FCPAméricas Blog
Local Perspectives: Anti-Corruption Efforts in Mexico and Brazil
7.15.2014
In previous posts (here and here), I summarized comments from local counsel in five Latin American countries regarding the impact of the FCPA and the UK Bribery Act in their countries. I now turn to local opinions regarding the impact of domestic anti-corruption efforts. Today’s post summarizes responses from expert local counsel in Brazil and Mexico.
Brazil
In Brazil, anti-corruption compliance has become a major topic of conversation. According to Shin Jae Kim of Tozzini Freire Advogados, the August 2013 passage of the Brazilian Anti-Bribery Law triggered:
… daily media coverage and massive calls for seminars to discuss… the impact of this new law. This is currently one of the most discussed hot topics among lawyers and business communities.
[Ed. Note: FCPAméricas has posted frequently about the new law, most recently here.] Much of this conversation has focused on the new law’s prohibitions and consequences. Ms. Kim notes that the potential penalties include:
- Fines of up to 20% of a company’s annual gross revenue;
- Prohibitions on taking government loans or accessing public funds; and
- Judicial orders to shut down sanctioned businesses.
But compliance programs are also a key part of this conversation. This is because the new law “recognizes the adoption of compliance programs and leniency agreements (i.e., voluntary disclosures)… as mitigating circumstances for the imposition of sanctions.”
The new law has generated a broad discussion about anti-corruption topics, including application of the FCPA and the U.K. Bribery Act in Brazil and the equivalent application of Brazil’s Anti-Bribery Law outside of Brazil. A current focus of attention regards regulations to be issued by the Federal Executive Branch. Those regulations are expected to “establish… evaluation parameters on the effectiveness of compliance programs,” and to clarify other unclear aspects of the law.
Mexico
In Mexico, anti-corruption does not appear to attract the same level of attention but reform efforts are still making headway. México has recently enacted a new Federal Anti-Corruption Procurement Law [Ed. Note: discussed by FCPAméricas here] and an Anti-Money Laundering Law [Ed. Note: discussed by FCPAméricas here]. According to Mr. Luis Ortiz of OCA Abogados, “both [laws] are adequate but haven’t had the impact they should according to OCDE, OAS, UNDOC and GAFI.” He also notes some specific concerns:
The Anti-Corruption Procurement law is hardly enforced and it is not applicable at State and Municipal levels. This has created an excessive, undesired and awful bribery activity in municipalities, and the abuse of federal participations which are not subject to federal audit.
Mr. Ortiz also notes some positive developments, including obligations that the new AML Law imposed on corporations to have a “code of procedures for compliance and monthly notices for vulnerable activities.” In addition, he noted that President Peña Nieto presented a Transparency Bill [Ed. Note: this bill was signed into law after Mr. Ortiz provided his comments.]
Conclusion
Mexico’s experience suggests that reform is moving incrementally, with the passage of new laws followed by slow adoption and the exposure of gaps in the system that has been created.
Brazil’s experience is the result of a dramatic change: the passage of the new law has galvanized attention and energy regarding anti-corruption compliance. This approach has comes with some risks – Brazil has committed to a course that provides for harsh consequences despite a lack of clarity regarding obligations and mitigating factors.
The local efforts to address corruption in both countries is hopeful, and their experiences present alternatives to other countries also considering reforms. With that in mind, a subsequent post will summarize local counsel views regarding anti-corruption efforts in Argentina, Chile and Venezuela.
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 Matthew Fowler, FCPAméricas Contributor
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