BrazilAnti BriberyLaw WhatYouNeedToKnow .pdf


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Brazil’s new Anti-Bribery Law: What you need to know
“Clean Company Law” aims to support culture of corporate compliance
Public corruption has long been illegal in Brazil, but up
until now only public officials have been punished if
caught. Companies were not liable for bribes paid by their
employees. Now, for the first time, Brazilian companies will
be subject to an anti-bribery law. Referred to as the “Clean
Company Law,” the law provides more lenient treatment
to companies that have compliance programs in place and
for voluntary disclosure of corrupt conduct. The provision
has been viewed by many as a major step toward creating
a compliance culture and changing the way businesses
operate in the country. Corruption has been ingrained in
the Brazilian mentality and is present in every facet of life.
If properly enforced, the anti-corruption law could indeed
pave the way to a new way of working in Brazil.
The recent June-July 2013 wave of widespread protests
across Brazil shook that country’s political establishment
and prompted panicked lawmakers to make quick progress
on a long-delayed anti-corruption bill. The protests were
initiated in response to increases in public transportation
fares, but expanded to express the colossal public anger
with corruption and dissatisfaction with the government,
especially in relation to reported corruption in public
projects. A poll conducted by a news organization found
that the most visible demand of demonstrators was putting
an end to government corruption, followed by calls for
more transparency in public spending.
On July 4, 2013, Brazilian lawmakers passed ground-breaking
legislation that establishes direct civil and administrative
liability for companies found guilty of foreign and domestic
bribery. On August 2, 2013, Brazilian President Dilma Vana
Rousseff signed off on the legislation, which is expected to
go into effect in February 2014. The Anti-Bribery Law (No.
12,846/2013) stalled in the Brazilian Senate for more than
three years, until lawmakers were forced to respond. As a
signee of the OECD’s Anti-Bribery Convention, Brazil was
asked in 2007 by member states to implement a law making
companies directly liable for bribing foreign officials.

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The law can enforce fines of up to 20 percent of a
company’s revenue for the previous year or a maximum
of 60 million reais ($26.9 million)1. It also gives the
government authority to suspend a business’s operations,
seize its assets and force dissolution, or blacklist a
company convicted of bribery by withholding government
contracts or banning it from receiving public lending and
government subsidies for up to five years. Acts covered
by the law include bribery, fraud in public procurement,
bid rigging, fraud in contracts signed with public bodies,
impairing public officers’ investigative activities, and
influencing or financing others to engage in illegal
acts against the government. Prior to its enactment,
Transparency International reported that Brazil had only
pursued one case and two investigations of bribery in
international business in the 12 years since ratifying the
OECD convention.

Multinationals: Document Compliance Efforts
Multinational companies operating in Brazil that already
have policies to comply with the US Foreign Corrupt
Practices Act and UK Bribery Act must now also be
prepared for the provisions of the Anti-Bribery Law.
Priority should be given to implementing effective
compliance programs that can detect and prevent bribery

by employees, third-party agents, overseas representatives,
clients, and external parties. The most important point is to
document all these compliance efforts.
Some best practices include:
»» Reviewing current procedures as they relate to the
receiving, reporting, management, and investigation of
allegations of possible bribery or kickback schemes.
• An independent risk assessment of a company’s
business operations and existing internal controls
will help identify vulnerabilities, deficiencies,
inadequacies, or other factors which might increase
the risk of fraud in critical areas of an organization.
• This review may include client due diligence
process, vendor integrity program, ethics
committees, employee background checks, and
internal audits.
• Certain areas of organizations, such as
procurement, are traditionally more prone to
fraudulent activities than others.
»» Implementing and monitoring internal controls
will ensure companies accountability for their assets
and mitigate the risk of employees offering, promising,
or paying anything of value to foreign officials.
• These measures should be updated regularly to
reflect regulatory developments and corruptionspecific risks.

• Internal compliance personnel should regularly
monitor transactions, randomly audit particular
employees, transactions, and business units, and
test controls to identify irregularities.
• Moreover, companies should conduct extensive
due diligence on all new business partners and
impose strict controls on payments.

Newcomers: Ensure management is
trustworthy and informed

Foreign companies looking to acquire local Brazilian
operations should be mindful of the fact that most Brazilian
companies remain unaware of the need for measures to
combat bribery. In addition to implementing strong internal
controls and mechanisms for preventing and detecting
corrupt activities, those making acquisitions in Brazil should
be advised to:
• Implement appropriate structural changes to
ensure management is trustworthy, competent,
and well-versed in relevant local and
international laws.
• Create a company culture that treats anticorruption laws seriously.
With just under six months until the Anti-Bribery Law’s
enactment, the implications for companies operating in
Brazil will come fast, creating a major incentive to embed,
enhance, and operate effective compliance programs that
establish strong control environments.

• Company-wide awareness of such policies should
be complemented by mandatory training given by
reputable professionals.

Authors:
Vander Giordano is a Senior Managing Director in Kroll’s São Paulo office. He has extensive experience in
investigative and business intelligence matters, including internal fraud, asset searches and competitive intelligence.
Snezana Petreska is an Associate Managing Director with Kroll’s Investigations & Disputes Group and Head
of the São Paulo office. She has managed sophisticated strategic intelligence gathering engagements in
complicated cross-border transactions and challenging business situations.
Scott Schwartz is a Director in Kroll’s Miami office. He has advised clients throughout Latin America on issues
related to crisis management, project governance, political risk, and M&A.

Learn more at www.krolladvisory.com.
Copyright © 2013 Kroll Advisory Solutions. All Rights Reserved.
Certain Altegrity companies provide investigative services. State licensing information can be found at www.altegrity.com/compliance.
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