Chile ranked 22nd on the 2013 Transparency International Corruption Perceptions Index with a score of 71 out of 100 (where 100 is very clean and 1 is very corrupt).
Chile currently lacks comprehensive whistleblower laws or legal provisions to protect whistleblowers from retaliation in either the public or private sectors. The only relevant provision currently in effect is intended to protect public officials who report disciplinary action during the course of an investigation.
2. Present legal environment
a. Public sector
In 2007 Chile adopted a law to protect government employees and civil servants who report the lack of probity of Chilean officials1. The law calls for protection from retaliation such as administrative punishment, transfer and demotion. Although the goal is not explicitly stated, the law aims to detect, prevent and punish acts related to corruption and the poor exercise of public duties. It is the first legal instrument in Chile especially designed to regulate, promote and protect allegations of irregular conduct and lack of integrity within the Public Administration, other than criminal acts.
According to the law, civil servants shall report corruption to the national prosecutor (Ministerio Público), police or competent authority. It is the responsibility of the Public Prosecution Agency to handle the complaint. Public officials who report unfounded or false allegations with the mere intention to defame a person are subject to removal from office; this behaviour in itself violates the principle of probity according to Chilean legislation.
This law is weak, however, as it does not provide any real incentives to report wrongdoing. Further, it only protects the whistleblower for three months or until the complaint has been resolved2. The law applies only to public officials, and specifically those governed by the Administrative Statute and the Administrative Statute for Municipal Officials. It does not apply to employees of state-owned and state-controlled companies.
b. Private sector
There are no safeguards in Chilean law to protect private sector employees who report offences. A 2009 law that establishes criminal liability for companies3 has led some companies in Chile to establish whistleblower procedures. The law was passed following recommendations by the OECD.
In addition to this law, international standards have led a number of companies doing business in Chile – including some multinational companies – to introduce whistleblower standards as part of their compliance programmes4. To date, however, such procedures are not mandatory in Chile.
3. Additional legislative gaps
Chilean government officials and elected officials, in collaboration with international organisations, NGOs and citizens, should begin a public process to explore the adoption of a comprehensive whistleblower protection law and framework. This process should draw on the numerous sets of guidelines and standards that have been released in the past two years by international and regional organisations, and NGOs, including:
Organization of American States (2013): Model Law to Facilitate and Encourage the Reporting of Acts of Corruption and to Protect Whistleblowers and Witnesses5
OECD (2012): Study on Whistleblower Protection Frameworks, Compendium of Best Practices and Guiding Principles for Legislation6
Council of Europe (2013): Draft Recommendation on Protecting Whistleblowers7
Government Accountability Project (2013): International Best Practices for Whistleblower Policies8
Transparency International (2013): International Principles for Whistleblower Legislation9
4. Case examples of Whistleblowing
There are no widely known cases of whistleblowing in Chile, partly due to the fact that the public sector legislation is fairly new, and partly because the law only covers government employees who report irregularities or breaches of the principle of probity. Cultural factors may also discourage whistleblowing in Chile.
It is worth noting that the most well-known accounting scandal in Chile in recent years, regarding the retail chain Empresas la Polar in 2010, did not come to light as a result of an internal whistleblower – despite the fact that fraud had been ongoing for more than five years and involved employees at all levels of the company. This serves to prove the point that Chile’s private sector is in need of changes in attitude and culture.
5. Political, economic and cultural environment
In 1990, Chile transitioned back to civilian democratic rule following the 17-year reign of General Augusto Pinochet, who took the country by coup in 1973. More recently, Former President Michelle Bachelet ( 2006-2010) was elected to a new four-year presidential term in December 2013 and took office on March 11, 2014.
Chile scored 78.7 on the 2014 Index of Economic Freedom, ranking as the 7th freest economy on the 2014 index. Chile has one of Latin America’s strongest economies and has survived the Global Financial Crisis and 2010 earthquake comparatively well10.
6. Information environment
In 2008 Chile introduced the Law on the Transparency of Public Functions and Access to Information on Public Administration which provides that “all information prepared using taxpayer money and all other information held by government agencies, whatever its format, date of creation, origin, classification, or processing, is in the public domain”11. The legislation does include exceptions to preserve the confidentiality of certain matters where necessary.
Set forth in the Law is the principle of active participation, which stipulates that all government agencies must make the information set out in the Law electronically available to the potential users. The Law also concerns the constituent principles of citizens’ right to access information and encompasses principles of maximum information dissemination, non-discrimination, and gratuitousness. Exceptions to this right are also set out in the Law and are based on the rights of third parties and on other explicit and restricted justifications. Additionally, the Law provides for a maximum five-year enactment of special laws restricting certain matters as being “reserved” from public dissemination.
Among the key innovations the 2008 Law was the creation of the Transparency Council—an independent entity responsible for guaranteeing citizens’ right of access to public information—and its endowment with powers enabling it to enforce the law and impose penalties. The Law also provides for citizens to commence formal judicial or administrative proceedings relating to alleged violations of their right of access to public information before the Transparency Council and appellate courts12.
In October 2013 the Chilean Senate approved amendments to the Law, which include restrictions on access to emails belonging to public officials, the amendments stipulate that emails can only be accessed if the email domain belongs to a public institution and when the information contained within them pertains to final decisions. The amendments also install a public interest test that was not previously included, whereby the individual requesting to access public information contained in the emails would first need to prove that the information itself is of public interest. Further amendments include:
A requirement that public officials publish information about their salary and a declaration of their assets and interests on the website of the public office, together with a further requirement that an index for secret or reserved documents in published by the relevant authorities. The amendment includes provisions to allow Transparency Council approval of alternative means of disclosure if the material affects third parties or lacks public interest.
A provision for increased notification time to third parties regarding potential releases of documents that concern them. Where the rights of third parties are being affected by the access of public information, they must be notified by the administrative organisms in a time span of five days—as opposed to 2 current—and the time span for the third parties to act in the procedure would be of 10 days—as opposed 3 currently.
A stipulation that classified documents relating to national security would be released after 20 years—although extensions to this period can be sought. The amendment places a time limit on confidentiality of classified information of five years, with a potential for extension for a further five-year period. The amendment sets out an automatic period of 10 years for sensitive information—such as that related to foreign defence—which could be extended in 10-year increments successively and indefinitely. The Transparency Council has the power to review every resolution that declares that information is confidential.
An amendment of the complaints and appeals procedures to allow refiling of requests, notwithstanding a negative Transparency Council ruling, and an extension in the time period to file a complaint to the Transparency Council from 15 days to 20 working days.
The introduction of two recourses in the complaint procedure: the special reposition and the extraordinary recourse of the unification of the jurisprudence. The special reposition applies to resolutions from the Transparency Council that deny the access of information based on a factual inaccuracy or error that is determinant to the case, or when essential background for the case that has been ignored. The extraordinary recourse of the unification of the jurisprudence applies to the sentence from the Court of Appeals that resolves the illegality recourse when the subject has different interpretations in one or more sentences. The extraordinary recourse is resolved by the Supreme Court, and its objective is to have reassurance about the application of the law on access of public information law.
An expansion of the grounds for applying sanctions for noncompliance by government agencies and clarifies how the fines are to be assessed and an increasing in the type of sanctions that can be applied to those who deny public information. The amendment sets out sanctions including censure, fines and suspension from office and a fine reaching up to fifty-percent of the offenders monthly wage. Further, the amendment builds in discretionary power for the Transparency Council to change the sanction.13
8. Rule of law
The independence of the Chilean judiciary is provided for in the country’s constitution, and the courts remain relatively free from political interference. Over the past decade, the Chilean Congress has introduced significant anti-corruption, transparency, and campaign-finance legislation, which have furthered Chile reputation for good governance. Expropriation is rare and property rights are afforded a high degree of respect. Throughout 2009 to 2013 period, crime rates have been in significant decline14.
Last modified: March 14 2014.
SQM (chemical company)
MASISA (wood products company)