quarta-feira, 19 de fevereiro de 2014

Brazil business must respond to new corruption law

A new anti-corruption law that makes companies legally liable for the actions of their employees went into effect Jan. 29.

Companies operating in Brazil will need to review their codes of conduct and internal oversight procedures following the enactment of a new anticorruption law.
The new Clean Companies Act, which went into effect Jan. 29, makes companies liable for their employees’ corrupt acts. Previously, only individuals could be punished for bribery and corruption. Companies found guilty of graft face fines of up to 20 percent of gross annual revenue or, if gross revenue is unknown, a maximum of 60 million reals ($25 million).
“The law makes it harder for corporations to find a scapegoat,” says José Garcez Ghirardi, a professor of political theory and law at Fundação Getúlio Vargas in São Paulo. “It provides extra incentives for corporations to be watchful of employees,” he says, adding that “corporations will need people with specific expertise in crafting and enforcing codes of conduct.”
Some have criticized the law for failing to centralize enforcement, as is the case in the United States with the stock-market regulator and Department of Justice. The Economist magazine chided the government for entrusting local authorities with applying the new law, something that “may prompt bent mayors to blackmail businesses bidding in municipal tenders to pay backhanders or risk being dragged into protracted proceedings,” the publication wrote.
Mr. Ghirardi disagrees. The law is “very important and getting a lot of attention,” he says, adding that laws in any country are open to interpretation – and, potentially, abuse – in local jurisdictions, which is why Brazil’s judiciary will be overseeing enforcement.
Corruption is a big turnoff for foreign companies in Brazil, which ranks 77 out of 177 countries in the corruption-perceptions index compiled by Transparency International. The agency reported in October that even Brazil’s 13 largest, most respected and most closely scrutinized firms fall far short of adequate financial reporting standards. Among Brazil, Russia, India, China and South Africa – together known as the BRICS – only Chinese firms are less transparent than Brazil’s and provide less information to investors.
Within Brazil, publicly-owned companies tend to have a better reputation in terms of transparency and accountability than many large private companies. State-owned oil giant Petrobras is considered one of the more transparent corporations among government-run giants in emerging economies. By contrast, family-owned Odebrecht, a construction and industrial conglomerate, was called out by Transparency International for unaccountability on fiscal reporting shortcomings and holding anti-corruption safeguards in low regard.
“Some corporations are more updated, and others will need to catch up,” says Ghirardi.

Entrevista à The Christian Science Monitor em 05/02/2013, disponível em http://monitorfrontiermarkets.com/news-story/brazil-business-must-respond-to-new-corruption-law/

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