REDUCING BUSINESS RISKS IN BRAZIL
It is difficult to overstate the magnitude and significance of the corruption scandals that have unfolded in Brazil during the last several years. Last August, Brazil’s Congress impeached president Dilma Rousseff and removed her from office. Former president Lula da Silva, Rousseff’s predecessor and mentor, is a defendant in a criminal proceeding and current president, Michel Temer, is under investigation. It appears that corruption runs through the heart of Brazil’s government, with more than half the members of Congress reportedly the subject of corruption investigations. Hundreds of individuals have been arrested, including CEOs, board members and other C-level executives from companies throughout the country. Over 80 people have entered into plea bargains and many others are being prosecuted.
Corruption investigations intensified in 2014 with the passage of the Clean Company Act and ‘Operation Car Wash’ – more familiarly referred to as Lava Jato. Operation Car Wash began as a money laundering investigation and grew to become the largest scandal in Brazil’s history, ensnaring some of the country’s largest companies and resulting in a gut-punch to the nation’s economy. As the Car Wash investigation progressed, other corruption schemes came to light involving the Brazilian Ministry of Health and Ministry of Planning, as well as their contractors. The investigation spread to banks, such as the Brazilian bank, Caixa Econômica Federal, and engulfed the national power utility company Eletrobras.
Jul-Sep 2017 Issue
Baker & McKenzie LLP