Brazil’s New Anti-Corruption Law – Strict Liability!

No criminal charges, but strict liability, big fines, and liability for bribes of private companies as well as public officials. — Under the new rule, there are administrative and judicial sanctions. Fines are between 0.1 percent and 20 percent of a company’s gross revenue from the prior year. If gross revenue is not known, fines are between $3,000 and $30 million. The payment does not exempt a company from paying losses generated to the government as a consequence of its wrongdoings.

Also, the new law applies to businesses, foundations, as well as associations and foreign companies with an office, branch or subsidiary in Brazil, according to InsideCounsel.

What is unique about Brazil’s law when compared to similar laws in other nations?

“Unlike the UK Bribery Act and the US Foreign Corrupt Practices Act (FCPA), the Brazilian Clean Companies Act imposes strict liability to a legal entity for the corrupt acts of their employees, vendors, or third party contractors,” Jose Compagno, EY’s Brazil leader for Fraud Investigation and Dispute Services, explained to InsideCounsel.

In addition, when it comes to the Brazil law, “legal entities can be held liable for acts committed in their interest or for their benefit, either exclusively or not,” Compagno added.

“In other words, even if the company had no knowledge or intention to benefit from any fraud or corruption, the company is still held legally responsible,” he said.

The law is also different because there are no criminal charges. Also, unlike the FCPA, Brazil’s law is not limited to acts involving foreign officials, InsideCounsel reported. It prohibits bribery by local and foreign government officials. And when it comes to intent, the FCPA requires the government to prove that the defendants intended to engage in illegal conduct.

Overall, it is important that the Brazil law requires strict liability. The act puts liability on companies – which is a change. Before, only individuals were liable for corruption, according to a blog post from The Wall Street Journal.

“Brazilian authorities do not need to show that a person or company intended to violate the law—the fact that a bribe was paid to a public official is sufficient to establish liability,” InsideCounsel reported.
Enforcement of the Brazil law is unique, too. “There are a very large number of entities enforcing the law. This is making companies quite scared,”…..


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