FCPAméricas Blog

Brazil’s Anti-Corruption Bill Passes House of Representatives

Author: Carlos Ayres

Yesterday, the Special Committee of the Brazilian House of Representatives responsible for overseeing Brazil’s anti-bribery bill approved it. Now, the Bill of Law will be sent to the Senate. A Senate vote is expected in the near future. Many of the main features of the Bill of Law remain the same as earlier versions of the bill (FCPAméricas has discussed the draft bill here and here). For example, the bill notably:

(1) includes civil and administrative liability for legal entities that engage in acts committed against local and foreign Public Administration; (2) incorporates the notion of respondeat superior; (3) lists prohibited acts; and, (4) offers credit for cooperation and compliance programs.

But the version approved by the Special Committee also weakens the legislation in several ways, potentially bringing into question whether the ultimate law will meet OECD Anti-Bribery Convention standards (FCPAméricas has discussed this here).

For example, the text approved yesterday limits the amount of fines to the total amount of the goods or services contracted or sought. Moreover, debarment has been excluded from the list of possible penalties applied to legal persons that commit misconduct covered by the Bill. Furthermore, the approved Bill reduces the liability of successors in mergers and acquisitions. It establishes that the liability of the successor company shall be limited to the payment of a fine and restitution of damages up to the amount of the assets transferred under the corporate transaction.

In addition, it is possible that fines for violations could be calculated based on the gross revenue of the legal entity “in the line of business in which the wrongdoing took place.” This could complicate enforcement given the inherent difficulties associated with defining boundaries of a specific line of business. Further complicating matters, the report that was approved by the Special Committee says that the fines will be calculated using this method, but the reference in the text of the Bill consolidating the report does not incorporate such reference. Thus, it is not clear which language will ultimately prevail.

Given that the Bill had been scheduled for a vote several times (the last attempt was in December 2012) and each time the vote was cancelled, and considering that there has been little public discussion about the Bill in 2013, its approval by the Special Committee can be seen as a positive development. On the other hand, the incorporated changes could result in a negative evaluation by OECD’s Working Group (“WG”) on Bribery. This is relevant because Brazil would otherwise have much to gain from a positive evaluation by the WG. It would indicate that Brazil is following commitments it has made pursuant to the OECD Anti-Bribery Convention. It would signal that Brazil is a safe country for licit business transactions. It would also show that there is transparency, information, and punishment for irregular behavior in Brazil. And it would demonstrate strong institutions, factors that work to attract investment and, consequently, generate development.

Because the Brazilian Government is expected to pass the Bill of Law in the near future, companies should be alert to the changes that the future law will bring. They especially should make note that the draft bill does not cover only bribery cases, it also covers other areas like fraud in public procurement, bid rigging, and other practices. Companies operating in Brazil should therefore update their compliance programs to accommodate all particularities of the new legislation, as well as the local risks and legal requirements pertaining to their business.

* By Bruno Maeda and Carlos Ayres, Co-chairs of the Anti-Corruption and Compliance Committee of the Brazilian Institute of Business Law – IBRADEMP.

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.

The author gives his permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author.

© 2013 Matteson Ellis Law, PLLC

Carlos Henrique da Silva Ayres

Post authored by Carlos Henrique da Silva Ayres, FCPAméricas Contributor

Categories: Brazil, Enforcement, FCPA, OECD

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One Response to “Brazil’s Anti-Corruption Bill Passes House of Representatives”

  1. What Brazil’s Protests Suggest About the FCPA – LEC – Legal, Ethics and Compliance Says:

    […] has previously reported, Brazil is in the midst of a struggle against corruption. It is consideringnew laws prohibiting bribery, enforced corruption-related laws against powerful politicians and business […]

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