Brazil Compliance Guide
Brazil’s Clean Company Act 2014 (Law No. 12,846) is the country’s first anti-corruption law to hold companies responsible for their employee’s corrupt actions. The Act imposes strict liability on companies operating in Brazil for domestic and foreign bribery and provides no exception for facilitation payments. Unlike the UK Bribery Act, there is no statutory defense for having implemented ‘adequate procedures’ to prevent persons from committing corrupt acts on behalf of the company. These provisions make the Clean Company Act among the toughest anti-corruption laws in the world.
The Decree 8.420/2015 (in Brazilian Portuguese) stipulates criteria by which a company’s compliance system will be evaluated when sanctions are imposed. Having a compliance program in place in accordance with these criteria can significantly lessen administrative penalties. Factors such as the size of the company will be part of the compliance program’s evaluation. Here are some guidelines to consider:
Top Level Commitment
Senior management should convey a clear policy against corruption to employees and show commitment to the policy.
Compliance Policies
Compliance Policies Compliance policies and procedures must be applicable to all employees and third parties. The compliance function must be independent and have authority. If relevant, there must be specific procedures related to public procurement and interactions with government officials.
Risk Assessment
Potential risks should be periodically researched, analyzed and addressed.
Due Diligence
Third parties should be regularly assessed, especially before awarding and renewing contracts. Due diligence must be used in corporate and M&A transactions.
Internal Monitoring, Testing and Review
Appropriate steps should be taken to ensure policies are continually communicated, reassessed, understood, and updated over time. Procedures must be in place to detect and stop irregularities and to remediate damages.
Transparency
Establish internal controls to ensure the reliability of financial statements. Ensure that books and records must be accurate and complete.
Training
A company’s code of conduct should be clear, detailed and communicated to all employees and third parties. Periodical training must take place.
Reporting and Disciplinary Measures
Establish channels of communication where employees are free to report offences and good faith whistleblowers are protected. Share information on irregularities among employees and third parties. Establish disciplinary measures to penalize non-compliance. Update policies and procedures following investigations.