By Stephanie Gallagher, JD
On March 18, 2015, Brazil’s President, Dilma Roussef, signed Decree No. 8,420[i], regulating the 2014 Clean Companies Act. This long-awaited decree is part of new anti-corruption legislation that is being carried out by the Brazilian federal government. The Decree outlines the process for imposing administrative liability on legal entities for acts of bribery or corruption under the Act, and sets out procedures for calculating fines and establishing rules that will govern leniency agreements, as well as the criteria the Brazilian government will use to implement and assess anti-corruption compliance programs.
Among other things, the Decree contains several provisions relating the implementation of compliance programs. The Decree provides that the adoption and maintenance of a compliance program will be a mitigating factor when calculating fines against the offending company, and mandates the adoption or improvement of an existing compliance program.
Further, the Decree recognizes that an effective compliance program must be risk-based, and take into account many factors about the company, including the size of the company, its structure and industry, jurisdiction, and interaction with government entities. Additionally, it sets out parameters for assessing the effectiveness of the compliance program, including:
- Tone at the top, and the importance of gaining the commitment of upper management.
- Establishing standards and codes of ethics and conduct for employees, managers, and third-party vendors,
- Providing channels for the reporting of irregularities,
- Conducting training at appropriate intervals,
- Establishing internal controls,
- Arranging specific procedures intended to prevent fraud and corruption in the context of bidding for government contracts,
- Adequate due diligence in mergers, acquisitions, corporate restructurings and in dealings with third parties,
- Providing the Chief Compliance Officer the needed independence and authority to oversee the program,
- Establishing disciplinary measures for violations.
These parameters are consistent with best practices for creating a strong and effective compliance program, and is reminiscent of other key regulations in the US and UK. The Decree also states that the Comptroller-General of the Union will be issuing additional regulations and guidelines that will provide more detail around the governance and assessment of compliance programs.