[1]Brazil’s new Anti-Bribery Law, just signed into law this month, has already generated much attention. And with good reason. It makes highly innovative changes to Brazil’s laws, including the establishment of corporate liability for bribery offenses, a strict liability standard for administrative and other penalties, increased sanctions, and credit for self-disclosure, cooperation, and corporate compliance programs. FCPAméricas has covered the law extensively here [2], here [3], and here [4].
But there are still some significant unknowns related to the law, questions that will only be answered in time. For those doing business in Brazil, these matters should be kept in mind. (See Part 2 of this series here [5], that discusses questions related to interpretation of the statute’s provisions.)
Will the law be enforced? For too many OECD Anti-Bribery Convention member countries (Brazil is a member), the question is not whether adequate laws are in place. The question is whether they are adequately being enforced. Transparency International’s 2012 Progress Report [6] for the OECD Anti-Bribery Convention found that only 7 of the 37 countries reviewed last year have “active enforcement.”
There might be reason to question how serious Brazil’s enforcement will be once the new law goes into force in early 2014. In last year’s Latin America Corruption Survey [7], less than a fifth of Brazilian respondents felt that anti-corruption laws were effective there. Out of the Brazilian respondents who thought they had lost business to competitors who paid bribes, only 7% reported their concerns to the authorities. One Brazilian federal judge has explained [8] to FCPAméricas the challenges of impunity in the country. It is also not clear if Brazil’s Office of the Comptroller General (the Controladoria Geral de União [9] – the CGU), the federal body charged with enforcing violations of foreign bribery with concurrent jurisdiction for violations that take place at the federal level, will have sufficient resources to pursue meaningful cases even if it wants to.
But other factors suggest that enforcement might actually be meaningful. CGU officials are now regular participants at anti-corruption conferences in the country, sending a message to participants that they are serious about the new law. FCPAméricas has described [10] charges recently brought by a prosecutor against the Brazilian subsidiary of the Canadian property investment company Brookfield for alleged bribes paid to São Paulo officials to obtain permits to renovate malls. Moreover, Brazilian authorities appear to be investigating [11] individuals in connection with the Alstom bribery matter in Brazil involving contracts to work on São Paulo’s metro system.
This all suggests that real enforcement is not out of the question. Once Brazilian enforcers discover the significant monetary incentives that can flow to the public treasury from bribery prosecutions, they might have further incentives to act.
Will enforcement be consistent? The new Anti-Bribery Law provides for enforcement by, not just the CGU, but also by “the highest authority of the relevant Agency or entity of the Executive, Legislative, and Judiciary Branches.” As a result, a wide range of officials at various levels of government, including the federal, state, and local, could bring actions under the new law. This means that authorities in localities with little-to-no experience with corruption matters could bring cases against companies, both large and small, doing business within their jurisdictions.
This broad base of enforcement authority has the potential to undermine consistency in the interpretation and application of the law’s provisions. This risk is heightened by the fact that some aspects of the law, like corporate liability and leniency measures, are largely new in the country’s legal system. When various authorities throughout the country have the opportunity to advance their own interpretations and make their own rulings on issues like corporate liability for the acts of third parties and strict liability with no showing of corrupt intent, the result could be a hodgepodge of judgments and resolutions. Companies could be left with great legal uncertainty in the marketplace.
Will enforcement become politicized? Because so many different authorities can enforce the law, there is the risk that enforcement might become politicized, or be seen as politicized. It is more difficult to hold enforcement officials accountable when so many actors have a role. In addition, when enforcement happens in parts of the country that lack traditions of strong judicial and prosecutorial institutions, the law might become a weapon of political power or a way to advance political interests. Some feel that this has already happened in other countries, like China, where enforcement of bribery laws is sporadic. As a result, companies and businesspeople often receive questionable treatment under the law.
The FCPAméricas blog is not intended to provide legal advice to its readers. The blog entries and posts include only the thoughts, ideas, and impressions of its authors and contributors, and should be considered general information only about the Americas, anti-corruption laws including the U.S. Foreign Corrupt Practices Act, issues related to anti-corruption compliance, and any other matters addressed. Nothing in this publication should be interpreted to constitute legal advice or services of any kind. Furthermore, information found on this blog should not be used as the basis for decisions or actions that may affect your business; instead, companies and businesspeople should seek legal counsel from qualified lawyers regarding anti-corruption laws or any other legal issue. The Editor and the contributors to this blog shall not be responsible for any losses incurred by a reader or a company as a result of information provided in this publication. For more information, please contact Info@MattesonEllisLaw.com [12].
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