2014 is set to be Brazil's year. The FIFA World Cup is expected to bring 600,000 international visitors to 12 host cities, inject R$25 billion (£6.6 billion) into the economy and present Brazil's vibrant culture to more than 700 million viewers worldwide. With the eyes of the world on Brazil, 2014 will also be the year that the country signals its intention to get tough on corruption; a problem which is perceived to have historically restricted economic growth and inhibited foreign investment.
On January 29, 2014, the Brazilian Clean Companies Act (CCA) will enter into force. The CCA is an aggressive and broadly drafted piece of legislation which represents a firm statement of intent from the Brazilian government to align itself with global trends and tackle corruption head on. Brazil is an important trading partner for many UK companies and the reverse is also true.1 Companies doing business in Brazil should take note of the CCA and ensure that their existing compliance controls and procedures respond appropriately to its particular features. The good news is that the CCA shares several features of established anti-corruption legislation, the US Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act (UKBA).
The coming into force of the CCA in January 2014 serves as a timely reminder to international businesses to check that their existing compliance procedures accord with developing international standards.
The key features of the CCA were covered in our previous client alert dated August 6, 2013.2 In short the CCA:
applies to any legal entity, branch or office, whether domestic or foreign that does business in Brazil; prohibits bribes to any official (domestic or foreign) - this is anticipated to cover an individual who holds an office in the government at any level; prohibits other related acts such as fraud, data manipulation and the blocking of government investigations; prohibits facilitation payments - there is no de minimis exception as in the FCPA; implements strict liability for legal entities involved in corruption - proof that the punishable act wascaused by an act or omission on the part of the legal entity is sufficient to subject it to sanctions; and introduces harsh administrative and civil sanctions that apply directly to legal entities' income and assets.3 The broad application of the CCA clearly echoes the international reach of the FCPA and the UKBA. The CCA applies to all legal entities that do...