Page 105 - InvestmentGuideBrasilEng

Brazil is an OECD Anti-Bribery Convention and direct government spending for the procure-
party and co-founder of the Open Government ment of projects and services. Citizens are also
Partnership. It has also approved significant laws able to report irregularities and file complaints
CONTRACT I. The Clean Records Law (Lei da Ficha Limpa) tutions tasked with fighting corruption in Brazil:
through the portal.
concerning:
This is a brief overview of the key national insti-
prevents corruption in the legislature, making
? Comptroller General (CGU)
people criminally convicted by a judicial
ENFORCEMENT court ineligible to run for political office http://www.cgu.gov.br;
for eight consecutive years at any level;
? Federal Police
II. The Information Law (Lei da Informacao)
http://www.cgu.gov.br;
guarantees Brazilian citizens access to federal,
AND INVESTOR state and municipal public documents; Administration System (IFAS);
? Integrated Financial
III. The new Anti-Corruption Law (Lei
Anticorrupcao) recently came into force.
? Inter-ministerial Committee on
PROTECTION civil liability for companies for the bribery of both Open Government (CIGA);
The Anti-Corruption Law establishes direct
? Supreme Audit Court (TCU)
Brazilian and foreign public officials. This effec-
http://portal2.tcu.gov.br/
tively means that foreign companies operating
portal/page/portal/TCU;
within Brazil could be subject to penalties for
bribery of local officials, including employees of ? Ministry of Finance: Council for Financial
Brazilian subsidiaries of foreign companies; ma- Activities Control
jor Brazilian companies that are publicly listed on https://www.coaf.fazenda.gov.
foreign stock exchanges; Brazilian agents of for- br/?set_language=en
eign companies that have been subject to due dil-
Brazil has an independent judiciary governed by Parties are free to enter into contracts estab- igence reviews; and Brazilian companies acquired
the rule of law. Its legal system is based on respect lishing mutual obligations at will. As long as an by foreign companies.
for contracts and private property and other mat- obligation is not illicit, in conflict with the law, Moreover, the new law establishes civil lia-
ters provided for in Brazil’s Constitution and laws. immoral or impossible to fulfill, it is deemed valid. bility against companies for corrupt acts done by
Brazil’s legal system provides an independent Exceptions to the general rule: their directors, employees, and other agents act-
forum in which challenges and appeals to both ing on their behalf.
public and private acts are adjudicated in accor- ? The Principle of the Contract’s Social Function The law creates stiff penalties as well. A com-
dance with the law. Brazilian law provides for - “the liberty to contract shall be exercised by pany found guilty of corruption can face fines of
equal treatment between domestic and foreign virtue of and limited by the contract’s social up to 20 percent of its gross revenue from the
capital, with the exception of the few areas in function”. (Article 421 of the Civil Code) previous year. In addition, penalties can include
which foreign investment is restricted. disgorgement of benefits obtained, suspension of
Brazil is a civil law jurisdiction, based predom- ? The Principle of the Objective Good the company's activities, and even the dissolution
inantly on consolidated sets of legislation called Faith - “the parties are obliged to observe of the offending entity.
‘Codes’. Each area of law is governed by its own the principles of honesty and good Also, the Anti-Corruption Law includes a pro-
individual rulebook, such as taxation (National faith in the contract’s negotiation and vision directing that sanctions may be reduced for
Tax Code); private law, including property (Civil execution.” (Article 422 of the Civil Code) companies with effective compliance programs in
Code); commercial law (Commercial Code) and place and those that self-report violations of the
labor law (Consolidated Labor Law), for example. Many legal experts maintain that there must law to the authorities.
Unlike the common law system used in countries be some balance between the mutual obligations Additionally, since 2010 the electronic
such as the United States and Commonwealth established in a contract: a contract cannot create platform Transparency Portal (http://www.
countries, Brazil’s courts are less able to establish obviously disproportional obligations for one party, portaltransparencia.gov.br) has been available
legally-binding precedent, as most decisions are while granting extreme advantages to the other. to Brazilians to track how public money is being
applicable only to the parties concerned. There Foreign arbitration awards are enforceable in used in all federal government programs. This in-
are, however, some examples of ‘settled law’ Brazil. Transparency is another relevant issue in Bra- cludes items such as funds transferred to states
(sumulas) issued by the superior courts that influ- zil on which there has been progress. These efforts and municipalities, funds directly transferred to
ence the legal system. have contributed to giving Brazil a good ranking. citizens (i.e. conditional cash transfer programs),
104 105