RC: How would you describe Brazil’s fraud and corruption environment?

Fogarty: We see an increased level of concern from both multinational entities and Brazilian companies, not only about existing regulations such as the FCPA and the UK Bribery Act, but also with Brazil’s Clean Companies Act. What remains to be seen is how well enforced the Act is in reality. Infrastructure projects and concession contracts around both the World Cup in 2014 and the Olympics in 2016 will undoubtedly create situations where the Act can be applied and where both corruption and fraud will occur. What happens over the next three years and what action is or isn’t taken by regulators during that time against companies engaging in corrupt activities in Brazil, will define the strength of the Clean Companies Act. I would also add that the ‘atmosphere’ for change in how endemic problems like corruption are viewed in Brazil is changing. Recent protests over the last year show an increasing level of frustration by the populace with fraud and corruption and the perception that regulators and politicians have looked the other way for too long.

Franco: Unfortunately Brazil is a very corrupt country as can be seen by the Transparency International CPI of 4.2 which puts us in the 72nd position worldwide in 2013. Our anti-corruption team’s experience attests to this fact by our participation in M&A projects, due diligences and internal investigations in past years, not to mention recent scandals revealed by the media involving higher ranking members of the country’s administration and state controlled companies such as Petrobrás. Also, investigations conducted by tax, labour and police inspectors to companies are usually accompanied by a request for a bribe by the public agent involved in the case. Lastly, there are also numerous cases related to overpriced public contracts. The 2014 World Cup here in Brazil has enhanced the corruption scenario with infrastructure constructions and work that in many cases was promised but has not even taken place.

Jul-Sep 2014 Issue

Berkeley Research Group

Koury Lopes Advogados

Mattos Muriel Kestener Advogados

Trench Rossi & Watanabe