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.
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On January 17, 2014, the Ministry of Finance and Public Credit (Secretaría de Hacienda y Crédito Público) through its prevention of money laundering website established certain administrative breaks for the filing of notices and reports in zeros regarding companies' operations for 2013 and 2014.
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