Influence Peddling: Public and Private
In Peru, INFLUENCE PEDDLING is a criminal offence under the Peruvian Criminal Code, specifically article 400. The offence covers using a position of power, influence or personal connections to obtain an improper advantage or benefit in exchange for financial or other compensation, undermining the impartial functioning of public institutions.
What does article 400 of the Peruvian Criminal Code say?
Whoever, invoking or holding real or simulated influence, receives, causes to be given or causes to be promised, for themselves or for a third party, a gift, promise or any other advantage or benefit, in exchange for offering to intercede with a public official or servant who is to hear, is hearing or has heard a judicial or administrative case, shall be punished with a custodial sentence of no less than four and no more than six years…
Elements of the offence of influence peddling
- Invoking influence: the person committing the offence claims to have power or the ability to sway a public official's decision. That influence may be real or simulated — that is, even where they do not actually hold it but pretend to in order to obtain a benefit.
- Obtaining an improper benefit: influence peddling involves offering, promising or receiving some financial or material benefit.
- Act or omission by the public official: the aim of influence peddling is for the official to perform an act in their official capacity, or to refrain from doing something they ought to do as part of their duties.
Aggravating factors and additional penalties
Where influence peddling seriously harms the interests of the State, or occurs in the context of offences committed by public officials, the penalties may be more severe. In addition, where the offence is committed by a public official, disqualification from holding public office may be imposed alongside the custodial sentence, as laid down in the Criminal Code.
INFLUENCE PEDDLING in the private sector, although better known in the public sphere, can also arise in relationships between companies, or between individuals and private entities. While the Peruvian Criminal Code mainly regulates influence peddling in the context of public office, corrupt practices involving the improper use of influence also appear in the private sector, especially in situations affecting free competition, transparency and fairness in business.
How does influence peddling arise in the private sector?
- Contractual relationships
A private actor, such as an executive or company representative, may use their contacts or personal relationships with other company directors, customers or suppliers to win contracts or business on privileged terms. This could involve rigging tenders, awarding contracts directly or on favourable terms in exchange for some benefit (bribes, commission payments or indirect benefits).
- Purchasing and procurement
In private companies' purchasing and procurement processes, influence peddling can occur when an employee or director manipulates decisions to favour a particular company. This might include pressuring other members of the organisation to choose specific suppliers in exchange for personal compensation.
- Access to confidential information
Someone may use their position to obtain privileged information from their own company or from other private sector companies, and then share it with third parties or use it for their own gain, with the promise of financial reward or commercial advantage. This can lead to influence peddling cases involving investment decisions, mergers, acquisitions or private tenders.
- Negotiating commercial terms
A director may use their position to influence the terms of a commercial agreement in favour of a partner or friendly company, manipulating prices, payment terms or contractual conditions. This can happen through influence over those responsible for key commercial decisions within the organisation.
- Recruitment
In recruitment, influence peddling can occur when someone uses their power or connections to favour hiring relatives or friends, pressuring or influencing HR staff or senior management in exchange for favours or financial benefits.
- Influence over private judicial or arbitral decisions
Where private companies turn to arbitration or private judicial resolution to settle disputes, a private actor may improperly influence the arbitrators or judges to obtain favourable decisions, using contacts, payments or promises of future benefits.
Consequences of influence peddling
- Loss of trust and reputation
Influence peddling can undermine the trust of business partners, employees and customers, damaging the company's reputation in the market.
- Legal penalties
Depending on the seriousness of the act, the authorities may investigate and penalise the companies or individuals involved, especially where influence peddling involves corruption, bribery or anti-competitive practices.
- Internal sanctions
Many companies impose internal sanctions, including dismissal or the exclusion of partners who use influence peddling for personal gain against the company's interests.
In short, influence peddling can take a range of forms that undermine transparency, competition and fairness in professional and commercial relationships. Although the legal framework in many countries, Peru included, focuses more on influence peddling in the public sector, the private sector is not free of such practices, which can carry serious ethical and legal consequences.
At Líderes Empresariales APLA we specialise in training and advising compliance officers and in implementing money laundering, terrorist financing and proliferation financing prevention rules for the various obligated entities. We help you avoid penalties for non-compliance — get in touch.
Preventing influence peddling inside a company starts with its internal controls: that is what we design in our AML/CTF consulting.