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  • Foto del escritorThe Corporate Reviews

Alexandra Padurariu

Head of Legal, Samsung Electronics


The Romanian business environment: clarity of the legislative landscape and impact on compliance systems. The role of a preventive fining policy.

The current legislative landscape is increasingly dynamic in the recent years: private companies, regardless of the chosen business model or the industry they are operating in, are facing an increasing regulation regarding almost all aspects of their activity.

Whether we are talking about the legal provisions on the protection of personal data, those regarding the mechanisms for preventing money laundering activities, or the newer entry into force of the law on the protection of whistleblowers, all have one thing in common: the need for transparency regarding the activities carried out by companies and which can either affect or significantly harm the public interest or a person’s rights and fundamental freedoms. In this regard, the role of the compliance officer and its importance for companies are systematically rewritten, with a mission not at all easy nor clear-cut – the implementation of a standard of diligence, aligned with the local legislative rigors, but also with the mission of the company and the values of the group to which it can be part of.

One of the main challenges that the compliance officers are facing nowadays is the pursuit of the legislative desideratum, expressed however, more often than we would like, in mechanisms that are unclearly, confusingly, or incompletely transposed. The thorough regulation of this legislative desideratum can often lead to a lack of correlation between several incident legal provisions and, indirectly, to a lack of predictability, which makes it almost impossible for companies to comply in a context that should ideally pursue economic development and innovation.

Even if these aspects represent risks inherent to the legislative process, the price that the addressees of the law can end up paying is still a very high one: the lack of legislative predictability, especially in terms of conduct to be followed and sanctions applicable in case of breaching it, generates a potential lack of compliance placed unfairly and utterly in the sole responsibility of the addressee of the law, the one that has to comply with all its intricacies.

Private companies, in their vast majority, sometimes share from this point of view a common sad experience, namely that of routine checks carried out by the control authorities and finalized by indicating some irregularities in the assessment of the control bodies, which are in fact based on the actual lack of clarity or predictability of the applicable legal provisions (paradoxically, often recognized by the control bodies themselves).

Sometimes, companies that operate several offices, in several counties of the country, share an even more painful experience: certain legal provisions are interpreted by the control bodies differently, depending on the geographical area in which such interpretations were given. If we add to these aspects the judicial practice lacking constancy in many situations, which, in turn, paralyzes the efforts of diligent companies in terms of implementing and maintaining a safe business standard, we can easily imagine the scale of these challenges.

However, we do believe that there is hope from this point of view, but that is only if both private companies and the control authorities opt for a much more transparent communication and a change of optics. Both the supervisory authorities and the addressees of the law (in particular the companies) could rather be regarded as participants with equal obligations in terms of achieving the common goal, namely to increase the level of compliance actively and voluntarily – in this way, the desired goal could be achieved more quickly, in a more efficient way and with fewer expended resources (both on the part of the authorities, and of the companies).

This paradigm change could closely follow the steps taken and compliance mechanisms implemented and already existing in other states, which are based above all on a so-called eminently preventive role of the activity carried out by the state regulatory bodies, marked by ample information notes on the concrete obligations established for the companies, but also through multiple practical recommendations, made available in a transparent manner. These elements could lead to a better monitoring of a company's efforts to follow in concrete terms the existing recommendations, as well as the resources or efforts invested by private companies in this regard.

Also, as a general rule, taking into account the particular situation of each industry (or each category of companies separately) upon drafting legislation for that specific industry, has proven to be directly related to the increase in the general level of compliance, marked by the reduction of violations of the law as a result, and the increase of the productivity of the recipient companies in all respects. We therefore deem that the gaps inherent in a legislative hyper-regulation can be greatly lessened if the emphasis is placed on the common aim pursued and on the ways in which to achieve that aim is focused, rather than on the unpredictable penalty triggered by a lack of conformity which is, essentially only a foreseeable consequence of the legislative status quo.

It is well known that the business environment thrives in a climate based on predictability: economic, political, and legislative predictability, above all. However, the difference between theory and practice raised a constant challenge from the perspective of the benchmarks involved in the development of programs and mechanisms to support the business environment. In an attempt to reduce this gap between theory and practice, a lot of emphasis has been placed and is still placed on the idea of prevention, understood in the broad sense of the word: the risks that we can prevent are, above all, risks that we can completely remove.

Thus, it only seems logical that prevention as a general concept needs to have regard to the activities or actions carried out in order to prevent the wrongdoings and, especially, the fines applied, taking into account (i) the extremely high number of fines applied at country level every year and (ii) the effect of the multiple sanctions applied, both for the authorities involved and for the targeted private companies.

From this point of view, the activities or actions carried out in order to prevent offences have, or should have, certain very clear characteristics: first of all, the sanctions applied on a large scale in Romania receive a significant amount of challenges and appeals, which include both the "principled" appeal and the rigorously motivated appeal, based mainly on a misinterpretation of the provisions that allowed the application of the respective sanction – both categories, however, leading to an excessive workload over the courts and to the wasting of valuable resources of time and money.

Hence, we can ask ourselves whether the efforts of the control authorities would not be more useful to concentrate towards effectively preventing the offences, and not towards solely sanction the slightest hunch of their existence. In fact, this was also the very clear purpose of the Prevention Law no. 270/2017, by which certain conducts could no longer be sanctioned at the first offense, but oriented towards the need to enter into legality on the basis of clear recommendations. In this respect, we deem commendable the intention of the legislator, the effects of which can be much more accentuated in the future by extending the scope of that particular law.

On another train of thought, sanctions in general, but especially the ones targeting offences (contraventii), have never been effective in order to prevent wrongdoings; on the contrary, the number of offences found each year is very enlightening in this respect, given the dynamics of legislative changes and the lack of predictability of the legislative landscape in general.

Last but not least, the detection and sanctioning of offences implies a certain degree of interpretation of the applicable legal provisions (also necessary for reasons related to the lack of predictability of the law, as outlined above), which generates, as previously shown, non-unitary practices among the different control authorities and among the courts of law.

These non-unitary practices unfortunately do little to help the business environment in obtaining a clear guide on the attitude to be followed, generating only confusion, frustration and the wasting of financial resources.

From this point of view, we believe that the business environment could benefit to a greater extent from clear prevention mechanisms, aiming at indicating the behavior to be followed on a case-by-case basis and proposing clear remedial measures in the first phase, and applying sanctions only in cases of very serious misconduct, or in cases where the suggested remedial measures are ignored. This way, a large part of the acts that could be considered illegal would be corrected before they even cause damage, and the addressees of the law would have a very clear framework that would allow them to predictably adjust their own activity in the sense desired by the supervisory authorities.


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