Anticorruption Law changes business environment in Brazil

By ETCO
23/04/2014

The entry into force of Law 12.846, which establishes new rules for the punishment of acts of corruption in companies, introduces new paradigms in the country's business environment

After the 180-day period for adapting to the new rules, the so-called Anti-Corruption Law came into force on January 29. Sanctioned by President Dilma Rousseff in August 2013 in response to the wave of protests in June, Law 12.846 will target companies that commit acts against the public administration. The change represents a paradigm break from the legal point of view, since the previous rules only punished individuals, leaving companies aside.

Until then, companies that benefited from corruption were limited to paying their executives' lawyers, and accusations of administrative impropriety and marked letter bids almost always ran up against the difficulty in producing evidence. For lawyer Leonardo Ruiz Machado, responsible for the Corporate Integrity area of ​​Machado Meyer Sendacz and Opice Advogados, the new law changes this concept.

In an article published in the Valor Econômico newspaper, Machado states that the Anticorruption Law, taking as a parameter the foreign laws FCPA (Foreign Corrupt Practices Act) and the UK Bribery Act, introduces the company's strict liability, which can be punished even if its directors have not the illegal act is authorized. In this case, if a partner, contracted or consortium employee offers or pays an improper advantage to a public employee, the penalties will be applied to the company.

The sanctions provided for by Brazilian law are heavy and provide for an administrative fine of up to 20% of the company's gross revenue. There are also penalties in the civil sphere, such as a ban on receiving public incentives and investments and even compulsory dissolution, a “corporate death penalty” in the view of lawyers Pierpaolo Cruz Bottini and Igor Tamasauskas, manifested in an article published by Folha de S. Paulo also in January.

According to Bottini and Tamasauskas, the legislator's idea is that the company not only looks after its reputation, but also ensures the ethical behavior of those with whom it works. There is a limit to common sense, given the impossibility of fully understanding the character of partners or employees, but the objective is to encourage the corporation to develop internal control systems to ensure that all employees maintain a correct posture in relation to the government.

This concern is evident with the possibility of reducing the sanction for the company that maintains internal mechanisms to prevent illegal acts, codes of ethics, regular audits and channels for complaints. The objective is to encourage business commitment to an ethical culture.

For lawyers, the impacts of the law have already been felt. Most corporations have revised or created rules of good conduct, established strict standards of behavior and began to collaborate with investigations on their premises. Unlike so many laws that “don't stick,” the Anti-Corruption Law took effect even before it came into force.

Despite the positive impact, the new law brings vagueness that can lead to important legal questions. For Machado, the lack of a single administrative body responsible for law enforcement, such as Cade in the competitive sphere, tends to generate legal uncertainty, one of the major causes of the judicialization of the administrative process.