03/11/2011 10:54:00 AM EST
Brazil and Anti-Corruption Legislation
As one of the world's largest energy producing countries,
many US companies have subsidiaries in Brazil, which are subject to the Foreign
Corrupt Practices Act (FCPA). Most of these companies have translated versions
of the US FCPA compliance program. Such translations often disregard the size,
nature, and particularities of Brazilian business, as well as the local risks
and legal requirements pertaining to the Brazilian subsidiaries. Although these
programs add value to companies, provide more security to investors and avoid
reputational damage, aside from other benefits, they are mostly implemented by
Brazilian subsidiaries of American companies subject to the FCPA. It is unusual
to find a Brazilian company not subject to the FCPA that has a compliance
program in place.
In a recent article by entitled, "Compliance
in Brazil: Current and Future Perspectives" published in the International Law Enforcement Reporter,
Brazilian attorney Carlos Henrique da Silva Ayres discussed
legislation introduced in Brazil last year which is designed to require Brazil
to comply with international agreements for combating bribery to which Brazil
is a signatory. This legislation, designated as draft bill No. 6.826/2010,
addresses civil and administrative liability for corporations for corrupt acts
relating to Brazil's national and foreign public administration.
This legislation should bring Brazil directly into the
international mainstream regarding legislation to prevent bribery and
corruption. In his article Ayres details some of the significant provisions of
the legislation, as follows:
• Respondeat Superior - The legislation embraces a notion that
legal entities will be held liable for acts committed by any of its agents or
any person who may represent a Brazilian entity. This is significant because
under Brazilian law, with the exception of environment-related offenses,
corporations cannot be held criminally liable for the acts and omissions of
their employees and agents.
• Affirmative Defense - The legislation has something akin to the
"adequate procedures" of the UK Bribery Act. Ayres notes that the bill provides
"the existence of mechanisms and internal integrity procedures, audit and
incentive denunciation of irregularities in applying the code of conduct and
ethics within the legal entity," in addition to other factors, will be taken
into consideration when determining the sanctions to be applied.
• Credit for Cooperation - The legislation provides that "the
cooperation with investigation of infractions, through means such as communication
of the illegal act to the public authorities before the initiation of a
proceeding, and the celerity to provide information in the course of the
investigation" will also be taken into consideration when determining the
sanction to be applied.
• Penalties - The legislation has penalties, both for
corporations and individuals. These include fines against corporations of
between 1% to 30% of the company's gross revenue and debarment from public
contracts, among other sanctions. Individuals could face jail time of up to 12
years per offense.
Ayres end his article by observing that this proposed
legislation is another indication that Brazilian authorities are closing ranks
in the international effort against bribery and corruption. Brazil is a
signatory to three international conventions against corruption: The United
Nations Convention against Corruption; The OECD Convention on Combating Bribery
of Foreign Public Officials in International Business Transactions; and The
Inter-American Convention Against Corruption. Brazilian authorities have
cooperated with representatives from the US Department of Justice (DOJ) and
other anti-bribery and anti-corruption authorizes in international
investigation. If passed, draft bill No. 6.826/2010 will likely continue develop
Carlos Henrique da Silva Ayres is an attorney in at Trench, Rossi e
Watanabe Advogados, a Brazilian law firm associated with Baker &
McKenzie. He specializes in white collar crimes and compliance matters.
Visit the FCPA Compliance and Ethics Blog,
hosted by Thomas Fox, for more commentary on FCPA compliance, indemnities and
other forms of risk management for a worldwide energy practice, tax issues
faced by multi-national US companies, insurance coverage issues and protection
of trade secrets.
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© Thomas R. Fox, 2011
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