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The Anti-Bribery and Anti-Corruption Review The Anti-Bribery and Anti-Corruption Review Second Edition Editor Mark F Mendelsohn Law Business Research Chapter 3 BRAZIL Adriana Dantas and Luiz Eduardo Alcantara 1 I INTRODUCTION 2013 will be remembered as the year in which Brazil joined the group of countries that have enacted a law that has the potential to severely punish legal entities involved in acts of corruption. !e bill had remained under discussion in the Brazilian Congress for over three years and became Law No. 12846/2013 (the Anti-Corruption Law) 2 on 2 August 2013. !e Law will come into force 180 days following its publication and, during this period, government authorities, companies and the legal community have been actively preparing for a new legal reality that will govern the relationship between private parties and the public administration. Corruption is not a new topic in Brazil. Like most democratic nations, Brazil has adopted administrative, civil and criminal anti-corruption rules that have formed part of the Brazilian legal system for many years. In fact, corruption has been criminalised under the Brazilian Criminal Code since 1830.3 Despite the legal framework, Brazil has always been a country where corruption, if not endemic, is very much present within its large bureaucratic government, at the federal, state and municipal levels. !is reality is caused by a lack of enforcement of the law, which was unable to change a widespread culture of bene"t and corruption throughout all levels of the public administration. It is not by coincidence that Brazil 1 Adriana Dantas is a partner and Luiz Eduardo Alcantara is an associate at BM&A – Barbosa, Müssnich & Aragão. 2 Federal Law No. 12846 of 2 August 2013, available at: www.planalto.gov.br/ccivil_03/_ Ato2011-2014/2013/Lei/L12846.htm. 3 Criminal Code of 16 December 1830, Articles 130–133, available at: www.planalto.gov.br/ ccivil_03/leis/lim/lim-16-12-1830.htm. 33 Brazil ranks 69th out of the 176 countries measured in the Corruption Perception Index 2012 of Transparency International. 4 However, the new Anti-Corruption Law includes instruments designed to e%ectively punish private companies involved in acts of corruption and in the other illegal acts de"ned in the Law, thereby being able to promote a new business culture in Brazil. It is against a background characterised by the coexistence of extensive corrupt practices with an increasingly e%ective law enforcement environment that this chapter discusses Brazilian anti-corruption law, its enforcement, and compliance mechanisms and presents our outlook and conclusions. Brazilian companies and foreign companies operating in Brazil certainly face challenges and need to prepare for and prevent risks created by their level of interaction with the public administration at the federal, state and municipal levels in Brazil. II DOMESTIC BRIBERY: LEGAL FRAMEWORK !e Brazilian legal framework on anti-corruption consists of criminal, civil and administrative o%ences that seek to punish both the public o'cial and the private party (individual or legal entity) that participate in the act of corruption. !e concept of corruption under Brazilian law, regardless of whether in the criminal, civil or administrative spheres, necessarily requires the participation of a government institution or a public o'cial. In other words, the Brazilian legal framework has not yet formally adopted the concept of corruption in the private sector or commercial corruption and bribery. Nonetheless, the Brazilian legal framework adopts a broad concept of ‘public o'cial’ for the purposes of applicable criminal, civil and administrative laws. In general, anyone who works for any level, branch or agency of government, or for any company or entity owned by the government, is considered to be a public o'cial. !e de"nition of public o'cial is also extended to anyone who works for a private company that is hired to provide a public service. For criminal purposes, Article 327 of the Brazilian Criminal Code (Decree-Law No. 2848/1940) de"nes a public o'cial as ‘anyone who, even if transitorily or without remuneration, holds a public post, employment or function’. Article 327 further states that ‘anyone who holds a post, employment or function in a government agency, or who works for companies that have been contracted to render services or to execute activities that are typical of the public administration’, is also regarded as a public o'cial.5 Wrongdoings involving public o'cials are also governed outside the criminal law. Law No. 8429/1992 (the Administrative Improbity Law) 6 establishes civil sanctions 4 Corruption Perception Index 2012 of Transparency International, available at: www.transparency.org/cpi2012/results. 5 Decree-Law No. 2848 of 7 December 1940, Article 327, available at: www.planalto.gov.br/ ccivil_03/decreto-lei/del2848.htm. 6 Civil law related to acts against the public treasury. !is law is discussed in more detail below. 34 Brazil for acts de"ned as illicit because they constitute ‘administrative improbity’. !e Administrative Improbity Law also gives a broad de"nition of ‘public o'cial’. Article 2 of the Law considers a public o'cial to be anyone who holds, ‘even if transitorily or without remuneration, upon election, appointment, designation, hiring or any other means of endowment a mandate, post, employment or function’: a in the direct or indirect administration of any of the branches of Brazilian government at the federal, state, or municipal levels or in the federal district or the territories; b in a company that has been made part of the state’s property; c in an entity to whose creation or funding the public treasury contributed or contributes more than 50 per cent of its assets or annual income; d in an entity to whose creation or funding the public treasury contributed or contributes less than 50 per cent of its assets or annual income (in such cases, the economic sanctions shall be limited to the illicit e%ects for the public treasury’s contributions); or e in an entity that receives grants, bene"ts, tax or credit incentives (in such cases, the economic sanctions shall be limited to the illicit e%ects for the public treasury’s contributions). Finally, Law No. 8666/1993 (the Procurement Procedures and Government Contracts Law) de"nes a public o'cial as ‘anyone who holds, even if transitorily or without remuneration, a public function or employment,’ as well as ‘anyone who holds a post, employment or function in government agencies, or in foundations, public companies and mixed economy companies, and other entities that are, directly or indirectly, controlled by the public administration’. i Criminal offences Criminal o%ences are generally de"ned in the Brazilian legal framework under the Criminal Code or other speci"c laws. Under the Brazilian system, legal entities have no criminal liability, except for environmental crimes. Nevertheless, members of management, employees and representatives in general of legal entities may be criminally liable for acts of corruption or bribery involving the legal entity. !e legal entity, despite not being a defendant, may have its assets seized and forfeited in a criminal action if such assets are found to be instruments or proceeds of crime. Title XI of the Brazilian Criminal Code de"nes crimes against the public administration. Such o%ences are divided into four main groups: crimes committed by public o'cials; crimes committed by private parties; crimes against foreign public administrations; and crimes against the administration of justice. !e crime of in+uence tra'cking is de"ned in Article 332 of the Criminal Code as ‘to request, demand, collect or obtain for oneself or for another, a promise of advantage or bene"t, under the pretext of in+uencing an act committed by a public o'cial in the 35 Brazil exercise of his function’, regardless of whether the public o'cial is aware of such undue advantage or e%ectively receives an undue advantage. !e penalties applicable to those who are found guilty of tra'cking in+uence are two to "ve years’ imprisonment plus a "ne. Passive and active corruption de"ned in Articles 317 and 333 of the Brazilian Criminal Code clearly prohibit the payment of bribes to public o'cials and the receipt of bribes by such public o'cials. In fact, the terms of such articles are even broader. Article 317 of the Brazilian Criminal Code, under the chapter of crimes committed by public o'cials, de"nes passive corruption as ‘to request or receive, for oneself or for another, directly or indirectly, even if outside or prior to assuming the function, but by reason of such function, undue advantage, or to accept a promise of such advantage’. !e crime of active corruption is de"ned under Article 333 of the Brazilian Criminal Code as ‘to o%er or promise an undue advantage to a public o'cial, for him to perform, omit or delay an o'cial act’. 7 !us, the crime of corruption is not limited to the payment of bribes, but rather any undue advantage, in a similar concept to the US Foreign Corrupt Practices Act’s ‘anything of value’. !e undue advantage does not have to actually be given and received; the simple request of an undue advantage by a public o'cial or the o%er and promise of such advantage to a public o'cial is enough for the crime of corruption to be committed. !e penalties for those who are found guilty of active and passive corruption range from two to twelve years’ imprisonment plus a "ne. ii Civil and administrative offences As noted, Law No. 12846/2013 (the Anti-Corruption Law) was sanctioned on 2 August 2013.
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