Among the concepts related to anti-corruption enforcement, there is the cooperation of companies with enforcement authorities with the expectation to mitigate sanctions for potential violations. While the Brazilian Anti-Corruption Law provides cooperation as a mitigating factor, the criteria and parameters for its recognition are not clearly developed and companies trying to cooperate with Brazilian authorities face some challenges. A thorough internal investigation may assist companies to cooperate, but this mechanism is not regulated and expressly recognised in Brazil. In the United States, both the concept and criteria for cooperation and the importance of internal investigations are clearer and the benefits are noticeable in the results that US authorities achieve in resolutions with companies. In this chapter, we present a parallel between the Brazilian and the American enforcement systems to consider the possibilities for Brazil to improve its anti-corruption enforcement.
- US anti-corruption enforcement
- Brazilian anti-corruption enforcement
- Criteria for cooperation
- Internal investigations
Referenced in this article
- Brazilian Anti-Corruption Law (Law No. 12,846/2013)
- US Foreign Corrupt Practices Act
- Foreign Corrupt Practices Act Corporate Enforcement Policy
- US Department of Justice
- US Securities and Exchange Commission
- US Justice Manual
Corruption has a big social and economic impact1 considering that, in recent years, the fight against corruption has turned into a priority worldwide and many countries have enacted or amended legislation related to the matter.2 This increased legislative activity came accompanied by a stricter enforcement of these new rules and it is clear there has been an increase in the number of criminal and civil prosecution of companies that have practiced some type of misconduct.3
In this context of a greater enforcement, legal entities must act and adopt compliance measures to ensure adherence to the legislation they are subject to. In case of allegations of potential wrongdoings, corporate internal investigations are a relevant mechanism for legal entities to analyse internally whether the facts and misconduct actually occurred and how to remediate and prevent new violations.
Along with internal investigations, the concept of cooperation with enforcement authorities has developed and become very relevant. Allegations of misconduct are often taken to regulators and authorities, who will start their own investigation about the facts and decide on potential sanctions to companies that violate anti-corruption legislation. A proper and well conducted internal investigation allows a company to consider cooperating with the authorities and possibly being granted credits or leniency for the cooperation.
However, in general, there is no unique definition for what should be considered cooperation. While some jurisdictions have developed clearer criteria to guide companies in their efforts to cooperate with enforcement authorities, there are other jurisdictions where legal entities do not have a clear path for conduct or acts that would be recognised as a company's effort to cooperate and be granted credits or leniency.
For example, in the United States, there are guidelines and standards established by the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) for the recognition of a company's cooperation in procedures related to the US Foreign Corrupt Practices Act
(FCPA). These authorities have created policies and have been systematically working alongside companies in disciplinary efforts to avoid new potential violations to anti-corruption legislation, as well as dealing with and remediating prior violations.
1 Impacts of corruption are seen in the most diverse sectors of society. Although it is not possible to precisely estimate the economic cost of corruption, in a 2016 report, the International Monetary Fund calculated that the annual cost of bribery alone could reach between US$1.5 to US$2 trillion. (IMF Staff Discussion Note – Corruption: Costs and Mitigating Strategies. May 2016, page 5. Available at https://www.imf.org/~/media/ Websites/IMF/imported-full-text-pdf/external/pubs/ft/sdn/2016/_sdn1605.ashx.
2 As examples, we have the Brazilian Anti-Corruption Law, enacted in 2013; the Mexican General Law on Administrative Accountability, which is in force since July 2017 (https://www.complianceweek.com/mexicounveils-new-anti-corruption-law/2578.article); Argentina's Law No. 27,401, from December 2017, that amended some corruption provisions in the Criminal Code and established corporate criminal liability for certain corruption offenses ( https://fcpamericas.com/english/anti-corruption-compliance/argentinaintroduces-corporate-liability-compliance-standards-anti-corruption-law/#); and Italy's New AntiCorruption Legislation, that came into force in January 2019 ( https://www.loc.gov/law/foreign-news/article/ italy-new-anti-corruption-legislation-comes-into-force/).
3 In the United States, starting 2007, the number of enforcement actions of the US FCPA by the DOJ and the SEC has largely increased, as it can be seen on a graph available on the Stanford's Law School FCPA dedicated website (http://fcpa.stanford.edu/statistics-analytics.html?tab=1). To illustrate the increase, in 2006, the DOJ started only six enforcement actions, while in 2019 there were 32 enforcement actions started by the DOJ.
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