In 2014, Brazil enacted the Clean Company Act to counter widespread corruption in both the private and public sectors.

Under this law, companies can be held responsible for corrupt practices of employees and liable without finding fault. Companies can no longer make the excuse that a “few bad actors” were solely responsible for corrupt acts.

Executives can now be held responsible for decisions being made on behalf of the company. Some have been given jail sentences for their companies’ involvement in bribery and corruption.

Like the FCPA and UK Bribery Act, the Brazil Clean Company Act allows for extraterritorial reach in some respects, meaning any company doing business in Brazil can be punished, along with its culpable executives.

As a result, companies need to put in the investment to ensure compliance. It may seem too early to spend the time and resources when the results of the Clean Company Act are not yet clear. However, now the stakes are higher.

If an internal investigation finds that the company has violated the Clean Company Act, the usual best course of action is:

1. Under the advice of investigative experts, gather as many facts as possible
2. Consider potential solutions and corrective action for any violations, and
3. Consider self-reporting to regulators, under the advice of counsel.

Coming clean isn’t necessarily a way to avoid punishment. However, it goes a long way with the regulators and helps companies re-establish credibility.

The Clean Company Act changes the way companies and executives should do business in Brazil and in the coming years will see major shifts in business practices and the role of compliance.