Anti-Corruption Enforcement In Brazil Is In High Gear

Headlines of Brazil's push to fight corruption are everywhere. The Petrobras scandal involves contracts worth billions of dollars, and prosecutors have uncovered a U.S. connection. The public is outraged and has called for President Dilma Rousseff's impeachment, as the speaker of Brazil's lower house of Congress and a former president of Brazil face recently filed corruption charges. In light of this cascading wave of corruption enforcement, companies operating in Brazil would be wise to scrutinize the adequacy of their compliance programs there and beyond. Fortunately, recent regulations further implementing Brazil's Clean Company Act provide guidance that will help them move forward with confidence.

Efforts to Fight Corruption

Some of the more significant headlines related to Brazil's recent anticorruption push include the following:

In March, Brazil's Supreme Court approved an investigation of 54 high-ranking officials, including former President Fernando Collor de Mello, current Senate Leader Renan Calheiros, and the leader of the lower house Eduardo Cunha. All three are allegedly involved in the Petrobras scandal. Now, federal authorities have charged Collar and Cunha with corruption-related crimes, and charged former federal deputy Solange Almeida with helping Cunha collect bribes. In July, prosecutors opened a probe into another former president, Luiz Inacio Lula da Silva, focused on whether Lula improperly helped construction giant Oderbrecht win billion-dollar deals in South America and Africa. This follows the arrest of Oderbrecht's CEO in connection with the Petrobras scandal. In early August, it surfaced that prosecutors had charged Jorge Zelada, the former head of Petrobras' international division, and Hsin Chi Su, the chief executive of the Taiwanese shipping firm TMT, for allegedly favoring Houston-based Vantage Drilling in a bid with Petrobras. Su and others allegedly paid $31 million in bribes to Zelada, other ex-Petrobras officials, and Brazil's PMDB political party. In an SEC filing, Vantage Drilling disclosed it had voluntarily informed the DOJ and SEC of the issues. In late August, prosecutors in the Vantage Drilling case alleged that Su and Hamylton Padilha, who worked as a third-party agent for Vantage Drilling, met in New York in November 2008 to discuss the bribery scheme. This allegation is the first in the Petrobras scandal to include a connection to the U.S. Also in late August, demonstrators took to the streets...