When Brazil’s government announced the introduction of anti-bribery legislation on August 1st, 2013, there wasn’t a lot of fanfare. But considering the implications of the move for the average Brazilian business, and the possibilities for relationships with foreign companies that might have been hesitant to partner with them otherwise, the move could be a game-changer for Brazil.
“Brazil battles an image of lack of transparency, so some companies were afraid to do business there because of the risks,” says Alexandre Lira de Oliveira, managing partner at Brazilian consulting firm Lira & Associados. Many foreign companies were worried about becoming embroiled in a bribery investigation. “Now companies can feel that Brazil offers a more reliable environment with less risk,” he told me in an interview at the SCCE Compliance and Ethics Institute in Washington earlier this month.
The new law imposes civil and administrative liability on companies doing business in Brazil that engage in bribery of Brazilian or non-Brazilian officials. Previously only individuals could be prosecuted for bribery.
US Companies Already Comply
FREE Investigation Report Template
Prepare thorough, consistent investigation reports with our free report template.Download Template
For US and other foreign companies looking for opportunities in emerging markets, Brazil will certainly move up the ladder with this initiative. But what does it mean for the foreign companies who have a new compliance model to consider? Not a problem, says Lira.
“Multinational companies already have anti-bribery compliance programs in place,” he says. “The controls that they already have are going to be enough to comply with the new laws.”
In fact, Brazil’s new anti-bribery law is modeled after the ones already being followed by the US. “Regulations of the new law are much the same as anti-bribery regulations in other countries,” says Lira. “They follow the US Sentencing Guidelines. So what US companies have in place will be more than what’s necessary.”
The origin of Brazil’s new law is the OECD’s anti-bribery treaty, so the same controls apply, explains Lira.
“Companies coming into Brazil to do business can feel more at ease,” he says. “They just need to follow FCPA regulations.”
Challenge for Local Companies
While the new laws are no challenge for US companies that already have robust compliance programs in place, the same isn’t true for Brazilian companies. The new anti-bribery laws in Brazil are going to pose a serious compliance challenge for Brazilian companies going forward.
“Brazilian companies don’t have compliance programs in place,” says Lira. “They need to develop a culture of ethics and put compliance programs in place.”
There has been little publicity since the new law was announced on August 1st. Its effects, however, will be seen after February of 2014, the compliance deadline.
Although Brazilian companies have been given six months to comply with the new rules, Lira sees challenges ahead. “Brazilian companies are not known for their tendency to take measures for the future,” he says. A conference has been organized in November to ensure Brazilian companies are on track with their compliance programs.
“The challenge is to move the switch,” says Lira. “Creating a cultural change will be the main issue. In public tendering, companies still think it’s ok to call their competitors to see what they are doing. They will have to learn that this is prohibited,” he says.
“The cultural change needs to start at the Board and the CEO level. The program is not the hard part. The hard part is getting the CEO to understand that the culture needs to change to comply with these new standards of anti-corruption.”