Experts Discuss Compliance Issues in United States and Brazil


Corporate compliance experts from the United States and Brazil shared insights into the development and current state of anti-bribery and corruption regulatory regimes and enforcement in their respective countries, during an event held at Fordham Law School on Nov. 17. Central to the conversation was how each country approaches domestic corruption. While Brazil has made herculean efforts to root out corruption through a broad interpretation of the law and the rise of strong, independent, and mission-minded prosecutors, the United States has applied a narrower interpretation of the law, it seems, and the conditions by which a case of domestic corruption becomes prosecutable.

The event’s three Brazilian presenters each spoke at length about Operation Car Wash, a three-year corruption investigation that ballooned from a money laundering probe into a single car wash owner to a sprawling conspiracy involving state-owned oil firm Petrobras that shook the country’s political and economic foundations.

Operation Car Wash resulted in billions in fines for some of South America’s largest corporations, convictions of political and business leaders for corruption, and the impeachment of Brazilian President Dilma Rousseff. The investigation, which included cooperation with American and Swiss authorities, would not have been possible had Brazil not passed its first anti-corruption law in 2013, the event’s Brazilian participants agreed.

“The stars were with Brazil,” said Odilon Castello Borges Neto, South America legal manager for U.K.-based oil and gas giant Technip FMC.

Meanwhile in the United States, the Supreme Court’s ruling in McDonnell v. United States (2016) construed federal bribery prohibitions in a very narrow way that has made it harder to attain a conviction in such cases.

“Just as it’s becoming a major political and social issue in the United States, we no longer have as much power to prosecute corruption,” said Luke Brussel, former head of anti-bribery and corruption compliance at GE Capital and First Data and an adjunct professor at Fordham Law. “If Brazil is in a very hopeful position because of an aligning of the stars in a way, and its evolution of its judicial system and democracy, the United States, at least for right now, is not moving in the same direction. In fact, it’s the opposite.”

Brussel underlined this last point by highlighting President Donald Trump’s recent meetings with three potential federal prosecutors in jurisdictions where he maintains properties. “It’s certainly the first time in my lifetime I can remember concerns about the basic independence of the judiciary in the United States,” Brussel observed.

While many people see the U.S. Foreign Corrupt Practices Act as a model for anti-corruption prosecution, the Department of Justice has failed to create a culture of personal accountability among corporations convicted of wrongdoing in the wake of the financial collapse, said Fordham Law alumnus A.J. Bosco ’86, a principal with StoneTurn and a former enforcement division branch chief in the New York office of the Securities and Exchange Commission.

“There’s no longer a risk to a corporation taking a guilty plea,” Bosco said, noting after JPMorgan Chase paid $20 billion in fines to federal regulators its stocks hit an all-time high. Nor did anyone with JPMorgan Chase—or any banking institution responsible for the 2008 collapse—go to jail for their misdeeds. “Where’s the deterrent effect in that?” he asked.

Traditionally, the same scenario would have played out in Brazil, where the wealthy do not go to jail regardless of what damning information an investigation yields. Instead, Operation Car Wash resulted in convictions of former Brazilian leader Luiz Inacio Lula da Silva (aka Lula), construction titan Marcelo Odebrecht, and dozens of other top government and business officials.

“If this happened 10 years ago, it would have been much harder to find an independent prosecutor,” Neto said. “But the Brazilian people are tired of the small acts of corruption in daily life. The politicians in Brazil don’t understand these times are over.”

Odebrecht SA, Latin America’s largest engineering firm, and Braskem SA, a major petrochemical company owned by Odebrecht and Petrobras, agreed to pay $3.5 billion in fines, as a result of the investigation. The total fines levied as a result of Operation Car Wash have exceeded $11 billion, according to Neto. Another $3 billion in money and assets have been recovered.

Meanwhile, Odebrecht has invested the Brazilian equivalent of $20 million in its compliance department, which now has 60 employees, noted Bruno Barata, a specialist in white-collar crime and chair of the international relations commission of the Brazilian Bar Association (Rio de Janeiro chapter). In addition, Petrobras now has a special reporting channel to protect would-be whistleblowers.

“The same way a culture of wrongdoing can develop so too can a culture of good acts,” observed Renato Cirne, head of legal and compliance for FSB Comunicação, the largest PR agency in Latin America. (Read a follow-up post by Cirne.)

Alice Brightsky, senior director of compliance programs at Fordham Law, provided brief opening remarks prior to the three-hour program. Fordham Law offers a robust curriculum in compliance that J.D. students avail themselves of, as well as LL.M and M.S.L. degrees in the field. The event focusing on the U.S. and Brazil is part of the compliance program’s drive to provide enlightening programs outside the classroom for students, instructors, and practitioners, Brightsky noted.

Alice BrightSky. Photo by Ray Legendre


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