Brazil – President signs sweeping anti-bribery law

On August 2, 2013, following Presidential approval, Brazil’s new Anti-Bribery Law (“Anti-Bribery Law”, Law No. 12,846/2013), which imposes civil and administrative liability on legal entities for acts committed against local and foreign public administration, especially those related to corrupt practices, was published in the Diário Oficial da União (Official Gazette). The new law will come into force in 180 days.

President Dilma Rousseff vetoed three specific features of the bill:

1) Veto of §6 or Art. 6 which would have limited sanctions to the value of the good or service contemplated. This means that fines can reach as high as 20% of the previous year’s gross revenue of the legal entity. If that amount cannot be calculated, fines can reach up to R$60 million, approximately US$26 million. With this veto, the sanction is no longer capped by the amount of the contract. This veto might be key to bringing the law into line with the requirements of the OECD Convention;

2) Veto of §2 of Art. 19 which would have required the government to show intent or fault in applying certain specific sanctions; and

3) Veto of item X of Art 7 – a feature that could give more lenient treatment to companies depending on the extent of participation of government officials in the wrongdoing.

The Anti-corruption and Compliance Committee of IBRADEMP (the business law association of Brazil) had submitted a report to Congress at the end of last year outlining problems related to previous versions of the bill, regarding in particular items 1 and 3 above. The main features of the new Anti-Bribery Law are described here.

For additional information, please contact Esther Flesch, Bruno Maeda, Erica Sarubbi or Carlos Ayres.