FCPAméricas Blog

How Brazil’s New Anti-Bribery Law Compares to the FCPA – Part 2

Author: Carlos Ayres

Part I of this series compares the following aspects of Brazil’s new Anti-Bribery Law with the FCPA: the subjected persons, protected persons, prohibited acts, facilitation payments, strict liability, and books and records. Part II (below) discusses corporate criminal liability; corporate fines and sanctions; credit for compliance programs; and self-disclosure and cooperation.

No corporate criminal liability. Inspired by the U.S. model of corporate criminal responsibility, the Anti-Bribery Law embraces a respondeat superior notion that legal entities will be held liable for the acts committed by their employees or third parties. Different from the FCPA, in which civil and criminal sanctions are applicable for legal persons and individuals, the sanctions in the Anti-Bribery Law are civil and administrative. In Brazil, under currently laws, with the exception of environment-related offenses, corporations cannot be held criminally liable for the acts and omissions of their employees and third parties. The Brazilian Government considered expanding the legislation to include corporate criminal liability; but it concluded that establishing criminal liability would mean that strict liability could not be included (a feature that the Government has always considered fundamental in the Bill). It also felt that criminal liability could complicate enforcement.

Corporate fines and sanctions. Under the FCPA, companies can face criminal penalties of up $2 million per violation under the anti-bribery provisions and up to $25 million per violation of the accounting provisions. Moreover, under the Alternative Fines Act, the sanctions can potentially be much higher, up to twice the benefit improperly obtained or loss caused. The FCPA also allows for civil fines. Other severe consequences that have been included in resolutions of FCPA cases (although not set forth in the Act) include disgorgement and appointment of independent monitors, among others.

The sanctions set forth in the Anti-Bribery Law include administrative sanctions (which can be applied by the public administration directly) and judicial sanctions (which can only be applied by a judge). Administrative sanctions are: a) fines in the amounts of 0.1% to 20% of the gross revenue of the legal entity (If it is not possible to use the criteria of the value of the gross revenue of the legal entity, the fine will range from R$6 thousand — around US$2.6 thousand — to R$60 million — around US$26 million); and b) publication of the condemnatory decision. Judicial sanctions are: a) loss of assets, rights or valuables directly or indirectly related to the wrongdoing; b) partial suspension or interdiction of activities; c) compulsory dissolution of the legal entity; and d) prohibition to receive incentives and public funding. In all cases, the legal entities will also have to repair the damages caused.

Credit for compliance programs. The Anti-Bribery Law gives credit for companies that have compliance programs in place. This is a new feature and important development in the Brazilian anti-corruption arena. Under current laws, companies get no credit for such programs. In the United States, the advisory U.S. Sentencing Guidelines are used to calculate an advisory amount of credit for compliance programs. In Brazil, the new law does not specify the amount of credit companies will get for their compliance programs. Rather, it just says that the existence of compliance programs “will be taken into consideration when applying the sanctions”. The Anti-Bribery Law requires the Federal Government to issue guidance on compliance programs, which is expected to be released in the near future. In the meanwhile, the OECD Good Practice Guidance on Internal Controls, Ethics and Compliance, the Guidance on the UK Bribery Act; and Chapter 5 of the FCPA Guidance can serve as good starting points for companies implementing their compliance programs. However, companies should not assume that compliance programs developed to comply with these guidelines will be sufficient under the Brazilian Anti-Bribery Law, especially because its scope is broader in certain aspects (i.e., it covers other prohibited acts and not just corruption).

Credit for self-disclosure and cooperation. Similar to what happens in the United States where companies can get credit for self-disclosure and cooperation (based on non-binding guidance from the DOJ and SEC), under the Anti-Bribery Law companies will also get credit for it (as opposed to the FCPA, such features are part of the law). Like compliance programs, this is also a new concept in the Brazilian anti-corruption arena and the Anti-Bribery Law only says that the cooperation is one of the factors that will be taken into consideration when applying the sanctions.

Similar to the FCPA, the Anti-Bribery Law does not obligate companies to self-disclose violations they find. However, those that cooperate with the investigations will receive a credit in the application of the sanction. Moreover, companies that enter into leniency agreements with public authorities and fulfill the requirements will have their fines reduced by up to two thirds, and administrative and certain judicial sanctions exempted. Companies, however, should carefully analyze the situation before deciding to self-disclose to Brazilian authorities, especially because, among other things, the Anti-Bribery Law potentially overlaps with others laws (which do not authorize leniency), that may be applicable in certain circumstances.

An unofficial translation of Brazil`s Anti-Bribery Law prepared by Trench, Rossi e Watanabe Advogados is available here.

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

CommentsComments | Print This Post Print This Post |

2 Comments

Comments

2 Responses to “How Brazil’s New Anti-Bribery Law Compares to the FCPA – Part 2”

  1. How Brazil’s New Anti-Bribery Law Compares to the FCPA – Part 1 – LEC – Legal, Ethics and Compliance Says:

    […] persons, prohibited acts, facilitation payments, strict liability, and books and records. Part II discusses corporate criminal liability, corporate fines and sanctions, credit for compliance […]

  2. Brazilian Government Issues Compliance Program Guidelines - My Blog Says:

    […] information about how Brazil’s Clean Companies Act compares to the FCPA can be found here and here). While the FCPA covers the bribery of foreign officials (and the accounting / internal controls […]

Leave a Reply


Subscribe to our mailing list

* indicates required

View previous campaigns.

Close