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Brazil's President Dilma Takes a Stand

Photo courtesy of WikipediaThe ongoing saga of Brazilian anti-corruption reform has reached a glorious crescendo. On Thursday, President Dilma Rousseff exercised her line-item veto power (a power the U.S. president lacks) to selectively approve Brazil's Clean Company Act. As a result, this long-time party to the OECD Convention has adopted legislation that creates corporate liability for bribery, cooperation credit for voluntary disclosure, a potential penalty reduction for the existence of a compliance program, and a host of very serious penalties.  

That these provisions made their way through the legislative process, and were approved by the President, is itself extraordinary. But there's more. The President vetoed three provisions that would have weakened the bill's impact. First, the bill contained a limitation of financial liability to the value of the contract obtained with the bribe. Figuring that it did not create a sufficient disincentive to bribery ("what do we have to lose?") she took it out. Second, the bill established an intent or fault requirement for certain sanctions; that's gone too. Third, the legislature sought to afford the defendant more lenient treatment depending on the the extent of the government's participation in the wrongdoing. But the President would have nothing of it.

These are remarkable times we're living in. People are speaking out, governments are responding, and the rules of international commerce are being re-written. In adopting this law, Brazil has regained its position as a leader to the developing world in the anti-corruption effort, and we should all recognize its historic importance.

Many thanks to Carlos Ayres in São Paulo, a good friend of the FCPA Blog, for providing terrific updates and explanations as the story unfolded. Carlos is an attorney with Trench, Rossi e Watanbe (affiliated with Baker & McKenzie) and co-chairs the Brazilian Institute of Business Law (IBRADEMP).  


Andy Spalding is a senior editor of the FCPA Blog. He's an Assistant Professor at the University of Richmond School of Law. His groundbreaking research about FCPA enforcement and its impact on developing countries has been discussed in leading publications, including the Wall Street Journal, the Economist, the Atlantic, and the New York Times, among others. He can be contacted here.