Brazil Enacts New Anti-Corruption Law

On August 1, 2013, Brazil enacted Law No. 12.846, which will allow administrative and judicial bodies to hold legal entities (including foreign companies with operations and branches in Brazil) responsible for acts of corruption committed against Brazilian and foreign public officials and bodies ("Brazilian Anti-Corruption Law"). It will become effective 180 days as of its publication in the Official Gazette, on August 2, 2013.

Until the enactment of the Anti-Corruption Law, only individuals (e.g. public officials, employees and managers) could be punished for bribery. Therefore, the Brazilian anti-corruption statutes lacked the element of corporate liability that is a cornerstone of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of the Organization for Economic Cooperation and Development ("OECD"), which was ratified by Brazil in 2000.

In general terms, corruption offences under the Brazilian Anti-Corruption Law encompass offering or giving unjust advantage to a public official, or to a related third party; financing or subsidizing the illegal offences foreseen in such legislation, and; committing illegal actions related to public contracts and public biddings, such as bid rigging.

Administrative fines may vary from 0.1% to 20% of the gross turnover of the legal entity for the financial year prior to the beginning of the administrative proceeding. If it is not possible to ascertain the gross turnover, fines may range from R$ 6,000 to R$ 60 million. In the event of judicial proceedings, civil penalties may include suspension or the partial banning of activities; compulsory dissolution of the legal entity and prohibition from obtaining incentives, donations or loans from government bodies. Regardless of the imposition of the above-mentioned penalties, the legal entity must fully indemnify the injury suffered by the government body.

The Law also...