Brazilian Democracy in Action
Tuesday, July 9, 2013 at 1:02AM
Andy Spalding in Brazil, Clean Company Act, Corporate Criminal Liability, Dilma Rousseff, Disclosure, OECD, OECD Convention, Sarbanes Oxley, Turkey

The protests of the Brazilian people have moved their Parliament to action. Late last week, after a protracted procedural history, the Brazilian Senate approved the Clean Company Act. It now goes to President Dilma Rousseff for final approval.  

The bill addresses various white-collar crime issues, but four provisions are especially critical to the anti-bribery movement. First, it establishes the liability of legal persons for overseas bribery. Brazilian law has not traditionally recognized criminal liability for corporations, so the bill is limited to civil and administrative liability. Realize that this is fully consistent with the OECD Convention, which requires corporate liability but accommodates those jurisdictions (like Germany, or Turkey, or Brazil) that do not recognize corporate criminality.   

Second, the bill would create, for the first time, cooperation credit for voluntary disclosure. Though another foundational piece of effective anti-bribery enforcement, voluntary disclosure is now almost unheard of in Brazil. Sarbanes-Oxley was the catalyst for the modern voluntary disclosure practice in the U.S.; the Clean Company Act could do the same for Brazil.

Third, the bill would establish a new policy of considering at the penalty phase whether a corporate defendant had a compliance program in place. Supporters hope this provision could stimulate the growth of Brazil’s now-fledgling compliance industry.  

Finally, the bill includes some serious penalties for overseas bribery. These include significant fines,  prohibition on receiving funding from state agencies and state-controlled financial institutions, and in some circumstances, compulsory dissolution of the defendant firm.

We'll notify you promptly of President Rousseff's decision. But with rising anti-corruption protests around the world, let's hope Brazil is now setting an example for so many other countries to follow.

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Andy Spalding is a senior editor of the FCPA Blog.

Article originally appeared on The FCPA Blog (http://www.fcpablog.com/).
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