Self-reporting is the key to navigating the anti-bribery legislation being implemented in Brazil
Brazil has joined countries such as India and China and revamped its anti-bribery laws. In January the new Brazilian anti-bribery law (ABL) will come into force. This will affect domestic and foreign corporations that operate either directly or indirectly in Brazil, regardless of where the unlawful act is committed.
Unlike the US Foreign Corrupt Practices Act 1977, the ABL covers bribery of both Brazilian and foreign public officials and prohibits facilitation payments. It is designed to enable the authorities to take a hard line against bribery and corruption by imposing a liability offence on companies that bribe public officials. This means a company will not need to have guilty intent and prosecutors will only require evidence that an employee or intermediary paid a bribe or facilitation payment to seek a guilty verdict.
In a committed stance to crack down on corruption, the penalty for a breach of the ABL can lead to a company being fined up to 20 per cent of gross turnover in the year The rules also prohibit companies from undertaking other types of fraudulent activity such as bid-rigging, fraud in public contracts or influencing others to engage in illegal acts against the government.
before the investigation was launched, or up to £17m where turnover cannot be calculated. Furthermore, the ABL allows for sanctions such as disgorgement of benefits obtained, suspension of activities and even dissolution of the company.
The ABL, which complements existing Brazilian laws that impose criminal penalties on individuals engaged in bribery, also provides for civil liability against directors, officers, employees and agents of a company, whether the act occurs in Brazil or elsewhere. Liability may extend to a parent company, its subsidiaries and/or affiliates.
But some may argue that the rules do not go far enough, by omitting commercial to commercial bribery, which is included in the Bribery Act. There is also a leniency programme if companies voluntarily disclose information about themselves any other companies involved in misconduct. Although self-reporting will not provide immunity from prosecution, it will mean the company is eligible for a much-reduced penalty.
The ABL also states that the existence of an effective compliance programme will be taken into account when determining the level of any penalty. Unlike the Bribery Act, a compliance programme will not provide a defence, but it should mitigate any penalties imposed.
So what should be done? Brazilian businesses and those operating in Brazil need to respond to this legislation by ensuring they have an adequate anti-corruption compliance regime. They should review their anti-bribery procedures to ensure they minimise the risk of bribery occurring in the first place, have whistleblowing measures in place and be ready to investigate quickly and effectively when an issue arises. Being in a position to self-report could help a company control the process and avoid massive fines.