ANTICORRUPTION – New LAW 12.846/2013

ANTICORRUPTION – New LAW 12.846/2013 The new Federal Law 12.846/2013 coming in to force in January 29, 2014.

Brazil is a signatory of 4 important conventions against corruption:

- OECD Convention on Combating Bribery of Foreign Public Officials in

- International Business Transaction: 2000

- Inter-American Convention Against Corruption: 2002

- United Nations Convention against Corruption: 2006

BRAZIL ANTI CORRUPTION LEGAL FRAME:

·          =  Penal Code: 1940

·        = Public Procurement Law: 1993

·     = Improbity Law: 1992

·       = The Code of Conduct of the Federal Government: 2001

- Not technically law (set of presidential guidelines)

- In principle, only applies to high-level public employees

- Can be used as reference with respect to all public employees by the administrative authorities, and even by courts, to determine a standard of proper conduct

- Guidelines for gifts, entertainment and hospitality

·      = New Money Laundering Law: 2012

- No predicate offenses

·       LAW 12.846/2013

The new law is the latest Brazilian efforts against International Systemic Government/Private Sector’s Corruption. It addresses administrative and civil liability for corporations for corrupted acts relating to national and foreign public administration.

• Federal Agencies Responsible for Combating Corruption in Brazil – The law provides Administrative Investigation, civil, and accrues further criminal procedures, through The Office of Comptroller General of Brazil (AGU).

• Respondeat Superior – Legal entities shall be held liable for acts committed by any of its directors, representatives, or agents, and by colligates companies,  and  its subsidiaries.

• Affirmative Defense –  Unlike as UK Bribery Act,  “adequate procedures” appears only to mitigate the fines as  “the existence of mechanisms and internal integrity procedures, audit and incentive denunciation of irregularities in applying the code of conduct and ethics within the legal entity”., is properly implemented and in place to follow compliance within the Corporation, its agents, and third parties.

• Credit for Cooperation – Whistleblower provision, doesn’t appears for 3^rd parties, as “the cooperation with an investigation of  infractions”, reflects directly to corporation self-disclosure.

• Penalties – Penalties for corporations and individuals, include fines between 0.1% to 20% of the company’s gross revenue and debarment from public contracts. Individuals could face prosecution and jail time of up to 12 years per offense. Criminal Brazilian system does not embrace the same concept of “plea bargain” we have in the US.

=== Subjected Persons

- Brazilian  Corporation legal entities

- Foreign legal Corporation entities with “registered office, branch or representation in the Brazilian territory”

• Prohibited Acts

- Related to local and foreign public administration

- Bribe of public officials

_ “To promise, offer or give, directly or indirectly, an undue advantage to a public agent, or third person related to him”

- “Fraud” in public procurement settings

- Bid rigging

• Strict Liability

-       Should be more easily applied than current laws

• Sanctions to the Corporation (civil and administrative)

-       Restitution/Disgorgement (mandatory)

-       Fines

_ 0.1% to 20% of the gross revenue of the previous year

_ R$ 6,000 to R$ 60,000,000

_ Influence of new antitrust law

- Debarment: from 1 to 5 years

- Publication of the condemnatory decision

- Prohibition to receive incentives and public financing from 1 to 5 years, and government contracts (lei 8.666).

- Termination of contracts with public entities

-       Judicial level:

- Seizure and confiscation of assets and gains

- Partial suspension or interdiction of its activities

- Compulsory dissolution of the legal entity

- Critical: The OECD Convention seeks “functional equivalence” when criminal responsibility is not applicable, the Convention requires that bribery of a foreign public official be punishable by “effective, proportionate and dissuasive” sanctions.

-At least comparable to sanctions for bribery of domestic public officials

Voluntary Disclosure and Cooperation

- New feature in the Brazilian anti-corruption arena

The cooperation of the legal entity with the investigation of the violations, Including by voluntary reporting to the authorities, before the initiation of a proceeding, as well as the disclosure of information during the course of the Investigations

• Leniency Program:

- Requirements

-- Legal entity initiative to come forward and confesses its participation in the unlawful practice;

-- Legal entity ceases its involvement in the unlawful practice;

-- Public authorities did not have sufficient information about the illegal activity to ensure the condemnation of the applicant; and

-- The applicant agrees to fully cooperate with the investigation.

- Benefits for legal entities

-- Fines can be reduced up to 2/3

-- All the other sanctions (excluding restitution) are excluded.