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15 April 2019
Over the past few years, Brazil has experienced nothing short of an anti-corruption revolution. Since before the beginning of Operation Car Wash in early 2014, which led to the arrest of high-profile politicians and executives, there have been significant legislative changes and increased enforcement actions that have reshaped Brazil's business environment. This article discusses some of the recent key changes and explores how businesses are responding to this new scenario.
In March 2014 Brazilian authorities launched Operation Car Wash, an investigation into allegations of corruption, bid rigging, money laundering and illegal political campaign contributions in contracts between several construction companies and Petrobras, Brazil's government-controlled oil company. Five years on, the investigation recently reached its 60th phase and has been expanded to include other economic sectors, such as healthcare, marketing and toll roads.
Operation Car Wash is widely considered to be the world's largest anti-corruption investigation. According to the Federal Public Prosecutors' Office, Operation Car Wash has resulted in:
In August 2013 Brazil enacted Law 12,850/13, which introduced several changes to how organised crime is investigated in Brazil and set out more predictable rules for authorities to enter into plea bargain agreements. According to the law, individuals subject to criminal investigations who enter into a plea bargain and cooperate with the investigations may:
In August 2013 Brazil also enacted the Anti-corruption Law (12,846/13), which became effective in January 2017 and imposed strict civil and administrative liability on companies that directly or indirectly engage in illegal conduct against the Brazilian or foreign governments. The Anti-corruption Law applies to companies with their headquarters, branches or representation in Brazil, even if this is temporary. The Anti-corruption Law also sets out criteria to assess the effectiveness of anti-corruption compliance programmes and establishes a leniency programme for corruption-related violations.
Subject to certain requirements, a company may enter into a leniency agreement with the government, whereby the company agrees to cooperate with the investigations and provide appropriate evidence in exchange for a reduced fine and a commitment from enforcement authorities not to seek harsher penalties (eg, a prohibition on entering into agreements with government entities). Operation Car Wash alone has entered into 11 leniency agreements. Such agreements include certain compliance obligations and require full compensation for the damages caused to the government.
Considering the above, it is clear that Brazil has seen extensive legal changes and enforcement efforts against corruption. As a result, local and multinational companies active in the region have increased their anti-corruption compliance efforts, particularly by:
Companies active in Brazil should monitor the developments discussed above and adapt their practices to this new and constantly evolving risk landscape.
For further information on this topic please contact Thiago Jabor Pinheiro at Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados by telephone (+55 11 3147 7600) or email (firstname.lastname@example.org). The Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados website can be accessed at www.mattosfilho.com.br.
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Thiago Jabor Pinheiro