Anti-Corruption in Brazil

1. Domestic bribery (private to public)

1.1      Legal framework

Individuals and legal entities can be liable for bribery of public officials in Brazil.

Bribery of public officials is regulated under the Brazilian Criminal Code (Decree Law No. 2,848), Article 333. Only individuals are criminally liable for bribery in Brazil. The Brazilian Anti-Bribery Law (Law No. 12,846/2013) establishes judicial and administrative sanctions for legal entities. The Brazilian Anti-Bribery law not only covers acts of corruption, but also prohibits such as fraud in public tenders, for both national and foreign public administration.

1.2      Definition of bribery

The Brazilian Criminal Code sets forth the crime of Active Bribery, which is defined as the crime to offer or promise undue advantage to a public official, in order to influence him or her to perform, hide or delay an official act within the scope of his or her duties.

According to the Brazilian Anti-Bribery Law, it is prohibited to promise, offer or give, directly or indirectly, an undue advantage to a national or foreign public official, or a third person related to them.

1.3      Definition of public official

As set forth in Article 327 of the Brazilian Criminal Code, a “government official” is described as any person who, even on a temporary basis or without remuneration, renders services in governmental agencies or entities, and carries out a public function, job or office.

1.4      Consequences of bribery

(a)        For the individuals involved

Under the Brazilian Criminal Code, individuals who commit acts of corruption can be subject to penalties of a fine and up to 12 years of imprisonment.

(b)        For the company/legal entity

Under the Brazilian Anti-Corruption Law, legal entities can be subject to administrative and judicial penalties.

  • Administrative: (i) Fine of 0.1% to 20% of the gross revenue in the last year prior to the start of the administrative proceedings; if such criteria cannot be used, the fine will range from BRL 6,000 to BRL 60 million; and (ii) publication of the condemnatory decision
  • Judicial: (i) Prohibition from receiving incentives, subsidies, grants, donations or loans from public agencies or entities and from public financial institutions or institutions controlled by the government, for up to five years; (ii) loss of assets, rights or valuables representing the advantage or profit, directly or indirectly, obtained from the wrongdoing; (iii) partial suspension or interdiction of the legal entity’s activities; and
    (iv) compulsory dissolution of the legal entity

1.5      Political contributions

According to Law No. 9,504/97, individuals can make political contributions in an amount that does not exceed 10% of the person’s gross income. Law No. 9,504/97 also allows companies to make contributions to candidates or political parties in an amount of up to 2% of the company’s gross revenue in the year prior to the election. However, this provision was revoked by Law No. 13,165/2015, and companies are no longer permitted to make political contributions.

1.6       Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, among others)

Brazilian legislation does not establish a limit on hospitality expenses given to government officials. There is, however, a Code of Conduct for the High Level Administration, which contains a set of guidelines and ethical principles to be observed by some government officials. This code is only applicable to government officials and not to private entities, but it is useful in setting out specific parameters to assess the appropriateness of conduct towards a public official regarding gifts, hospitalities and entertainment. According to the code of conduct, government officials must refrain from accepting presents or other benefits when the offeror is any individual or company that: (i) is subject to the regulatory jurisdiction of the agency for which the government official works; (ii) has any personal, professional or corporate interest with the government official; (iii) maintains a business relationship with the agency to which the official provides services; or (iv) represents third parties that have interests with the agency in which the official is employed.

The code of conduct also establishes that government officials may accept small free gifts given for advertisement or for celebration of events of historical and cultural nature. The commercial value of the free gift coming from the same company cannot exceed BRL 100 per year. Moreover, its distribution must be generalized (i.e., it should not be exclusively targeted to a specific public official), and the gift must not be offered more than once every 12 months to the same government official.

2.      Domestic bribery (private to private)

2.1       Legal framework

Private bribery is not regulated by Brazilian legislation.

2.2       Definition of private bribery

Private bribery is not regulated by Brazilian legislation.

2.3       Consequences of private bribery

Private bribery is not regulated by Brazilian legislation.

2.4       Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, among others)

Brazilian legislation does not establish limits to hospitality expenses between private parties.

3.      Corruption of foreign public officials

3.1       Legal framework

Individuals and legal entities can be liable for bribery of foreign public officials in Brazil.

Bribery of foreign public officials is regulated under the Brazilian Criminal Code (Decree Law No. 2,848), Article 337-B for individuals, and in the Brazilian Anti-Corruption Law (Law No. 12,846/2013) for legal entities. The Brazilian Anti-Bribery law not only covers acts of corruption, but also prohibits acts such as fraud in public tenders, for both national and foreign public administration.

3.2       Definition of corruption of foreign public officials

Under the Brazilian Criminal Code, which sets forth the crime of Active Bribery in International Commercial Transaction, it is a crime for an individual to offer or promise undue advantage to a foreign public official, or to a third party, in order to influence him to perform, hide or delay an official act related to an international commercial transaction.

Under the Brazilian Anti-Bribery Law, it is forbidden to promise, offer or give, directly or indirectly, an undue advantage to a national or foreign public official, or a third person related to them.

3.3       Definition of foreign public official

Foreign public officials are those who, even transitorily and without compensation, hold a public position, job or office in government agencies and entities, or in diplomatic representations of a foreign country, as well as in legal entities controlled, directly or indirectly, by the government of a foreign country, or in international public organizations.

Public agencies and entities, diplomatic representations of a foreign country, of any government level or sphere, and legal entities controlled, directly or indirectly, by the government of a foreign country, as well as international public organizations, are considered foreign public administration, according to Law No. 12,846/13.

3.4       Consequences of Corruption of foreign public officials

(a) For the individuals involved

Under the Brazilian Criminal Code, individuals who commit acts of corruption in international commercial transactions can be subject to penalties of a fine and up to eight years of imprisonment.

(b) For the company/legal entity

Under the Brazilian Anti-Bribery Law, legal entities can be subject to administrative and judicial penalties.

  • Administrative: (i) Fine of 0.1% to 20% of the gross revenue in the last year prior to the start of the administrative proceedings; if such criteria cannot be used, the fine will range from BRL 6,000 to BRL 60 million; and (ii) publication of the condemnatory decision
  • Judicial: (i) Prohibition from receiving incentives, subsidies, grants, donations or loans from public agencies or entities and from public financial institutions or institutions controlled by the government, for up to five years; (ii) loss of assets, rights or valuables representing the advantage or profit, directly or indirectly, obtained from the wrongdoing; (iii) partial suspension or interdiction of the legal entity’s activities; and
    (iv) compulsory dissolution of the legal entity.

3.5       Limitation applicable to hospitality expenses (gifts, travel, meals, entertainment, among others)

Brazilian legislation does not establish a limit on hospitality expenses given to government officials, and there is no minimum amount allowed. Any amount can be considered corrupt, depending on the context.

4. Facilitation payments

Under Brazilian legislation, facilitation payments are prohibited

5. Compliance programs

5.1       Value of a compliance program to mitigate/eliminate the criminal liability for legal entities

The existence of a compliance program does not eliminate judicial or administrative liability for legal entities. However, it can mitigate sanctions that legal entities can be subject to. According to the Brazilian Anti-Bribery Law, “the existence of internal mechanisms and procedures of integrity, audit and incentive for the reporting of irregularities, as well as the effective enforcement of codes of ethics and of conduct within the scope of the legal entity” will be taken into consideration when applying sanctions.

5.2       Absence of a compliance program as a crime

Brazilian legislation does not establish that the absence of a compliance program is a crime or a violation of any laws.

5.3       Elements of compliance program

(a)        Legal framework

On 19 March 2015, the Federal Executive Branch issued Decree
No. 8,420/15 (“Decree”), which provides regulation for the Brazilian Anti- Bribery Law. Among the several items regulated in the decree are the parameters for the evaluation of a compliance program.

Article 42 of the Decree sets forth that compliance programs will be evaluated according to the following parameters:

  1. Commitment of the legal entity’s senior management, including board members, proven by their clear and unequivocal support to the program./li>
  2. Standards of conduct, code of ethics, policies and integrity procedures that are applied to all employees and administrators, regardless of their position or role
  3. Standards of conduct, code of ethics and integrity policies that are extended, when necessary, to third parties such as suppliers, service providers, intermediaries and other associates
  4. Periodic training on the integrity program
  5. Periodic analysis of risks in order to implement necessary adjustments to the integrity program
  6. Accounting records that precisely and completely reflect the transactions of the legal entity
  7. Internal controls that assure that reports and financial statements of the legal entity are readily prepared and credible
  8. Specific procedures to prevent frauds and illicit acts within the tender process, on the execution of administrative contracts or on any interaction with the public sector, even if intermediated by third parties, such as the payment of taxes, subjection to inspections, or obtainment of authorizations, licenses, permits and certificates
  9. Independence, in structure and authority, of the internal department that is responsible for enforcing the integrity program and monitoring its compliance
  10. Channels to report irregularities, openly and broadly disseminated among employees and third parties, and mechanisms to protect good-faith whistleblowers
  11. Disciplinary mmeasures enforced against those found to have violated the integrity program
  12. Procedures that assure the immediate suspension of irregularities or detected infractions and the timely remediation of the damages caused
  13. Proper due diligence conducted prior to engaging third parties and, depending on the circumstances, the monitoring of third parties such as suppliers, service providers, intermediaries, and other associates
  14. Verification, during a merger, acquisition or other corporate restructuring, of the occurrence of irregularities or illicit acts, or the existence of vulnerabilities in the legal entities involved
  15. Continuous monitoring of the integrity program to ensure it remains effective at preventing, detecting and otherwise addressing the wrongful acts set forth in Article 5 of the Anticorruption Law
  16. Transparency surrounding donations to candidates and political parties made by the legal entity

(b)        Recommended practice

It is recommended that companies create, maintain and update mechanisms and procedures to prevent, detect and correct prohibited acts. Having an effective compliance program allows companies to decide about the convenience of making voluntary disclosures to enforcement authorities, as well as to obtain credit in case of possible wrongdoing.

Compliance programs should be implemented and revised on a regular basis, considering the evaluation of key risk factors related to the company and varying according to the company’s size, amount and nature of commercial operations; location where their activities take place; and risk perception. However, the mere creation and revision of a compliance program is not sufficient. It is important to disseminate and apply such programs throughout the company, as well as to third parties and business partners. It is very important to provide periodic training to employees and also to third parties. The Decree also establishes that companies should make their reporting channels available to such third parties. This will also be a factor to be taken into consideration for the evaluation of the compliance program, as set forth in the Decree.

It is also important to note that the Brazilian Anti-Bribery Law, unlike other anti-corruption legislation, does not only cover acts of corruption, but also other acts against public administration, mainly related to public tender procedures and public contracts. For that reason, it is important for companies to take this into consideration when structuring or reviewing their compliance program, even if they already have a compliance program with focus on corruption matters.

6. Regulator with jurisdiction to prosecute corruption

If the crime of corruption is committed by individuals, the state police, the federal police, and the state and federal public prosecutor office are the authorities who can prosecute corruption.

Under the Brazilian Anti-Corruption Law, for legal entities who commit acts of corruption, the highest authorities of each entity of the executive, legislative and judiciary powers, and the Office of the Federal Comptroller General has standing to prosecute and apply administrative sanctions. The federal government, the states, the federal district, the municipalities and the public prosecutor office are the authorities who can prosecute acts of corruption and apply civil sanctions.