[1]The impact of the Foreign Corrupt Practices Act and the UK Bribery Act on business in those countries can be measured in different ways: the total fines imposed, the number of compliance officers hired, and the existence of this blog and others like it. But what do these two laws – which criminalize bribes paid to foreign officials – look like from the perspective of foreign countries?
I asked prominent private counsel in five Latin American countries several questions around this theme, and got some interesting answers. All of the lawyers said that the FCPA and the UKBA have had an impact in their countries, but the impacts they described varied widely.
This post starts a series that will report these responses, beginning with responses corresponding to Venezuela and Chile. The lawyers who responded for those countries both referenced Transparency International’s Corruptions Perceptions Index [2], where these two countries represent the far ends of the spectrum among Latin American countries.
Venezuela
Gerardo Briceño [3] of Hoet Pelaez Castillo & Duque in Caracas described the impact of international anticorruption laws in terms of enforcement. He said that foreign authorities have recently brought prosecutions for transnational bribes paid in Venezuela. He noted in particular that an ex senior official of BANDES, (a government-owned bank,) recently pleaded guilty in New York court to charges including money laundering violations as “part of an agreement to cooperate with the U.S. prosecutors in their investigation of Direct Access Partners.”
Mr. Briceño also identified “an increasing interest in implementing anti-bribery and compliance programs in Venezuela.” He attributed this interest to “… an effort to improve the credibility of both domestic and foreign companies, and to support their commitments to corporate responsibility.”
These compliance efforts are taking place in a challenging context – the recent political upheavals in Venezuela are presenting difficulties for both companies and lawyers. And corruption is part of that context – as Mr. Briceño noted, the 2013 Corruption Perceptions Index ranks Venezuela “as the most corrupt country in Latin America.”
Chile
At the other end of the Corruption Perceptions spectrum is Chile. Marcos Rios [4] of Carey y Cia, Ltda. noted that, according to the Corruptions Perceptions Index. “Chile’s corruption levels are equivalent to the U.S.’s and, together with Uruguay, [are] the lowest in the region.”
Mr. Rios describes the impact of the FCPA and the UKBA in terms of both transactional and compliance practices:
On the transactional front, we see the impact of these laws particularly in connection with international business transactions… and cross-border mergers and acquisitions. It is now common practice that, where one of the parties to international transactions is or may be subject to the long-arm jurisdiction of these laws, it will attempt to mitigate its exposure through due diligence investigations of the target entities and/or their counterparties, as well as through the inclusion of anti-corruption representations and obligations.
On the compliance side, it is also customary for local subsidiaries of multinational entities to have FCPA- and UKBA-related risk mitigation mechanisms and rules in their codes of conduct and compliance programs and practices.
Mr. Rios went on to describe how anticorruption compliance has penetrated Chilean business culture:
Local companies and lawyers are increasingly aware of the FCPA and the UKBA, and multinational companies frequently raise issues relating to these laws when doing business locally. Local awareness of these laws is understandably higher in companies dealing with multinational entities and [with] practitioners who have substantial international practices. Anti-corruption matters come up rather frequently in conversations between such companies and practitioners.
Takeaways
These responses show that the FCPA and the UKBA have had tangible impacts in two very different Latin American countries. They also illustrate how corruption and compliance risks vary across the region – a variation that underscores the importance of getting advice from knowledgeable local counsel. Local anticorruption efforts are another key aspect of local risk assessments. I will summarize responses from local counsel about such efforts in a future post, but the next post in this series will summarize the impacts of the FCPA and UKBA as described by counsel in three of Latin America’s heavyweights: Argentina, Mexico and Brazil.
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.
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