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Brazil’s anti-bribe bill moves ahead, but is it enough?

Source: Thomson Reuters Foundation - Fri, 26 Apr 2013 04:08 GMT
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A demonstrator carries a sign that reads "No to Corruption" during a protest in Sao Paulo, on Nov. 15, 2011. REUTERS/Nacho Doce
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NEW YORK (Thomson Reuters Foundation) - Brazil’s legislature made progress on an anti-corruption bill that would prohibit companies from bribing public officials to win business, although the measure appears to fall short of international standards.

The Special Committee of the Brazilian House of Representatives on Wednesday approved the long-awaited bill, which would make it a civil and administrative offense to bribe government officials. It is expected to go to the Senate in the near future.

However, the bill fails to include a provision banning companies from bidding on future public contracts if they violate the anti-bribery law. This throws into question whether Brazil would meet the international standards set by the global monitoring body of the Organisation of Economic Cooperation and Development (OECD).

“Although it is positive that the draft bill was voted, the changes incorporated into it made the bill much weaker, and it is very possible that, if passed as is, it may not meet the requirements of the OECD Anti-Bribery Convention,” said Carlos Ayres, a lawyer at the Brazilian Institute of Business Law (IBRADEMP).

YEARS OF DITHERING

Fighting corruption is a priority of President Dilma Rousseff, who has dismissed ministers tainted by graft. Last year, Brazil's Supreme Court also convicted former aides and associates of ex-President Luiz Inacio Lula da Silva in a vote-buying scandal.

Yet the anti-graft bill had been stalled for more than two years in Brazil’s Chamber of Deputies.

The OECD’s Working Group on bribery by July begins evaluating Brazil’s compliance with the anti-bribery convention ahead of a report next year. A favourable OECD report would signal to international investors that Brazil is a safe country to conduct business, adhering to globally-recognised standards of transparency and punishment of illicit behavior.

Another area of concern for international lawyers was that the bill weakens the original language on mergers and acquisitions, limiting the successor company’s liability for any wrongdoing by the company it has acquired. The bill also suggests that the parent company would not be liable.

In its June 2010 report on Brazil, the OECD noted that corporate liability was a necessary component of meeting the OECD anti-bribery standards. Patrick Moulette, head of the OECD’s anti-corruption division said in an interview this would be “a key aspect” of its next review.

Here are other measures included in the bill:

  • Limiting the fines to the total value of the goods or services contracted or sought;
  • Offering more lenient treatment to companies that have anti-bribery compliance programs in place and cooperating with authorities when any of their officials are found to have engaged in bribery;
  • Imposing financial penalties that range from 0.1 to 20 percent of the gross revenues of the legal entity in the line of business where the wrongdoing took place, not necessarily on the parent company;   
  • Requiring a partial suspension of the firm’s activities, repayment of the bribe, and a ban for up to five years from receiving government loans or support programmes.

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