It is no longer true to say that only regulated institutions of the financial sector in Brazil are obliged to adopt a compliance program. Now state authorities are adopting regulations requiring companies, foundations or foreign entities that execute public construction or sell products or services to the government, to adopt a complete compliance program.
The new laws go further than the Brazilian Anti-Bribery Law, which provides for credit if a company can prove it has an effective compliance program in place. The new laws, however, provide for heavy sanctions against companies, calculated on a daily basis, if the companies fail to prove the existence of an effective compliance program.
The Governor of Rio de Janeiro approved Law 7,753, of October 17, 2017, which introduces the requirement for a compliance program. Companies have 180 days after the signing of the contract with the government if the contract has a value higher than R$650,000.00 (about $202,000). The requirement applies to entities that have contracts, concession or partnership agreements signed with the government.
The law sets out a number of guidelines for compliance programs, similar to the requirements in the Brazilian Anti-Bribery Law. The penalty for failing to comply is 2 percent of the value of the contract, per day, up to 10 percent, possible suspension of the contract until the breach is corrected, and a ban from public tenders during the breach.
The Brazilian Federal District also passed a local law in February 2018 (Law 6,112/2018) requiring companies, foundations or foreign entities to adopt and implement compliance programs. The law is similar to the law of Rio de Janeiro and consistent with the national compliance law framework.
The value of the contracts, in the case of the Federal District, is much smaller than of Rio de Janeiro, with a threshold of just R$80,000.00 (around $24,500).
Under both new laws, the government agencies that are parties to the contracts have the power to assess the implementation of the mandatory compliance programs. It isn’t clear what standards the inspectors will use to assess the programs, considering the likely lack of expertise of the officer in charge of the assessment. Nor is it clear how the inspecting agencies will coordinate their reviews and reach consistent results.
Priscila Akemi Beltrame is partner at Barbosa & Spalding Advogados, in Brazil. She holds a PhD in criminal law by the University of Sao Paulo and is a specialist in compliance, ethics and anti-bribery law.