Brazil’s Clean Company Act 2014 (Law No. 12,846) holds companies responsible for the corrupt acts of their employees and introduces strict liability for those offenses, meaning a company can be liable without a finding of fault. The Act provides strict civil and administrative penalties but no criminal penalties for companies. However, the Criminal Code establishes domestic criminal offenses.
Penalties for companies under the Act include fines of up to 20% of a company’s gross revenue from the previous year or suspension or dissolution of a company. Importantly, prosecutors are not required to prove a company’s representatives acted with criminal or corrupt intent, and companies are not afforded a legal defense for implementing ‘adequate procedures’ to prevent corrupt acts.
The Office of the Brazilian Comptroller General sets legally binding regulations to the calculation of fines. Penalty fines range from 0.1% to 20% of the gross revenue of the company from the year before the commencement of the administrative proceeding against the company (or from USD 1,850 to around USD 18,505,000 if it’s not possible to use the gross revenue criteria). The range of the fine depends on various aggravating and attenuating criteria such as whether the wrongdoing continued or reoccurred over time, and whether the company was aware. Further consideration will be given to the amount of contract sought and obtained with the public administration as well as the execution of such contracted projects. The Clean Companies Act allows for significant leniency if a company cooperates with investigators, self-discloses violations and enters into leniency agreements. Fines can be reduced by up to two-thirds of the total fine, and a company may be exempted from a number of sanctions; the most significant criteria for reduced fines is whether the company’s compliance program is in accordance with the law. For further information, companies are advised to consider the Brazil Compliance Guide.