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INTERVIEW - Brazil will soften bribery sanctions on companies with strong compliance

Source: Thomson Reuters Foundation - Wed, 11 Dec 2013 08:03 GMT
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A worker and a Brazilian flag at a construction site are reflected on the wall of a business building, in the financial centre of Sao Paulo's Avenida Paulista, on Aug. 29, 2013. REUTERS/Nacho Doce
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PARIS (Thomson Reuters Foundation) - Brazil is willing to reduce penalties under its new anti-bribery law for companies that have a strong compliance programme in place and can show they are promoting good preventative policies, a senior Brazilian official said on Tuesday.

Latin America's largest economy after years of debate pushed through the Clean Companies Act this year, criminalising corruption by individuals and making businesses legally liable for corrupt acts for the first time. This gives the government the power to impose heavy fines on legal entities for corruption.

"Companies are worried about the sanctions, which is a very important part of the law," Hamilton Cruz, the director of integrity for Brazil's Office of the Comptroller General, said in an interview on the sidelines of the Working Group on Bribery meetings at the Organisation for Economic Cooperation and Development.

"But we have explained that if you pay bribes and tell the government, we will give recognition to companies that behave well," Cruz said. Countries such as the United States frequently lessen the charges if the bribery was the rogue action of one employee, rather than systemic in the company.

Companies found guilty of bribery will face fines of up to 20 percent of their gross annual revenue for the previous year or a maximum of 60 million reais ($26.22 million). They could also be suspended from operating, have assets confiscated and even face possible dissolution.

Brazil has been meeting with businesses, accountants, auditors and lawyers to explain the new law, which takes full effect on Jan. 29, 2014. Cruz said his office has drawn up a seven-page preliminary document on implementing regulations, which will be issued next month. Training programmes also are under way and the Office of the Comptroller General will have a six-person investigative team in place to handle foreign bribery cases.

While Cruz dampened any expectation for rapid prosecutions by Brazil given the complexity of bribery cases, he said one of the most important effects of the new legislation is that it opens the door to much deeper international cooperation. The U.S. Department of Justice, the Federal Bureau of Investigations and the Securities and Exchange Commission, for instance, are much more willing to share information with Brazil on fraud, bribery and corruption now they have a strong law in place.

“It is not easy to follow the money. It is not easy to locate a fake company. It is not easy to see who took the decision (to bribe). As soon as we can gather information that is in the hands of the West and share evidence, we can get some traction," Cruz said.

Already the United States and Brazil are cooperating in investigating a leading Brazilian company Embraer, the aircraft manufacturer, for foreign bribery and corruption. Pressure to toughen the country's anti-bribery framework mounted this year after Brazil’s Supreme Court, in a highly unusual move, convicted and jailed officials linked to former President Luiz Inacio Lula da Silva in a vote-buying scheme in Congress and street protestors demanded the government act forcefully against corruption.

CRIMINAL VS CIVIL

OECD's director of legal affairs Nicola Bonucci has said its Working Group on Bribery, which is due to issue a report next June on how well Brazil's new law complies with the OECD’s Anti-Bribery Convention, will question whether civil penalties alone are sufficient for companies. The OECD prefers criminal liability.

But Cruz said Brazil's constitution does not allow for criminalising a corporation, and he expects the OECD will understand that its civil penalties can be equally punitive.

"We will have to convince them, but one of the principles of the Working Group is that every country works within its own constitution and laws in complying with the convention," he said. 

Search and arrest powers for federal investigators, who must get warrants through the judicial process and the police, also will be a question the Working Group will want to examine, Cruz said.

One of the major challenges in implementing the law will be training investigators and prosecutors, particularly in the states and municipalities that are responsible for domestic bribery. His office handles foreign bribery.

Already training programs have begun, he said.

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