Thanks to Paula Galhardo  in Squire Sanders’ Houston office for preparing this post on the new Brazilian Anti-Corruption Law.

Boosted by the recent popular manifestation in Brazil against corruption and extreme expenses in preparation for the 2014 World Cup and the 2016 Olympic Games, the Brazilian Senate approved on July 4, 2013 a Bill of Law called “Anti-Corruption Law.”  This law imposes direct civil and administrative liability on legal entities for corruption and bribery acts against domestic and foreign governmental authorities.  The Anti-Corruption Law is still subject to the approval of the Brazilian President Dilma Rouseff.

In the current legal scenario, only individuals can be prosecuted for corruption acts.  However, the new law establishes significant administrative fines ranging from 0.1% to 20% of an entity’s gross revenue from the previous year for corruption and bribery acts of legal entities against foreign as well as Brazilian officials.  If the gross revenue is not available, then the fines may vary between $6,000.00 Brazilian Real (approximately USD $2,700) and $60,000.00 Brazilian Real (approximately USD $27,000).

In addition, judicial penalties may be applicable against the offending legal entity, including suspension or prohibition of the entity’s activities, disgorgement of the entity’s assets, compulsory dissolution of the entity, and prohibition from obtaining any benefits from public authorities.

The new law provides that sanctions can be reduced if the company has an effective compliance program in place.  Therefore, if the new law is approved, companies operating in the country must implement or revise their compliance policies and agreements in order to comply with the new requirements and protect themselves against potentially onerous sanctions.