A proposed law in Brazil would be a strong tool in the fight against corruption. So strong, in fact, that the bill has bred vehement opposition from powerful interests.
The bill, which is being debated in the legislature now, would impose civil sanctions on legal entities that bribe domestic or foreign public officials. Both Brazilian companies and local offices of foreign entities fall within its ambit.
The bill would hold companies to strict liability, meaning that the government need not show any intent whatsoever on the part of defendants; only that bribes were paid. The FCPA by contrast requires the government to show corrupt intent, and current Brazilian law requires a showing of fault, which leads to long courtroom proceedings.
The bill would impose harsh sanctions on violators. Bribery can be punished by fines of up to 20% of the previous year’s revenue, or up to $30 million if revenue is not calculable. The bill also provides for debarment, in which companies are disqualified from doing business with the government, for up to five years. For companies in certain sectors, debarment is a death blow.
The law would also require Brazilian regulators to issue binding guidance for companies, and to give credit to companies that self-report violations or have strong compliance programs, an important change. Carlos Ayres, a Sao Paolo attorney and the Brazilian Institute of Business Law’s anti-corruption co-chairman, told the FCPA Blog that “No credit is currently given for self-reporting or compliance programs, and the bill would encourage companies to put effective compliance measures in place and to cooperate with local enforcement authorities.”
Unfortunately, the bill, in a drama familiar to Americans, has stalled in the House of Representatives. The bill has been scheduled for a legislative vote six times now, including on December 5, and each time the vote has been cancelled. Brazilian businesses are anonymously waging a lobbying campaign to stall the bill and water it down.
The bill, as written now, would be a powerful tool in the fight against bribery. Passing it would show the world that Brazil is serious about curbing corruption, and would almost certainly bring the country into compliance with OECD agreements it has signed. More importantly, it would reassure foreign investors and make Brazil a more attractive place to do business. For a country striving to maintain robust economic growth, one would think this would be a high priority.
Mark Friedman is a 2011 NYU Law graduate and a criminal defense attorney in New York City. He is seeking to transition into FCPA compliance. He can be contacted here.