FCPAméricas Blog
Brazilian Foreign Bribery Bill: Things the Brazilian Congress Might Consider
5.25.2012
FCPAméricas recently reported on how the Brazilian business community is pushing back against the draft foreign bribery bill (6.826/2010) currently under consideration by the Brazilian Congress. Its complaints center around three features: successor liability, the level of proposed sanctions, and corporate strict liability. These features are described in detail in previous FCPAméricas posts (here and here).
This week, the Special Committee set up by Congress to consider the bill delayed its May 23rd vote. It needs more time to work with Congressional members, the business community, and other stakeholders to try to resolve lingering concerns. The new date has not yet been set. By continuing to make efforts to build consensus in the Special Committee, Congress can potentially avoid sending the bill directly to the full House where delays could sideline it indefinitely.
While leaders work to finalize the bill, anti-corruption experts on the ground in Brazil have indicated that the Brazilian Congress could address the business community’s concerns by doing what other jurisdictions have done. For example:
1. Successor Liability: Congress could address concerns about successor liability by including features in the proposed legislation that would allow a company to reduce or eliminate liability for the past actions of the companies it acquires. Enforcement could give credit to a company that demonstrates that it has conducted adequate anti-corruption due diligence of an acquiree pursuant to the acquisition, remediated any compliance problems, brought the acquiree’s compliance activities up to minimum standards, and self-reported these actions. This is not a foreign concept. In other jurisdictions, acquisition due diligence for anti-corruption matters has become a standard part of business. A former Assistant Chief for FCPA Enforcement in the Fraud section of the U.S. Department of Justice’s Criminal Division co-authored this report that provides helpful guidance.
2. Level of Sanctions: Congress could leave the current sanctions in place, taking into consideration the unintended consequences that might result from limiting them. The current legislation establishes sanctions of between 0.1% – 20% of the company’s gross revenue in the previous year. The proposed amendment would limit the sanctions to between 0.1% – 20% of the gross revenue in the previous year of the specific line of business involved in the wrongdoing. Given the difficulties in defining the exact contours of a specific line of business, the amendment could result in costly and time-consuming litigation, complicating enforcement. Also, depending on the nature of the specific line of business, such a change could have the potential of greatly reducing incentives for companies to take compliance seriously. Many would argue that the reason the FCPA has been so successful in motivating companies to build their compliance programs and better manage corruption risk is because the potential penalties are so significant.
3. Corporate Strict Liability: Congress could keep in place the strict liability provisions but add provisions that account for other factors like whether a company had a robust compliance program in place at the time of its employee’s violation or whether the company self-disclosed the acts of wrongdoing. Such features could allow the company to free itself of, or reduce substantially, such liability. This is a concept applied in the United States. Just last month, the U.S. Department of Justice chose not to proceed against Morgan Stanley while enforcing the FCPA against one of its managing directors, Garth Peterson, because Morgan Stanley showed that it met minimal compliance expectations:
Morgan Stanley maintained a system of internal controls meant to ensure accountability for its assets and to prevent employees from offering, promising or paying anything of value to foreign government officials. Morgan Stanley’s internal policies, which were updated regularly to reflect regulatory developments and specific risks, prohibited bribery and addressed corruption risks associated with the giving of gifts, business entertainment, travel, lodging, meals, charitable contributions and employment. Morgan Stanley frequently trained its employees on its internal policies, the FCPA and other anti-corruption laws. Between 2002 and 2008, Morgan Stanley trained various groups of Asia-based personnel on anti-corruption policies 54 times. During the same period, Morgan Stanley trained Peterson on the FCPA seven times and reminded him to comply with the FCPA at least 35 times. Morgan Stanley’s compliance personnel regularly monitored transactions, randomly audited particular employees, transactions and business units, and tested to identify illicit payments. Moreover, Morgan Stanley conducted extensive due diligence on all new business partners and imposed stringent controls on payments made to business partners.
NOTE: In July 2012 the Brazilian Congress again delayed its vote on the draft bill.
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.
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© 2012 Matteson Ellis Law, PLLC
Post authored by Matteson Ellis, FCPAméricas Founder & Editor
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May 25th, 2012 at 8:27 pm
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May 26th, 2012 at 6:02 am
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