Brazil’s new Anti-Bribery Law gives credit to companies that have compliance programs in place and requires the Federal Government to issue a regulation on compliance programs. More than two months after the Law came into force, the regulation has not yet been published.
The Office of the Federal Comptroller General (“CGU“), the body with authority to investigate and sanction illegal acts prohibited by the law that are committed against foreign Public Administrations (CGU also has concurrent authority to investigate local bribery at the Federal Executive level) was involved in drafting the new law and the required regulation. The regulation drafted by CGU has been waiting for Presidential approval for the last months and is expected to be published any day now.
An earlier post discussed the main areas that are expected to be part of the upcoming regulation. The regulation will not be limited just to describing the criteria for evaluation of compliance programs. Jorge Hage, the head of CGU, and other representatives of the entity have been participating in public events and discussing the new Anti-Bribery law (see here and here) and are providing additional information about the upcoming regulation. The additional aspects discussed recently are highlighted below:
Criteria for evaluation of compliance programs. CGU representatives have indicated that the criteria for evaluation of compliance programs will be based on three pillars: the structure of the program; specifics about the legal entity; and an evaluation of the program’s efficiency.
The first pillar (the structure of the compliance program itself) will include consideration of the existence of mechanisms for reporting suspected or actual misconduct, training, code of conduct, policies and procedures, periodic risk assessments, and application of disciplinary measures against employees (and senior management too) involved in wrongdoing.
Under the second pillar, the compliance needs and particular risks associated with the business of the legal entity will be taken into consideration. This includes the number of employees, complexity of corporate structure, industry and region in which the company operates, level of interaction with the public officials, and use of third parties. CGU made clear that compliance programs should be tailored to the company’s needs and risks and has indicated that “one-size-fits-all” programs will not be accepted.
The third pillar will consist of a case-by-case verification on whether or not the program is actually applied (that it is not a “paper program”). The efficiency of the program and its effectiveness will also be assessed. CGU indicated that it will give limited credit for compliance programs (if any) in cases where the management of the company is involved in the wrongdoing. In that context, a good tone at the top is essential.
Evaluation of compliance programs will play an important role in the enforcement of the new law. CGU indicated that it plans to give substantial credit to companies that have effective compliance programs in place. The entity has an internal unit that is responsible primarily for evaluating compliance programs (investigations and litigation related to the new Anti-Bribery law will not be conducted by this area).
Clarification of CGU’s concurrent jurisdiction. CGU has authority to investigate, process and sanction illegal acts committed against foreign Public Administrations. At the Federal Executive Branch level, CGU will also have concurrent authority to initiate administrative proceedings against legal entities as well as to audit the progress of proceedings handled by other authorities. The regulation is expected to provide further details about the types of situations in which CGU’s concurrent jurisdiction will operate.
Further clarification on leniency agreements. The new Anti-Bribery law allows authorities to enter into leniency agreements with legal entities, provided they effectively collaborate with the investigations and with the administrative proceeding; that such collaboration results in the identification of the ones involved in the violation, when applicable; and that information and documents proving the illegal acts under investigation are rapidly obtained. The regulation is expected to provide further details about the parameters for celebration of leniency agreements.
Detailed administrative procedure. Articles 8 to 15 of the new Anti-Bribery law sets forth some basic procedural rules for the application of administrative sanctions (i.e., fine and publication of the condemnatory decision). Representatives of CGU say that the regulation will further detail the procedural rules in order to provide more certainty about it.
At the State level, the States of Tocantins, São Paulo and Paraná have issued regulations on the new law (see regulations here, here and here, respectively). Discussions about the regulation at the State level have taken place recently at the National Council from the Brazilian States Internal Control Body (CONACI). Apparently, States are waiting for the publication of the Federal Regulation to use it as a model.
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Post authored by Carlos Henrique da Silva Ayres, FCPAméricas Contributor