Clean Companies Act: Andrioli, Giacomini, Porto e Cortez Advogados on its global implications | Video

World Finance interviews Antonio Giacomini, Partner at Andrioli, Giacomini, Porto e Cortez Advogados law firm, to find out about the global implications of the Clean Companies Act

June 27, 2014

Brazil’s new Clean Companies Act came into effect in January of this year. Under the new law companies can be fined up to 20 percent of their gross annual revenue, if found liable of corrupt activities. World Finance speaks to respected lawyer Antonio Giacomini, Partner at Andrioli, Giacomini, Porto e Cortez Advogados┬áto find out about the global implications of the act.

World Finance: Antonio: what does the Clean Companies Act do?

Antonio Giacomini: Well the Clean Companies Act, also known as the Anti-Corruption Law, provides for certain penalties when a company or its officers are found guilty of acts of corruption.

One of the most important features of this legislation is the high penalty: you know, they can be fined up to 20 percent of their annual income. Mergers and acquisitions will also be affected, in the sense that acquiring companies may be found responsible for penalties that were imposed on acquired companies, up to the assets that were transferred.

World Finance: And just like anti-corruption laws in the US and the UK, it will apply to companies’ activities anywhere in the world, provided they have presence in Brazil? Is that right?

Antonio Giacomini: Indeed; much like in the UK and the US, a foreign company that has a relevant investment in a Brazilian company will be affected, as much as multinational Brazilian companies. So companies should be aware of the changes of this new legislation, and should also understand what the implications are when doing business in Brazil and with Brazilian companies.

[A] foreign company that has a relevant investment in a Brazilian company will be affected

World Finance: The law has been criticised for having so many levels of enforcement; what are the concerns?

Antonio Giacomini: Well there are basically two issues, there are two levels in this new legislation. One is the administrative level; the other one is the judicial level.

At the administrative level, the government, or the legislation, is looking more to imposing penalties on the companies and the officers. While on the judicial level, the focus is to cease assets and to close down businesses that have been practising corruption. Which is something that the government – and of course, a lot of Brazilian companies – are worried about, and want to prevent or terminate those practices.

World Finance: So do you expect it to do more good, or more harm?

Antonio Giacomini: In truth, it’s quite difficult to foresee if it will do more good or more harm. In my opinion, in the long-term, it will surely do more good. But in the short term, we do have some things to sort out.

The government has several levels of administration – you know, the municipal, the state, and the federal. And the Brazilian constitution would allow the state and the municipal bodies to issue regulations with respect to this particular legislation. So one of the concerns would be that there might be conflicting dispositions in these regulations.

Another concern is that before this new legislation, we already had criminal laws in place, that to a certain extent would cover those criminal acts.

You know, the concern is that there might be cumulative penalties, depending on the new regulations that are to come. But of course, we understand and we believe that the regulators will be attentive to that under this new statute.

World Finance: Another interesting legal development in Brazil is your internet anti-spying bill. What’s the latest?

Antonio Giacomini: Well first if I may; it’s not an anti-spying legislation, properly speaking. The thing is, the government wanted to take the opportunity of an internet regulatory framework bill of law that was in Congress to include certain articles that would deal with anti-spying provisions.

The government was truly concerned in rumours, or some… I don’t know if I can say this, but the Snowden situation? It was mentioned that the government was being spied on, and some Brazilian companies were being spied on. So the government decided to include that in the bill.

[O]ne of the concerns would be that there might be conflicting dispositions in these regulations

But fortunately the government decided to withdraw its proposal in order to approve the bill in time for an internet forum that took place in Brazil last month.

So the government decided to take this away, and approve the law as it should have been. As a Marco Civil, as we call it, which is a law or legislation that deals with internet service providers. And of course, users of the internet.

World Finance: And what other legal changes have been affecting your clients recently?

Antonio Giacomini: Well quite a few; but one in particular that’s been quite interesting – a change that the government did by approving last year’s budget. The government did veto a couple of articles. One of them in particular had to deal with indexes that adjust the government’s contracts with private companies, or companies that enter into public biddings.

That has been the first time in several years. I believe the government will issue a decree in the near future to deal with the situation. Some people understand this to be a good move, in the sense that it does not prevent the government from being flexible with the entities as far as adjusting the contracts. And some people are somewhat reluctant to accept that this is a good change.

But of course with the new legislation in place – especially the anti-corruption legislation – we tend to see this as a good move, and give more flexibility to the government and to the entities that do business with the government.

World Finance: And finally, the last time we met, you were simply Andrioli e Giacomini, and now you have Porto and Cortez. So what do these new partners bring to the table?

Antonio Giacomini: They bring a lot, we are very happy to have them. Luciana Porto is developing our consumer practices groups, and also the civil litigation practice group. And Cris Cortez is developing our intellectual property practices group.

We’ve always thought of ourselves as a small-to-medium law firm, and we’re rethinking that. We’re growing, of course with the help of everyone who is in the firm. And with the new businesses that they both brought to the table and to us. So we’re very excited and happy.

Some challenging new times ahead of us, I would say.

World Finance: Antonio, thank you for your time.

Antonio Giacomini: Thank you so much, thank you.