We discussed in the two prior posts (here and here) the two laws that Brazil enacted in 2011 to make government more accountable, transparent, and efficient. But readers may recall the major public protests that erupted in Brazil in 2013. Though seemingly provoked by a public transportation rate hike, the protests were about corruption and mismanagement more broadly.
The Brazilian government knew it. And it responded by enacting two major laws. Here we’ll talk about the first — the Anti-Corruption Law, sometimes called the Clean Companies Act.
The CCA undertakes to transform corporate norms and practices in Brazil. First, it aims to stimulate the growth of a compliance culture by guaranteeing a penalty reduction if the defendant had a quality compliance program in place. As readers of the FCPA Blog well know, compliance programs are resource-intensive undertakings, and companies have to believe that the investment is worth it. Supporters of the CCA — which include a great many leading corporate lawyers, several of which I have had the great pleasure to work with — expect that Brazilian companies will increasingly see that compliance is a good investment. It’s a long-term process, but an important one, and one that Brazil has begun in good faith.
Second, the CCA seeks to push Brazil toward adopting the enforcement regime that has proven a cornerstone of US enforcement, and that is now taking hold in the UK: the internal/independent investigation, voluntary disclosure, cooperation credit, and the negotiated out-of-court settlement. To get there, the CCA guarantees a penalty credit for corporate cooperation with investigations, and authorizes the use of what it calls “leniency agreements,” analogous to the U.S. DPA/NPAs.
Readers of the FCPA Blog may forget how counterintuitive this system really is. Try explaining it to a bunch of second- and third-year U.S. law students, and you’ll quickly be reminded that financing your own investigation and voluntarily turning over the results to the prosecutor really is a radical concept. So we should not be surprised to hear our friends in Brazilian enforcement report that it may take some time for this new paradigm to really take hold in Brazil. We should all be patient in the meantime.
But the Clean Companies Act is plainly a dramatic step toward building a culture of compliance and cooperation. And it has not been duly recognized by a global media industry that seemingly thrives on a sky-is-falling narrative. Scratch beneath the surface of the Zika virus and water pollution, and you’ll see a stunning story of the rise of the rule of law.
And we haven’t even gotten to the biggie. That comes in our next, and final, post in the series. Or, you can read about it in our ebook and other materials at law.richmond.edu/olympics.
Andy Spalding is a Senior Editor of the FCPA Blog and Associate Professor at the University of Richmond School of Law. He’s the author of the ebook Olympic Anti-Corruption Report: Brazil and the Rio 2016 Games (available here). He’ll be a speaker at the FCPA Blog NYC Conference 2016.