The Regulation of Corporate Bribery in Brazil

Abstract

This note explains the new legal initiatives in the regulation of private corporate bribery in Brazil. Corruption is an endemic problem in many States, including ones with an emerging economy such as Brazil. The development and implementation of anticorruption policies necessarily goes through Klitgaard’s “Principal-Agent-Client” model. According to this theory, it is important to create a system of punishment and incentive that focuses also on the “client,” the private sector, a subject often forgotten in the drafting of anticorruption laws. This note argues that previous Brazilian corruption laws did not foresee a consistent legal framework capable of preventing and punishing companies’ use of bribery. In this scenario, one can observe that Brazil began a process of institutional change over the course of recent years, which consisted of developing new anti-corruption mechanisms. The creation of The Office of Comptroller General (Controladoria Geral da União), a federal government organ specialized in corruption control, is a landmark. The implementation of Law No. 12.846, which will enter into force in 2014, shows great promise. The new law predicts harsher punishments to companies involved in bribery. One interesting aspect is the creation of incentive mechanisms directed at cooperation with government inspection, leniency agreements and a provision to decrease punishment when compliance programs are implemented. Although in order for it to be put into practice, the latter demands a more precise definition. The authors are optimistic about this new initiative and await further developments.