Article: Brazil's Landmark Clean Companies Act: Comparison to the OECD Anti-Bribery Convention and Issues

Sonia Zaheer 

Pacific McGeorge Global Business & Development Law Journal

March 1, 2014

Abstract:

Corruption in the international marketplace remains an endemic problem. The U.S. government estimates that bribery affects competition for international commercial contracts worth billions of dollars each year. Astonishingly, big names, some of which enjoy a generally good reputation, appear on the list of companies who have allegedly engaged in bribery of foreign public officials. This list includes Alcoa World Alumina LLC, Walmart, AG Simons, Halliburton, Lucent Technologies, Chevron, BAE Systems PLC, Baker Hughes, Monsanto, Titan Corporation, Triton Energy Limited, Avon Products, and Invision Technologies. 

Bribery on international level results in many grave consequences. It distorts markets, hinders economic development and undermines democratic accountability. It inflicts massive costs on countries, causes misallocation of resources, distorts public policy, and undermines enforcement of rule of law. It hurts those companies that choose to follow the law and rightfully refuse to participate in bribery of others. Bribery in the international marketplace also severely threatens global security as it enables transnational crimes including drug trafficking and money laundering. 

On August 1, 2013, Brazil enacted the Clean Companies Act (the Brazilian Act), placing administrative and civil liability on legal entities engaging in bribery of public officials. The new Act went into effect on January 29, 2014. This is a landmark development for several reasons. Brazil is the sixth largest economy in the world, ranked by GDP. It is also the largest and one of the most robust economies in Latin America, an area that is of special significance for U.S. companies conducting business on international level. Meanwhile, corruption is a widespread and long-rooted phenomenon in Brazil. According to some studies, corruption costs the country approximately $40 billion each year. In 2012, Transparency International ranked Brazil as the 69th most corrupt country, out of 174 countries, on its International Corruption Perceptions Index. This rank shows that the nation has "significant problems with corruption." Despite such prevalence of corruption in Brazil, before the enactment of the Clean Companies Act, Brazil’s express laws only held individuals liable for engaging in bribery of public officials, not legal entities. Because Brazil has signed on to the Organization for Economic Co-operation and Development’s (OECD’s) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the Convention), the OECD’s Working Group is scheduled to review the new Brazilian Act in June 2014 and issue its report on whether the law meets the Convention’s requirements. 

This Comment argues that while the provisions of the new Brazilian Act generally conform to or exceed those of the OECD Anti-bribery Convention, whether Brazil will actually and properly enforce the law will determine if Brazil will meet OECD’s expectations and those of its people. This Comment enumerates three key steps Brazil should take in order to effectively enforce its new law. Part II of this Comment explores the evolution of anti-bribery laws on the international level, the OECD’s role, and circumstances behind enactment of Brazil’s Clean Companies Act. Part III compares each provision of the OECD’s Anti-bribery Convention to those of the Clean Companies Act and concludes that the Brazilian law meets each provision except Enforcement. Part IV proposes three key steps that Brazil should take in order to effectively enforce its new law. Specifically, Brazil should make it a top priority to aggressively and objectively investigate and prosecute cases of bribery of public officials. It should ensure that all of the enforcement agencies across Brazil adopt uniform procedures and interpretations of the law. Lastly, it should collaborate with other countries in investigations and prosecutions.

Number of Pages in PDF File: 56

Disponível em: <http://ssrn.com/abstract=2417155>. Acesso em 25 maio 2014.