FCPAméricas Blog
Anti-Corruption Enforcement in Brazil Heats Up Against Individuals
10.22.2014
While the world awaits Brazil’s first enforcement action under the new Brazilian Clean Companies Act (the BCCA), local authorities are busy pursuing corruption cases against individuals. Prosecutors are making clear their interest in holding individuals accountable for international bribery.
Ex Petrobras Director: Brazilian authorities have arrested Paulo Roberto Costa, the former refining chief of Petrobras. The allegations involve bribery and money laundering related to the company’s purchase of an oil refinery in Texas for US$1.7 billion. The company appears to have overpaid significantly and has already had to write off US$500 million of the investment. Based on reports, Mr. Costa recently admitted to accepting US$636,000 in bribes related to the purchase. He is reported to be cooperating with authorities and already disclosed the names of dozens of politicians implicated in corruption surrounding the deal.
Eight Embraer Employees: Last month, Brazilian authorities launched a criminal case against eight Embraer employees for bribing officials in the Dominican Republic. Sales executives at the company are said to have agreed to pay US$3.5 million in bribes to a retired Air Force colonel there who used influence over local legislators. FCPAméricas has been covering the ongoing FCPA investigation of Embraer for years. This latest development highlights the growing nature of cross-border cooperation in global corruption matters. The Wall Street Journal reported that Brazil’s action “marks one of the first known efforts by Brazil to prosecute its citizens for allegedly paying bribes abroad, a milestone achieved with help from the U.S. Department of Justice and the U.S. Securities and Exchange Commission.” The report provides the names and positions of the eight individuals:
The criminal complaint alleges that an Embraer vice president for sales, Eduardo Munhos de Campos, promised to pay the bribe, and that he was assisted in arranging the payments by Orlando Jose Ferreira Neto, another vice president; Embraer regional directors Acir Luiz de Almeida Padilha Jr., Luiz Eduardo Zorzenon Fumagalli and Ricardo Marcelo Bester ; and managers Albert Phillip Close, Luiz Alberto Lage da Fonseca and Eduardo Augusto Fernandes Fagundes.
Former Brazilian Senator. Former Senator Luis Estevão was implicated in a famous corruption scandal in Brazil in the late 1990’s related to the construction of a courthouse. In 2012, Mr. Estevão agreed to return approximately R$ 470 million to the Brazilian government, the largest amount ever recovered by the country in a corruption case. In September of this year, the Brazilian Supreme Court decided an appeal against him, and, in doing so, sent Mr. Estevão to jail. Like the Mensalão case, it took some time for the Brazilian government to reach its final decision. Nonetheless, the decision demonstrates that politicians in the country are not immune to enforcement action.
Do these developments foreshadow an eventual robust application of the BCCA? Some say not necessarily. This is because a different body in the Brazilian government – the Federal Comptroller General – has primary authority to enforce foreign bribery under the BCCA. Thus, it might not be possible to draw sweeping conclusions from the current enforcement actions against individuals. Then again, federal prosecutors will still have a role in the BCCA’s application, along with an extraordinary number of other authorities, as discussed here. Considered in this light, the current high profile cases strongly suggest a climate in Brazil of little tolerance for bribery. What was commonplace in the past might not be so any longer.
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
Post authored by Matteson Ellis, FCPAméricas Founder & Editor
Comments