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Peru: Sentences Imposed for Fraudulent Corporate Activities

(Feb. 3, 2009) On December 30, 2008, President Alan García Pérez of Peru signed a law that amends articles 198 and 245 of the Criminal Code (Law No. 29307). Article 198 deals with fraudulent management. A prison sentence of one to four years will be imposed on a person who, in the exercise of functions of management or representation of a corporation, performs acts damaging to the entity or to third parties, such as hiding from shareholders, partners, or internal or external auditors the true situation of the corporation; falsifying balances by the inclusion or omission of profits or losses; or using any ruse to increase or reduce the amounts reflected in accounting records. Other actions that are subject to the same penalty include providing false data related to the situation of a corporation, falsifying balances to reflect and distribute non-existing profits, and using the assets of a corporation for the benefit of oneself or others.

Article 245 concerns cover-ups, omissions, or falsification of financial information. A prison sentence of four to eight years is imposed on anyone who, in the exercise of his/her functions as a manager or representative of a banking institution, financial institution, or other entity operating with public funds, with the purpose of concealing the state of liquidity or insolvency of the institution, omits or refuses to provide information or provides false data to the control and regulatory authorities.

Law No. 29307 also incorporates article 198-A, on distortion of auditing reports, in the Criminal Code. (Law No. 29307, EL PERUANO [the official gazette] (Dec. 31, 2008), available at http://www.congreso.gob.pe/ntley/Imagenes/Leyes/29307.pdf.)