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Impact of the FCPA and UK Bribery Act in Latin America: Perspectives from Argentina, Mexico and Brazil

Author: Matthew Fowler

FCPA.ImpactWhat impact have the FCPA and the UK Bribery Act had outside the US and the UK? I put that question (and a few others) to prominent anticorruption attorneys in five Latin American countries. All reported local impacts from these two foreign laws, but the nature of those impacts varied in significant and interesting ways. In a previous post, I summarized answers received from attorneys in Chile and Venezuela.  This post summarizes responses from counsel in three of Latin America’s economic heavyweights: Argentina, Mexico and Brazil.

Argentina

Maximiliano D´Auro of Estudio Beccar Varela in Buenos Aires distinguished between the impact of the FCPA and the UKBA:

[The] UK Bribery Act generated a great deal of discussion when it entered into force, but has not been so present in anticorruption conversations ever since; the reason for that probably being that – unlike [the] FCPA – there have not been enforcement actions under UK Bribery Act involving Argentina.

He also noted that awareness of the FCPA or UKBA among Argentine lawyers and companies is “directly proportional” to their international transaction experience.

Mexico

Luis F. Ortiz of OCA Abogados in Mexico City also distinguished between FCPA and UKBA impacts. “Regarding the FCPA: Mexico now has a history of FCPA violations by U.S. subsidiaries or Mexican units (e.g., Stryker, Bizjet, Siemens) and also ongoing investigations such as Wal-Mart and Oceanografia-Pemex-Banamex (Citibank’s Mexican unit).”

“Regarding the UK-Bribery Act: [OCA Abogados] has not led any investigations regarding ongoing investigations by the SFO, [but] we have participated in preventive investigations suggested or imposed by shareholders or compliance officers.” These preventive investigations seem to be driven by a perception among shareholders of UK businesses that “Mexico is a complex jurisdiction regarding bribery as a way of doing business.”

Mr. Ortiz reports changes in business culture arising from the FCPA and the UKBA. “Big corporations and multinationals seem to be more aware of the recent developments and ongoing investigations.”  They are “making mandatory [due diligence] procedures, and [training] third parties on FCPA cases and consequences.” Chief Compliance Officers are seeking “local counsel and organized associations that will provide training and a discussion forum.”

Brazil

Shin Jae Kim, Partner at TozziniFreire in São Paulo, reports various impacts of the FCPA and the UKBA in Brazil, corresponding to different bases for US or UK jurisdiction. Ms. Kim identifies impacts on the following types of entities:

  • “companies from the USA, UK and other countries subject to those laws that created subsidiaries in Brazil and made significant investments in the country”;
  • companies that have “business partners (e.g., agents, distributors, suppliers, etc.) located in Brazil”; and
  •  “Brazilian companies which are issuers of securities traded in the US exchange.”

But Ms. Kim notes that the most significant anticorruption impacts in Brazil have been caused by “the enactment of the Brazilian Anti-Corruption Law on August 1, 2013, [which] came into effect on January 29, 2014.”

Takeaways

The responses from Mr. D’Auro and Mr. Ortiz suggest that anti-corruption compliance is taking hold among multinationals and others who do business with U.S. and U.K. companies. But one wonders whether smaller local companies can manage corruption risks, and whether they can adequately respond to concerns of UK and US investors that those countries are “complex jurisdictions” where bribery is “a way of doing business.”

In contrast, Ms. Kim’s response suggests that Brazilian companies are now concerned more about local, rather than foreign, sanctions for transnational bribes. This is a significant shift and a strong rebuttal against any argument that corruption is acceptable in Brazil.

And since the Brazilian Anti-Corruption Law grants jurisdiction to Brazilian courts to sanction bribes paid outside Brazil – like the FCPA and the UKBA do – it may also have enforcement and compliance impacts on other countries.

In the next post in this series, I will summarize responses from local counsel regarding the impact of local anti-corruption efforts, including the passage and enforcement of anticorruption laws.

The opinions expressed in this post are those of the author in his or her individual capacity, and do not necessarily represent the views of anyone else, including the entities with which the author is affiliated, the author`s employers, other contributors, FCPAméricas, or its advertisers. The information in the FCPAméricas blog is intended for public discussion and educational purposes only. It is not intended to provide legal advice to its readers and does not create an attorney-client relationship. It does not seek to describe or convey the quality of legal services. FCPAméricas encourages readers to seek qualified legal counsel regarding anti-corruption laws or any other legal issue. FCPAméricas gives permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author and to FCPAméricas LLC.

© 2014 FCPAméricas, LLC

Matthew Fowler

Post authored by Matthew Fowler, FCPAméricas Contributor

Categories: Anti-Corruption Compliance, Argentina, Brazil, English, FCPA, UK Bribery Act

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One Response to “Impact of the FCPA and UK Bribery Act in Latin America: Perspectives from Argentina, Mexico and Brazil”

  1. Corruption Currents: From Changing Passwords to US-Created Corruption Says:

    […] says the SFO could do better. The FCPAmericas looks to Argentina, Mexico and Brazil for perspectives on the FCPA and Bribery Act. Mike Volkov sees chief […]

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