On August 1, 2013, Brazil enacted Law No. 12.846, which will allow administrative and judicial bodies to hold legal entities (including foreign companies with operations and branches in Brazil) responsible for acts of corruption committed against Brazilian and foreign public officials and bodies ("Brazilian Anti-Corruption Law"). It will become effective 180 days as of its publication in the Official Gazette, on August 2, 2013.
Until the enactment of the Anti-Corruption Law, only individuals (e.g. public officials, employees and managers) could be punished for bribery. Therefore, the Brazilian anti-corruption statutes lacked the element of corporate liability that is a cornerstone of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of the Organization for Economic Cooperation and Development ("OECD"), which was ratified by Brazil in 2000.
In general terms, corruption offences under the Brazilian Anti-Corruption Law encompass offering or giving unjust advantage to a public official, or to a related third party; financing or subsidizing the illegal offences foreseen in such legislation, and; committing illegal actions related to public contracts and public biddings, such as bid rigging.
Administrative fines may vary from 0.1% to 20% of the gross turnover of the legal entity for the financial year prior to the beginning of the administrative proceeding. If it is not possible to ascertain the gross turnover, fines may range from R$ 6,000 to R$ 60 million. In the event of judicial proceedings, civil penalties may include suspension or the partial banning of activities; compulsory dissolution of the legal entity and prohibition from obtaining incentives, donations or loans from government bodies. Regardless of the imposition of the above-mentioned penalties, the legal entity must fully indemnify the injury suffered by the government body.
The Law also establishes strict liability. Therefore, the enforcement authorities will only have to prove that the illegal acts of directors, officers, employees or other agents were committed to the benefit the legal entity.
Furthermore, the Brazilian Anti-Corruption Law establishes that sanctions may be determined by administrative and judicial bodies, taking into consideration the implementation by the offending legal entity of compliance programs and internal procedures to detect and prevent bribery. Further regulation on how compliance programs will be evaluated for such purposes still have to be enacted by the federal executive branch. Another important aspect of the Brazilian Anti-Corruption Law is that it includes successor liability with respect to any amendment to the articles of association, conversion, merger and spin-off of the offending legal entity.
Finally, it also includes the possibility of self-disclosure of bribery cases and entering into leniency agreements with public authorities, which may result in a reduction of up to 2/3 of the applicable penalty. Furthermore, under the Brazilian Anti-Corruption Law, corporate directors and employees may also be held criminally liable in accordance with their participation in the illegal actions.
Felsberg and Associates will be pleased to answer questions concerning the new Brazilian Anti-Corruption Law and to assist interested companies in implementing compliance programs in respect of this Law.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.