4. #ACIFCPA
CorruptionPerceptionin Latin America
Corruption Perceptions Index – 2013 (Transparency International)
Position Country Grade
1 New Zealand / Finland/ Denmark 9,1
19 United States 7,3
22 Chile 7,1
72 Brazil 4,2
80 China 4,0
83 Peru 3,8
94 Colombia 3,6
94 India 3,6
106 Argentina 3,4
105 Mexico 3,4
127 Russian Federation 2,8
160 Venezuela 2,0
175 Afghanistan / Somalia / North Korea 0,8
5. #ACIFCPA
Fight againstCorruptionin Brazil
• Increasing number of arrests for crimes against the
Public Administration between 2008 and 2012 – 133%
• In 2013, the Brazilian Federal Police conducted 296
special operations in which 1,785 individuals were
arrested
• Significant increase in cooperation with foreign
authorities
• Approval of new anti-corruption laws, including:
“money laundering law” (2012); Law no. 12.846, and
“conflict of interest law” (2013)
• Brazil is signatory of 3 important Anti-Corruption
Conventions: OECD, UN and OAS
7. #ACIFCPA
Corruptionin Brazil – Real Example(cont.)
• In March 2012, an important TV show in Brazil
(“Fantastico”), broadcasted a story of companies
circumventing public tender processes at a Public
Hospital in Rio de Janeiro. A reporter posed as the head
for the Hospital Procurement Department.
• Footage of employees of four companies, who
rendered services to the Hospital (such as collection of
hospital waste, vehicle rental services, etc), was shown.
All companies offered bribes to the head of the
Procurement Department in order to secure contracts.
• Companies also clearly manipulated the bidding
process. It was shown that company “x” would invite
other companies to participate in the public tender.
Such companies should offer higher prices for the same
services, thus making sure that company “x” would be
the winner of the public bid.
• After the story was broadcasted, the Federal Police
started four police investigations.
8. #ACIFCPA
SportEventsin Brazil
• World Cup (2014)
• Olympic Games (2016)
• Many companies use these events to forge commercial ties, by providing
tickets and hospitality to certain events.
• Prices of such events are sometimes lavish, and tickets are hard to obtain due
to the large quantity of people looking for them
• Such big events also bring media attention.
• Must be careful to not infringe anticorruption laws in connection with offering
hospitality and entertainment related to such events to HCPs and public
officials in general.
10. #ACIFCPA
Anti-corruptionLawsin Brazil – The Brazilian
Criminal Code
• Offer or the promise to offer to public officials any
benefit that relates to an express or implied request or
suggestion that the public employee performs or
refrains from performing, or even delays any act within
the scope of his duties
• Criminal intent is a necessary element of the crime of
bribery
• Offer or promise alone is sufficient
• Facilitating or “Grease” Payments are also bribes in
Brazil
• Penalty: from 2 to 12 years of imprisonment
11. #ACIFCPA
Anti-corruptionLawsin Brazil – The Brazilian
Criminal Code
• Public Employees: not only individuals
that render services in governmental
offices or agencies, but also employees
that carry out a public function, job or
office, even on a temporary basis or
without remuneration (or includes
doctors and employees of public
hospitals, professors of public
universities)
13. #ACIFCPA
Context: OECDAnti-BriberyConvention
• Ratification: August, 2000
- 2002: Brazilian Criminal Code amended to prohibit corruption of foreign
public officials
• Phase 1: September 2004
• Phase 2: December 2007 (examining countries – Chile and Portugal)
- recommends that Brazil “take urgent steps to establish the direct liability of legal persons
for the bribery of a foreign public official”
• Phase 3: 2014 (examining countries – Belgium and Portugal)
– Concentrates on the following pillars:
progress made by on weaknesses identified in Phase 2
changes in domestic legislation since Phase 2
enforcement efforts and results
14. #ACIFCPA
Law no. 12,846 – Key Features
• Published: August 2, 2013
• Effective: January 29, 2014
• Civil and Administrative Liability
– More easily applied than criminal liability
– Standard of proof not as high as for criminal cases
– New law applies only to legal entities; liability of legal entities does not
depend on and does not exclude the liability of individuals
• Subjected Persons
– Business organizations and sole proprietorships, legally incorporated or not
– Any foundations or associations of entities or persons
– Foreign legal entities with office, branch or representation in the Brazilian
territory
• Strict Liability
– Government need only to show that bribes were paid/promised.
15. #ACIFCPA
Law no. 12,846 – Key Features
• Prohibited Acts
– Committed against either the local or foreign Public
Administration, either in Brazil or abroad
– Include: bribery of public officials, fraud in public
procurement settings, bid rigging and other illegal conducts
– Specific prohibited acts:
I. To promise, offer or give, directly or indirectly, an undue advantage to a public
official, or third person related to him;
II. To finance, defray, sponsor or in any way subsidize, in a proven way, the
performance of the wrongful acts provided for in this law;
III. To make use of an individual or legal entity interposed to conceal or
dissimulate its real interests or the identity of the beneficiaries of the acts
performed, in a proven way;
IV. To hinder the investigation or assessment activity of public agencies, entities
or officials, or interfere with their work, including within the scope of
regulatory agencies and supervisory bodies of the national financial system
16. #ACIFCPA
Law no. 12,846 – Key Features
• Prohibited Acts
– Specific prohibited acts (cont.):
V. Regarding public tenders and contracts:
a. To thwart or defraud, through an adjustment, arrangement or any other
means, the competitive character of the public tender procedure;
b. To prevent, disturb or defraud the performance of any act of public tender
procedure;
c. To remove or try to remove a tenderer by fraud or by an offer of any type of
advantage;
d. To defraud a public tender or a contract arising therefrom;
e. To create, in a fraudulent or irregular manner, a legal entity to participate in a
public tender or enter into a contract with the Public Administration;
f. To gain an undue advantage or benefit, in a fraudulent way, of modifications
in or extensions to contracts made with the Public Administration, without
legal authorization, in the act inviting to the public tender or in the respective
contractual instruments; or
g. To manipulate or defraud the economic and financial balance of the contracts
made with the Public Administration.
17. #ACIFCPA
Lawno.12,846– Key Features
• Sanctions
• Successor Liability in the event of amendments to the articles of
incorporation, transformation, merger, acquisition or spin-off of a company.
Administrative Judicial
fine of 0,1% to 20% of the gross
revenue of the previous year
R$ 6,000 to R$ 60,000,000 (if not
possible to use gross revenue criteria)
publication of the condemnatory
decision
Prohibition to receive incentives and
public financing from 1 to 5 years
Seizure and confiscation of assets and
gains
Partial suspension or interdiction of its
activities
Compulsory dissolution of the legal
entity
18. #ACIFCPA
Law no. 12,846– Key Features
• Factors to be taken into consideration in applying sanctions
– The seriousness of the offense
– The advantage gained or intended by the offender
– Whether the offense was fully completed or not
– The degree of damage, or risk of damage
– The negative effect produced by the offense
– The offender's economic situation
– The cooperation of the legal entity in the investigation of the wrongdoing
– The existence of internal mechanisms and procedures of integrity, audit and incentive for the
reporting of irregularities, as well as the effective enforcement of codes of ethics and of conduct
within the scope of the legal entity
– Evaluation criteria will be established by the Federal Executive Branch
– The value of the contracts held by the legal person with public agency or entity damaged
19. #ACIFCPA
Law no. 12,846– Key Features
• Leniency Program
– Fines can be reduced up to 2/3
– All the other sanctions (excluding restitution) are excluded
– Collaboration must result in:
the identification of the ones involved in the violation, when applicable; and
rapid obtaining of information and documents proving the illegal acts under investigation.
– Requirements of the Leniency Program (cumulative)
Legal entity is the first one to come forward
Legal entity completely ceases its involvement in the investigated infringement
Legal entity admits its participation in the offense and fully cooperates
– Importance of an internal investigation and attention to the conflict of norms.
20. #ACIFCPA
Law no. 12,846– Key Features
• Enforcement Authority
– Cases involving foreign public administration: CGU
– Other cases “... highest authority of the relevant Agency or entity of the Executive, Legislative and
Judiciary …”
– Criticisms
Lack of specialized expertise
Excessive fragmentation of efforts
Potential conflict of interest
Other
21. #ACIFCPA
Enforcementof Law no. 12,846/2013
• CGU – Office of the Comptroller General:
− Presence in all states
− 2,689 employees
− Budget of more than R$ 770 million
− Active participation in the legislative
discussion related to Law 12,846/13
− Employees trained by the SEC/DOJ
− Cooperation with local and foreign authorities
• State and local authorities
• Comptroller Office of the State of São Paulo
− Created in 2013
− very active
− Cooperation with local and foreign authorities
CGU Employees
22. #ACIFCPA
Regulation
• Few states already have issued a regulation for the law
− São Paulo
− Tocantins
− Paraná
• Focus on centralizing the authority to determine illicit acts and sanctions
• CGU offered technical support to the states for the development of the
regulations.
• Expectation that federal regulation will influence states and municipalities.
23. #ACIFCPA
What to expectfrom the upcomingregulation
• Definition of required elements of a compliance program
− Importance of the tone at the top
• Definition of local officials
− Definition of the Brazilian Penal Code
• Calculation of gross revenue
− May be calculated based on the “line of business” involved in the wrongdoing
• Clarify who the enforcement authorities are
• Clear criteria for the fines
• Detailed administrative procedure
• Further clarification on leniency agreements.
25. #ACIFCPA
Comparison:FCPA x UKBA x Lawno. 12.846
FCPA UK Bribery Act Brazil`s Law n. 12.846
Enforcement Mechanisms /
Liability
Criminal and Civil Criminal and Civil Civil and Administrative
Bribery of foreign officials Yes Yes Yes
Bribery of local officials No Yes Yes
Extraterritorial reach Yes Yes Yes, but not as broad as under under the FCPA and UKBA
Books and Records Yes No Silent, but covered on certain existing laws
Other prohibited acts No No
Yes, include other acts against the Public Administration
(e.g., fraud in public tender processes, bid rigging)
Exception for facilitation
payments
Yes No No (prohibited in Brazil)
Corporate criminal liability Yes Yes No
Corporate strict liability Only under the accounting provisions
Yes, for "failure to prevent
bribery"
Yes
Corporate fines
Anti-bribery violation:
up to US$ 2 million per violation /
Accounting violation: up to US$ 25
million per violation. Twice the
benefit obtained or sought
Unlimited
Up to 20% of the company's gross revenue of the previous
year or up to R$ 60 MM (around U$ 27 MM) if gross
revenue cannot be determined
Other corporate
"sanctions”
Debarment, monitors, derivative
lawsuits, etc. (applicable under other
U.S. laws and legal features)
Debarment Prohibition to receive incentives, suspension, etc.
Credit for compliance
programs
Yes
(U.S. Sentencing Guidelines, FCPA
Guidance, etc.)
Yes
(can be full defense for
corporate offense of "failure to
prevent bribery")
Yes
(amount of credit not determined)
Credit for self-disclosure /
cooperation
Yes
(Principles of Federal Prosecution of
Business Organizations, FCPA
Guidance, etc.)
Yes, but limited
Yes
(under the leniency program, fines can be reduced up to
2/3 and all other sanctions can be excluded)
26. #ACIFCPA
Thank You!
Esther Flesch
Trench Rossi e Watanabe Advogados
Av. Dr. Chucri Zaidan, 920
13º floor - Market Place Tower I
04583-904
São Paulo, SP – Brazil
+55 11 3048 6940
esther.flesch@bakermckenzie.com
