Brazil Fights Corruption By Encouraging Corporate Compliance Programs
There was a time when ethics compliance could be handled by a company’s lawyer and in-house legal team. Today, compliance is a beast of its own, frequently requiring a dedicated compliance team to analyze national and international ethics laws while developing and implementing internal compliance programs.
During the past 20 years, the Brazilian government has demonstrated a growing commitment to combating corruption and the bribery of public officials. In the 1990s, Brazil enacted legislation that targeted bribery-related money laundering, concealment of assets, securities fraud, and economic power abuse.
In 2000, Brazil adopted the Organisation for Economic Co-operation and Development’s Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. In 2003, Brazil became a signatory to the United Nations Convention against Corruption, which sets international standards that combat political and governmental corruption in business dealings.
Now Brazil has a new tool for fighting corruption.
Brazil’s New Anti-Corruption Law
Brazil’s new Anti-Corruption Law (Law 12.846) was enacted in August 2013 and will become effective on January 28, 2014. The law imposes harsh civil and administrative liabilities on corporations for acts of corruption involving Brazilian and foreign public officials.
It’s widely understood that the term “acts of corruption” refers generally to bribery of public officials by a company’s directors, officers, employees, agents, and independent contractors. The law doesn’t just apply to Brazilian companies. Foreign companies can also be held liable for corrupt acts.
To prove a violation of the law, authorities only need to show evidence that the illegal act was committed in the benefit or interest of the company. And the penalties are harsh. In addition to fines up to 20% of the gross revenue of the company, violators also risk the loss of assets and compulsory dissolution.
The Importance of Developing an Internal Compliance Program
Brazil’s effort at curbing corruption is not entirely focused on punishment. The Anti-Corruption Law encourages companies to establish and implement an internal compliance program. When charged with a violation, the existence of an effective internal compliance program will be taken into consideration when determining sanctions. The existence of a program is not a complete defense, but it may reduce the severity of the penalties imposed.
Any foreign company conducting either direct or indirect business in Brazil must pay very close attention to the details of the Anti-Corruption Law and understand the intricacies of Brazil’s move toward a more ethical business culture.