(English) The new Anti-Corruption Law: strict liability of companies and the encouragement of compliance policies

[:en]The new Anti-Corruption Law: strict liability of companies and the encouragement of compliance policies

Pedro Ivo Martins Dutra- Lawyer of our public law sector

The Law N. 12.846/2013 was sanctioned on August 1st. The law will take effect within 180 (one hundred eighty) days from the date of its publication, on August 2, 2013.The aforementioned Law provides for civil and administrative liability of legal entities (including foreign companies with operations and branches in Brazil) by practice of acts against the national or foreign public administration.

The main innovation of the law is the possibility to penalize, as administratively and civilly the legal entities for prejudicial acts against the public administration. Until the publication of this law, the acts of corruption and fraud to a bidding process entailed punishment only to the individuals involved (business managers, employees, public officers, etc.).
Another point to be highlighted in the new law is the provision of the strict liability of companies by the harmful acts as stated by the mentioned law (Article 2), thus since then it will be no longer necessary the discussion of about the culpability measurement of legal entities involved. Therefore, after verifying the damage caused to the public administration and the responsibility for this damage related to an action (or inaction) made for any person who has acted under the interest or benefit of a legal entity, the company may be held liable both civilly or administratively.

However, the liability of the legal entity does not exclude the individual responsibility of its directors, administrators, employees or any natural person, perpetrator, co-perpetrator or participant of the illegal act, whom may be liable for unlawful acts proportionally to the extent of their guilt.

The harmful acts to public administration, being made by a national or foreign entity, are foreseen in an exhaustive list in Article 5 of the new law. The law gave an special emphasis to the acts related to competitive bidding procedures and public contracts entered into with public entities, among which we can mention: thwart or defraud, by adjusting, combining or any other expedient, the competitive nature of the public bidding process; prevent, hinder or defraud the realization of any act of public bidding procedure; fend or seek warding off bidders, by fraud or offering of advantage of any kind; defraud public bidding or resulting contract; manipulate or defraud the economic and financial balance of the contracts entered into with the public administration.
Regarding the administrative responsibility, the administrative fines under the law range from 0.1% to 20% (twenty percent) of the gross revenues of the company. The law provides alternatively the payment of a fine in the amount of R $ 60,000,000.00 (sixty million reais) if it is not possible to estimate the company’s gross income; and the extraordinary publication of the judgment of conviction – at the expense of the legal entity – in an means of communication of wide circulation.

As for civil liability, defined in the judicial sphere, it could result in penalties such as forfeiture of property, rights or amounts representing the advantage or profit directly or indirectly obtained in reason of the offense caused, the suspension or partial ban of the company’s activities; and even the compulsory dissolution of the legal entity, depending on the evidences that the legal person was used on a regular basis in order to facilitate or promote the practice of unlawful acts, or to have been incorporated in order to conceal or disguise illicit interests or the identity of the beneficiaries of the acts committed.
Regardless of the penalties aforementioned, and such other penalties provided by law, the legal entity shall fully indemnify the damage suffered by the public administration.

Noteworthy is also the guideline of the law which aims to make the companies actual partners of the public bodies in the combat against corruption. In this sense, the law offers to the companies the adoption of a leniency agreement that provides benefits (eg reduction of penalties) to those involved in corrupt practices that decide to cooperate with the investigations, as long as the company is the first to express interest in doing so and effectively gathers information that allows the rapid clarification of the facts and identification of involved.
Another indication of this system of partnership between company and government is the provision of the attenuation in the application of penalties to the company which cooperates with the public administration with the investigation of offenses and to the company which demonstrates the adoption of practices for the prevention of acts of corruption, such as the existence of internal mechanisms and procedures of integrity, auditing and incentive to the reporting of irregularities and effective implementation of codes of ethics and conduct (Article 7).

This prediction will certainly stimulate companies to adopt compliance policies and internal procedures in order to detect and prevent acts of corruption.
Law N. 12.846/2013 (already nicknamed Anticorruption Law) arrives as another mechanism available to the State in an attempt to root out corruption in the public administration, as well as to try to introduce a culture of corporate commitment against corruption, raising awareness to the development of a culture of compliance.

The Chenut Oliveira Santiago law firm’s Staff of Public Law is available for any clarifications that may be necessary on the subject, as well as to assist companies interested in implementing compliance programs.
This is a newsletter from Chenut Oliveira Santiago Law Firm and shall not be regarded as a legal advice.[:]