The anticorruption world is an ever-changing place these days, with an increasing number of countries enacting new or revised anticorruption regimes designed to strengthen prohibitions against bribery and other corrupt activities. This, in turn, is increasing the need for multinational companies to maintain global anticorruption compliance programs that articulate comprehensive policies and procedures responsive not just to the U.S. Foreign Corrupt Practices Act (FCPA), but also to local laws in the countries in which they operate. Brazil has become the latest country to make significant anticorruption reform, impacting companies operating within its borders and prompting them to review their anticorruption compliance programs.
On Aug. 2, 2013, Brazilian President Dilma Rouseff signed a new Anti-Corruption Law (Law No. 12,846/2013) that expands Brazil’s corporate liability law on corruption and impacts virtually every company that is headquartered in Brazil or that operates there locally. The law, which will become effective on Jan. 29, 2014, holds companies strictly liable for wide-ranging corrupt activities, regardless of where that conduct may have occurred. Stiff civil and administrative penalties are available to punish companies, including imposing significant fines, blacklisting a company from public bidding processes or even forcing dissolution. Parent companies must be particularly wary under these reforms, which hold parents liable for any infractions of their Brazilian subsidiaries or joint ventures.
Brazil joins a number of other countries that have shown a recent interest in legislative changes in this area and strengthened anticorruption enforcement. China has made headlines for its recent efforts in cracking down on corruption in the pharmaceutical and food supplement industries. Canada recently eliminated its law’s facilitating payments exception—reducing to three the number of countries that still allow such payments (New Zealand, South Korea and the United States)—while also expanding its law’s jurisdiction and creating a books-and-records offense. Countries in Europe have been increasingly active in fighting corruption, with the UK Serious Fraud Office (SFO) bringing its first charges under the UK Bribery Act (UKBA) on Aug. 14, 2013, and with Germany considering adoption of a corporate criminal code. Even Russia has been in on the act: as of January, companies operating within Russia’s borders must take affirmative compliance measures to prevent corruption.
All this activity raises an important question: What can multinationals do to reduce their exposure to liability under the expanding web of anticorruption laws? A rigorous anticorruption compliance program is the obvious answer. However, one size might not fit all. Key differences between laws exist, including allowance or disallowance of facilitating payments, targeting of only official (i.e., government official) bribery versus inclusion of commercial bribery, provision of compliance program-related defenses and whether and what type of books-and-records requirements may be included. Cultural differences may also play a role in the analysis because local standards may set a higher bar than what has emerged as an international best practice.
One possible approach is to develop an anticorruption compliance program with policies and procedures based on the absolute highest standards imposed on the company, which can be particularly effective for companies that operate in only a few countries. Another approach that lends more flexibility and manageability for larger companies is a highest-common-denominator anticorruption strategy with the very similar and preeminent FCPA and UKBA as its backbone. Under such a program, enhanced country-specific policies and procedures can be rolled out locally to meet any extra demands placed on the company. Companies must be careful, however, to implement policies that account for the jurisdictional reach of the anticorruption laws of every country in which they operate. Regardless of the path taken, compliance training modules tailored to complement policies and procedures will be vital for ensuring company employees navigate these seemingly rising tides.