, AAA Advogados

Address: Rua Alexandre Herculano 50, 9º, 1250-011 LisbonTel: +351 21 330 93 00 Fax: +351 21 330 42 33Email: [email protected] Web: www.aaa.ptMain practice areas: Arbitration & Litigation, Project Finance & PPP, Regulatory, Capital Markets, Funds & Fund Formation, Compliance, Syndicated Loans, Corporate Finance, M&A, Civil, Contracts and Corporate

Sofi a Ferreira Enriquez, Raposo Bernardo

Address: Avenida Fontes Pereira de Melo, Edifi cio Aviz 35, 18º, 1050-118 LisbonTel: +351 21 312 13 30 Fax: +351 21 356 29 08 Email: [email protected] Web: www.raposobernardo.comMain practice areas: Regulatory, Compliance, EU & Competition and Shipping

Paloma Fierro, Linklaters

Address: Zurbarán 28, 28010 MadridTel: +34 91 399 60 00 Fax: +34 91 399 60 01Email: paloma.fi [email protected] Web: www.linklaters.comMain practice areas: Financial Regulation, Banking & Investment Services and Derivatives



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