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March Bribery Digest – Beyond FCPA Compliance

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March Bribery Digest – Beyond FCPA Compliance

Today’s bribery digest is a little bit different than our past versions – rather than focusing specifically on FCPA compliance and enforcements, we’re taking a look at bribery news around the world. We’ve got a story from India, two from Brazil, and one from my home country, Germany. We wrap up with Spain’s recent additions to the Spanish Criminal Code.

India Considers Expanding Bribery Law

The government of India is considering amendments to domestic laws that would criminalize any attempt to bribe foreign public officials and officials of public international organizations and bring in other legislative changes that would make India fully compliant with the UN Convention Against Corruption (UNCAC). The home ministry is also considering a proposal for amendments to the Indian Penal Code (IPC) for criminalizing acts of bribery in the private sector. The proposed amendments will address all pending legislative changes required for India to fully ratify the UNCAC. The focus of the bill is to bring corruption in the private sector under the scope of the IPC.

Brazil (Finally) Issues Rules for Anti-Bribery Law

After people took to the streets in protest, Brazil’s President signed rules for implementing the Clean Companies Act, the anti-bribery law that’s been on the books for more than a year. Signed into law in August 2013, the law confers civil and administrative liability on companies for bribery for the first time; its passage came on the heels of anti-corruption protests and the firing of several government ministers. The regulations implementing the law were approved under similar circumstances, according to Matteson Ellis, an attorney with law firm Miller & Chevalier.

Brazilian President Dilma Rousseff issued the rules as part of an anti-corruption offensive she launched to fight off rising anger over a corruption scandal engulfing her administration just months after winning re-election, including major corruption uncovered within Brazil’s tax office. The federal police estimates that corruption within the finance ministry alone has cost the state at least 5 billion reais ($1.57 billion). The law went into effect in January 2014; the OECD said in October that Brazil had to issue the rules “as soon as possible” so it could properly be enforced. Ellis said the rules provide more detail on how to determine penalty levels for offenses, the parameters for companies seeking leniency agreements and the elements of an acceptable compliance program. They explicitly encourage the adoption of compliance programs, and among the requirements of an effective one are implementation of codes of ethics and conduct, commitment from senior management, training of employees and third parties, monitoring and audits.

Former Petrobras CEO Foster Denies Knowledge of Bribery

The former chief executive officer of Petroleo Brasileiro SA, Maria das Graças Foster, tells reporters she is ashamed of a corruption scandal at the state-run oil company but continues to deny any knowledge of bribery. “I am effectively very embarrassed to look at you all, but I’m being very sincere,” she told the congressional investigators. “I wish all of this was a lie and there was never any bribery.”

Prosecutors allege that some of the nation’s largest construction firms conspired with Petrobras insiders to skim hundreds of millions of dollars from the firm through inflated contracts, funneling some of the ill-gotten gains to a political slush fund. Foster claims that all of the corrupt activities occurred outside of Petrobras, as internal investigations were unable to substantiate the allegations. However, she did not reveal status of those investigations in a previous congressional panel, and has now apologized for not being “fully clear.” This investigation will continue to be of interest given the new bribery laws described above. The company has nominated a new CEO in response to the scandal, who is expected to be confirmed at the end of April. The company’s shares have dropped 60% since October, when the allegations were first made public. Petrobras’s layoff of thousands of oil workers, canceled contracts and delayed payments are only adding to the general turmoil of the Brazilian economy as a whole, which is on the brink of recession.

Bilfinger Launches Probe into Suspected Bribery Related to World Cup

Germany’s Bilfinger, a huge engineering company, said it’s investigating allegations that employees at a Brazilian subsidiary participated in bribery involving orders related to last year’s soccer World Cup. As reported by the Wall Street Journal, the company was informed last year of potential compliance violations related to orders worth about €6M ($6.5M) for monitors for security control centers in Brazil. Bilfinger’s Mauell subsidiary provided the monitors and software that helped oversee traffic flows at several of Brazil’s World Cup venues. Bilfinger said it launched an internal investigation directly after learning of the allegations, which relate to suspected payments to public officials and employees of state companies. The company said the suspicions have since been substantiated. A Bilfinger spokesman said the investigation isn’t yet complete, including the question of what amounts may have been paid and to whom. He said the subsidiary had no direct business with soccer world governing body FIFA.

Spain Regulates Content of Compliance Programs

Spain has joined the ever-growing number of countries which effectively regulate corporate compliance programs. Amendments to the Spanish Criminal Code were approved at the end of March and are scheduled to take effect on July 1. The amendments state that a company’s directors are legally obligated to adopt a compliance program and the program must be supervised by a body or individual authorized to exercise high-level control. The amended Code also lists six elements that must be included in an effective compliance program to protect the company from criminal liability. These elements are outline in Article 33 of the Code:

  • Risk assessments
  • Standards and controls to mitigate any criminal risks detected,
  • Financial controls to prevent the crimes,
  • Obligation to report to the Compliance Body any violations of the standards and controls (a whistleblowing channel),
  • Disciplinary system to sanction violations of the compliance program by officers and employees, and
  • Periodic review of the compliance program, making the necessary adjustments when serious violations occur or when the company undergoes organizational, structural or economic changes.

What Does This Mean For You?

Hopefully you’ve had a chance to look at the proposed amendments and newly issued anti-bribery rules if you operate in any of the above countries. If not, now would be a great time to do so. Determine whether or not your current compliance programs are still effective and sufficient under the new rules in each country. Even if your current compliance program is technically sufficient, this could be an opportunity to bring the program to best practices standards. As this Global Compliance News article points out, an emerging international consensus on compliance best practices, and on the essential elements of an effective compliance program. For example, perhaps you already have a Code of Ethics available for your Brazilian employees. Has that Code been transcreated to speak to Brazilian culture and customers, not to mention showcase the issues most critical in the Brazilian market, or is it just a word-for-word translation of your English Code?

It’s also an opportunity to revisit (and potentially expand) your Code of Ethics training for both US-based and foreign-based employees. Will certain US-based employees require a level of familiarity with the Brazil Clean Companies Act (BCCA) that would justify expanding your FCPA compliance training course for them, or does it make more sense to roll out a BCCA-only course to Brazil-based employees? Is there ever a case where it would make sense to train both countries’ employees on both countries’ laws? We’ll be addressing these points in a forthcoming webinar, Corruption Risks in Brazil: Ensuring Compliance with the FCPA and BCCA. Register today to answer the previous questions, and learn more about the steps global companies are taking to manage corruption risks in Brazil and avoid liability in this attractive market.

Compliance Meme

I’m beginning to wonder if these History Channel memes will ever stop being funny.

Share Your Thoughts with Us

We’d love to hear from you! What are your thoughts on the Petrobras scandal? Is the Bilfinger investigation the last we’ll hear of World Cup-related scandal? (Our money is on ‘no,’ for what our humble opinion is worth…) How will the new bribery laws affect your company, and what are you doing to prepare? Are History Channel memes still funny?

You can share your thoughts with us by commenting on the blog, messaging us on JDSupra or messaging me directly on LinkedIn. We look forward to hearing from you!

For More Information About FCPA Compliance, Anti-Bribery Training and Global Anti-Corruption Efforts, Check Out These Resources:

About the Author

Pia Adolphsen, Associate Manager of Marketing Content Strategy. Pia leads content strategy at The Network. Previously, she led client advocacy and marketing initiatives in the competitive intelligence industry. She is strongly in favor of lattes, 1.0mm pens, and her Georgia Bulldogs. Connect with Pia on LinkedIn

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