The Brazilian Clean Company Act completes ten years in 2023 and has fundamentally changed the compliance landscape in the country – undoubtedly, for the better. Transparency International Brazil published a survey this month of professionals from the most prominent Brazilian companies that reveals the importance of the Act, which 95 percent of the respondents approved.
In addition, an astonishing 99 percent believe the Act contributes to disseminating integrity systems in the market, supports the expansion of the local compliance culture (98 percent), and helps to attract quality foreign investment (92 percent).
The Office of the Comptroller General (CGU) – the main competent body at the Federal Executive Branch to prosecute companies that violate the Act – and the private sector have been organizing different discussions not only to celebrate all the Act’s achievements but also to debate potential changes to the local compliance framework so that it keeps evolving. More specifically, the following challenges:
The lack of a single supervisory body that concentrates all anti-corruption matters. The Act confers to the highest authority in each organ or entity part of the Executive, Legislative, and Judiciary branches (at the Federal, State, and Municipal levels) the prerogative to prosecute legal persons that violate the Act. This often creates legal uncertainty as there is no guarantee all the authorities with jurisdiction will cooperate at an optimal level, which may not only lead to cumulative fines being applied but also make it difficult for corruption cases to be resolved through leniency agreements.
Absence of an explicit declination provision. The Brazilian legal system – contrary to the U.S. one – confers little discretion to the enforcement authorities when deciding whether to prosecute individuals and companies that engage in corrupt activities. In the absence of a specific provision allowing them not to file charges against wrongdoers, there is no other alternative but prosecution, even if it is not the best solution for the case at hand.
Fine calculation. The Act imposes fines to violators based on percentages applicable on top of the companies’ gross revenues. This may be too severe for companies in markets where the revenues are high – but the profit margins are low – or too mild in the opposite case.
If ten years ago integrity was not a hot topic in the local agenda, now the compliance community should welcome and praise the Brazilian efforts to reassess its legislative framework and enforcement procedures to incentivize companies to do the right thing.