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Ariel Ramirez: New incentives to self-report in Brazil

In 2014, Brazil enacted the Clean Company Act to counter widespread corruption in both the private and public sectors.

Under this law, companies can be held responsible for corrupt practices of employees and liable without finding fault. Companies can no longer make the excuse that a “few bad actors” were solely responsible for corrupt acts.

Executives can now be held responsible for decisions being made on behalf of the company. Some have been given jail sentences for their companies’ involvement in bribery and corruption.

Like the FCPA and UK Bribery Act, the Brazil Clean Company Act allows for extraterritorial reach in some respects, meaning any company doing business in Brazil can be punished, along with its culpable executives.

As a result, companies need to put in the investment to ensure compliance. It may seem too early to spend the time and resources when the results of the Clean Company Act are not yet clear. But now the stakes are higher.

If an internal investigation finds that the company has violated the Clean Company Act, the usual best course of action is:

1. Under the advice of investigative experts, gather as many facts as possible

2. Consider potential solutions and corrective action for any violations, and

3. Consider self-reporting to regulators, under the advice of counsel.

Coming clean isn't necessarily a way to avoid punishment. But it goes a long way with the regulators and helps companies reestablish credibility. Approaching regulators with potential solutions signifies a proactive commitment to taking responsibility.

Companies may look at the situation and decide to take their chances. After all, “greasing the wheel” is how business has always been done in Brazil.

But the Clean Company Act changes the way companies and executives should do business in Brazil. Things may not be so different yet in 2017. But the coming years will see major shifts in business practices and the role of compliance.


Ariel Ramirez is Managing Director in Berkeley Research Group’s Investigations practice on international assignment as Managing Director-Brazil. He has more than 20 years of experience providing forensic investigative, anti-bribery/corruption, compliance and ethics program development, and other risk and internal services globally. He can be contacted here.