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. 

2014 Latin America Ethics Summit: Global Issues, Local Perspectives

Renata Fonseca de Andrade Esq., LL.M., to Speak on Corruption Enforcement at the 2014 Latin America Ethics Summit: Global Issues, Local Perspectives, taking place July 16-17 in São Paulo, Brazil.

 “This year’s Latin America Ethics Summit features an impressive roster of expert panelists from c-suite executives of Latin American companies and 2014 World’s Most Ethical Companies® to ethics and compliance leaders that consistently endeavor to elevate best practices across the Latin America business and regulatory environment,” said Ethisphere’s Editor in Chief, Stefan Linssen. “We look forward to addressing the most relevant ethics and governance topics facing leaders of multinational companies based in Latin America or with substantial operations across Latin America.”

The 2^nd Annual Latin America Ethics Summit
The 2014 summit will provide local perspectives on global issues including implications of Brazil’s Clean Company Act. Delegates will also gain insight into tailoring ethics programs for Latin America and will come away with useful tools and strategies to apply to daily work.

To Learn More and Register
See the full agenda and get the latest updates on new speakers and sponsors by visiting: http://latinamericaethicssummit.com.

Renata is offering to her contacts a 15% discount off the registration price by having them use discount code: speaker15LAES

About Ethisphere
The Ethisphere® Institute is an independent center of research, best practices and thought leadership that promotes best practices in corporate ethics and compliance and enables organizations to improve governance, mitigate risk, and enhance relationships with employees, business partners, investors and the broad regulatory community. Ethisphere evaluates and benchmarks compliance and governance programs, honors superior achievement through its World’s Most Ethical Companies’™ recognition program, and publishes Ethisphere Magazine. Ethisphere is also the leading provider of independent verification of corporate ethics and compliance programs that include: Ethics Inside® Certification, Compliance Leader Verification™ and Anti-Corruption Program Verification™. Learn more at http://www.ethisphere.com.
Clea Nabozny
Ethisphere
480-397-2658
clea.nabozny(at)ethisphere.com

Decreto da Prefeitura de São Paulo regulamenta Lei Anticorrupção (Lei Federal 12.846/13)

Em 14/05/2014, o Diário Oficial do Município de São Paulo publicou o Decreto Municipal nº 55.107, que regulamenta, no âmbito do Município, a Lei Federal nº 12.846/13, a conhecida “Lei Anticorrupção”, que passa a vigorar plenamente nesta capital.

O Decreto Municipal prevê a competência da Controladoria Geral do Município para a instauração da sindicância e do processo administrativo destinados a apurar a responsabilidade das pessoas jurídicas pela prática de atos contra a Administração Pública Municipal Direta e Indireta, nos termos da Lei Anticorrupção. Nisso andou bem o Poder Executivo local, pois, na prática, a instauração e a decisão final cabem à Autoridade distinta daquela que teve participação nos fatos ou que costuma se relacionar comercialmente com as empresas.

O Decreto Municipal desce a minúcias no que se refere às fases e aos atos a serem praticados no processo administrativo, conferindo segurança ao envolvido. Além da condução do processo por comissão processante composta por três servidores estáveis, após a conclusão do relatório final, o Decreto Municipal prevê manifestação jurídica da Procuradoria Geral do Município, seguida de alegações finais pela pessoa jurídica interessada e, por fim, a decisão pela Controladoria Geral do Município. Da decisão cabe recurso administrativo e pedido de reconsideração.

Uma interessante inovação trazida por essa norma está no art. 5º. que a pedido da comissão processante, em determinados casos, a autoridade instauradora do processo poderá suspender os efeitos do ato investigado ou do processo a ele relacionado. A previsão torna o Decreto Municipal apto a prevenir danos e não apenas a punir os agentes.

Ao contrário do verificado no âmbito Estadual , Decreto nº  60.106, o art. 24 do Decreto Municipal prevê expressamente parâmetros a serem considerados para fins de atenuação das penalidades aplicadas às empresas, notadamente no que se refere ao programa de conformidade (“Compliance”). Não bastará a existência de tal programa, será verificada sua aplicação e efetividade, bem como se há mecanismos de recebimento de denúncias que assegurem o anonimato e se foram implementadas medidas de transparência no relacionamento com o setor público.

Há pontos, no entanto, que merecem especial cuidado. No que se refere ao acordo de leniência o Decreto não fornece a necessária segurança àquele que pretenda se valer desse instituto. Isso porque seus benefícios estão condicionados a uma série de fatores subjetivos, de modo que, se não houver avaliação técnico-jurídica por equipe capacitada, o efeito prático poderá ser o de uma simples entrega de documentos e confissão de culpa, sem qualquer benefício à empresa.

Por exemplo: 

O artigo 3º., ”caput”, do Decreto 55.107, de 13/05/2014, concentra na Controladoria Geral do Município a competência para instaurar sindicância e processo administrativo destinados  a apurar a responsabilidade administrativa de pessoas jurídicas pela prática de atos contra a Administração Pública Municipal Direta e Indireta de atos passíveis de aplicação da Lei 12.846/13.

O Decreto Municipal 55.107 de 13/05/2014 inova ao indicar no art. 3º., § 3º. que a Controladoria Geral do Município, poderá determinar a instauração de sindicância, com carácter de investigação preliminar, caso a autoridade tenha notícia de suposta irregularidade, mas não possua dados suficientes para instaurar o processo administrativo.

Enquanto a Lei Federal 12.846/13 (art. 16, §1º), prevê ao acordo de leniência redução  de até 2/3 (dois terços) da multa aplicável à pessoa jurídica que seja a primeira a se manifestar sobre seu interesse em cooperar para a apuração do ato ilícito no processo administrativo, a Prefeitura de São Paulo cria um redutor do máximo do desconto previsto na Lei Federal para as empresas que não  se adiantarem à cooperação (“self disclosure“ ), antes mesmo de eventual instauração do processo administrativo, ou seja já na fase da sindicância prevista no artigo 3º. ,do Decreto Paulistano.

O artigo 31, § 3º., declara que se a proposta de acordo de leniência for apresentada após a ciência, pela pessoa jurídica, da instauração dos procedimentos previstos no “caput” do artigo 3º., do Decreto Municipal, a redução do valor da multa aplicável será, no máximo, de até 1/3 (um terço) .

Essa competência investigativa da Controladoria Geral do Município para instalação de sindicância, mesmo quando não possua dados suficientes para a instalação do processo administrativo contra a pessoa jurídica por eventuais vestígios de atos ilícitos, remete a uma controvérsia quanto à discricionariedade ampla do órgão municipal no tocante à aplicação do artigo 31 do mesmo decreto municipal, reduzindo os benefícios do acordo de leniência como previsto na Lei Federal.

Conclusão: 

O que foi denominado “bônus” pelo Sr. Prefeito do Município de São Paulo, na verdade é um verdadeiro redutor das atenuantes de cooperação da pessoa jurídica e ao acordo de leniência definidos pela Lei Federal  12.846/13, porque a Autoridade  Municipal poderá erroneamente determinar a redução do desconto à pessoa jurídica, porque esta deveria apresentar proposta de leniência,  antes mesmo de tomar ciência dos fatos imputados, na instauração de sindicância, antecedente ao processo administrativo, por supostos atos ilícitos que lhe estariam sendo imputados.

Ainda assim, de um modo geral, o Decreto fornece as ferramentas necessárias para que o Município de São Paulo passe a aplicar a Lei Anticorrupção em sua plenitude. 

BRAZIL – FIGHT AGAINST CORRUPTION – The new Draft Bill is around the corner - PL 6826/2010 final draft.

 BRAZIL – FIGHT AGAINST CORRUPTION – New Draft Bill is around the corner - PL 6826/2010 final draft.

Brazil is a signatory of three 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

·       DRAFT BILL 6826/2010

The new bill is the latest Brazilian efforts against International Systemic Corruption. It addresses administrative, civil, and criminal liability for person and corporations for corrupt acts relating to national and foreign public administration.

• Federal Agencies Responsible for Combating Corruption in Brazil – The law provides Administrative Investigation, civil, and 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.

• Affirmative Defense – (As UK Bribery Act) “adequate procedures” appears 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”.

• Credit for Cooperation – Whistleblower provision, appears as “the cooperation with an investigation of  infractions” .

• 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 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 legal entities
- Foreign legal 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 (civil and administrative)
- 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
- Termination of contracts with public entities
- Seizure and confiscation of assets and gains
- Partial suspension or interdiction of its activities
- Compulsory dissolution of the legal entity


- 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 is the first 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

Renata Fonseca de Andrade
Attorney at Law – Brazil and USA
br.linkedin.com/in/renatafandrade/

TIPs and CHIPs - the payments....

SEC Charges Seven Oil Services and Freight Forwarding Companies for Widespread Bribery of Customs Officials. The Securities and Exchange Commission announced sweeping settlements with global freight forwarding company Panalpina, Inc. and six other companies in the oil services industry that violated the Foreign Corrupt Practices Act (FCPA) by paying millions of dollars in bribes to foreign officials to receive preferential treatment and improper benefits during the customs process. http://www.sec.gov/news/press/2010/2010-214.htm

DOJ is moving beyond the FCPA. The government’s willingness to use the Travel Act to attack bribes to foreign nationals in cases where the FCPA arguably does not apply (e.g., the Nexus Technologies case) or concededly does not apply (e.g., the Carson case) seems to indicate that DOJ stands ready to prosecute private commercial bribery. Indeed, the DOJ’s own FCPA website states that DOJ “may” in the future continue to use the Travel Act to pursue “federal prosecutions of violations of state commercial bribery statutes.” Whether it will do so only in cases where it stumbles on evidence of bribes to private actors during traditional FCPA investigations or will pursue such cases where this conduct stands alone, based on whistleblower information or other leads.

For this trend, a reassessment of internal compliance programs is prudent.

The inclusion of the Travel Act charges in the Nexus Technologies indictment is not an isolated incident. DOJ has used the Travel Act to reach bribery of individuals overseas in a number of different cases. It has, in fact, done so at least sporadically for years. See, e.g., United States v. Welch, 327 F. 3d 1081 (10th Cir. 2003) (reversing District Court’s dismissal of Travel Act charges, with Utah bribery statute as predicate, in case involving bribes to private individuals overseas);United States v. Young & Rubicam, Inc.,741 F. Supp. 334 (D. Conn. 1990) (Travel Act charges with underlying predicates of FCPA and New York commercial bribery statute).

See Indictment in United States v. Nexus Technologies Inc., Counts 11 – 19, 08-cr-522 (E. D. Penn.) (Docket # 106, 10/29/09). And DOJ Press Release dated September 16, 2010 at http://www.justice.gov/opa/pr/2010/September/10-crm-1032.html

Precedents:

• United States v. Robert E. Thomson and James C. Reilly – Two executives of HealthSouth Corporation were charged with Travel Act violations, based on Alabama’s commercial bribery statute, in connection with alleged kickbacks to a Saudi Arabia customer. They were acquitted of all charges at trial in 2005. Two other executives caught up in the same investigation pled guilty to other charges.

• United States v. Steven J. Ott et al. – Three executives from ITXC Corporation, an international telecommunications company based in New Jersey, were convicted of parallel FCPA and Travel Act violations and sentenced in 2008, with the lead defendant receiving 18 months in prison. The Travel Act’s underlying predicate crime in that case was New Jersey’s commercial bribery statute (Section 2C:21-10 of the New Jersey Code) and the conduct included wire transfers of bribe money from New Jersey to Nigeria.
  SeeDOJ Press Release dated September 2, 2008; Indictment in United States v.Steven J. Ott, 07-cr-608 (D.N.J.)

• United States v. Stuart Carson et al.– Numerous employees of an energy industry equipment manufacturer were indicted for an alleged scheme to land contracts through bribery – including about $5 million in payments to employees of foreign state-owned customers and about $2 million in payments to employees of private foreign companies. The latter conduct was prosecuted under the Travel Act, using California’s commercial bribery law (Penal Code Section 641.3) as the underlying predicate. Two employees have pled guilty and await sentencing while six more await trial, currently scheduled for November 2010.
  See DOJ July 6, 2010, Press release; Docket sheet for United States v. Carson et
  al., 8:09 cr 77 (D.D. Cal. 2009).

• United States v. Frederic Bourke, Jr.– Bourke was convicted at trial of violating the FCPA and the Travel Act. Unlike in other cases discussed above, however, the underlying “unlawful activity” predicate for the Travel Act charges was not a state law commercial bribery statute – but the FCPA itself. Unsurprisingly, the jury was accordingly instructed that the government had to prove, among other things, “that the activity that the person intended to facilitate was, in fact, unlawful under the FCPA” itself. But that charging decision portends another future risk: that the government could use the Travel Act to bootstrap an FCPA charge (or a state commercial bribery charge) into a racketeering charge – as it has done in the past.

While the FCPA is not an enumerated predicate under the Racketeer Influenced and Corrupt Organizations Act, and hence cannot form the basis for RICO charges, the Travel Act does constitute such a predicate and thus can be the basis for a RICO indictment.

See Young & Rubicam, 741 F. Supp. at 338 (rejecting defense argument that it was improper to charge criminal RICO violation based on Travel Act predicates, which were in turn based on FCPA and New York commercial bribery predicates); cf. Dooley v. United Technologies Corp., 1992 WL 167053 at *9 (D. D. C. 1992) (refusing to dismiss a civil RICO action, finding specifically that Travel Act violation relating to bribery of Saudi Arabian officials was a sufficiently pled predicate act of racketeering).And see Jury Instructions, United States v. Bourke, S2 05 Cr. 518 (S.D.N.Y. 2009) at 32.

The government’s willingness to use the Travel Act to attack bribes to foreign nationals in cases where the FCPA arguably does not apply (e.g., the Nexus Technologies case) or concededly does not apply (e.g., the Carson case) seems to indicate that DOJ stands ready to prosecute private commercial bribery.

Indeed, the DOJ’s own FCPA website states that DOJ “may” in the future continue to use the Travel Act to pursue “federal prosecutions of violations of state commercial bribery statutes.” Whether it will do so only in cases where it stumbles on evidence of bribes to private actors during traditional FCPA investigations or will pursue such cases where this conduct stands alone, based on whistleblower information or other leads.

The trend raises the need of a reassessment of internal compliance programs and an anti-corruption compliance program that covers the waterfront of traditional FCPA concerns and commercial bribery and US state commercial bribery laws which sets a very low bar for bribery, outlawing the provision of “any benefit upon any employee, agent or fiduciary … with intent to influence his conduct”, as well that covers the UK Bribery Act.

The conduct US prosecutors can now only reach through the artful use of the Travel Act (necessarily tethered by some nexus to the individual state at issue), the UK Act targets directly and more broadly: it directly criminalizes commercial bribery of private individuals, imposes criminal liability for the new strict liability corporate offense of “failing to prevent bribery” with a long-arms beyond territory (and no prong on corrupt intent).