Anti-corruption law enacted

A new law against corruption is now effective as of Wednesday (Jan. 29). Passed in response to massive protests that broke out in the streets of the country in June 2013 – which among other demands, called for more rigor against corruption – Act No. 12846 has introduced fines that may get as high as 20% of the gross earnings of businesses and entities found to be involved in corrupt practices. Depending on severity, courts may even require the organization to close down altogether or suspend or restrict its activities.

In all cases, companies found guilty of corruption will now be blacklisted in a National Organizational Liability Registry (CNEP) introduced by the new law. Still, administrative conviction does not preclude punishment of individual board members or officers.

Before the new law was enacted, only individuals were indicted on corruption charges – in most cases, the punishment fell almost exclusively on public officials that accepted corrupt offers or requests with the intention of obtaining undue advantages in exchange for favoring individuals or organizations.

A federal decree is also planned to add a regulatory dimension to specify details of procedures including applicability of fines and aggravating and mitigating circumstances that may be considered in judging each case.

Sérgio Seabra, Transparency and Anti-Corruption Secretary at the Comptroller-General Office (CGU), told Agência Brasil that the decree will serve as the basis for state and local governments to draft their own rules.

“We have been working with state and local representatives to align regulations at all levels in order to avoid conflict, controversy, and legal uncertainty,” he said, noting that even though the regulatory decree is pending, the law is already enforceable.

Translated by Mayra Borges