How the expansion of U.S. anticorruption law affects Brazil

For Brazil, aligning with FEPA offers a strategic pathway to reinforcing its legal and regulatory framework

By André de Almeida and David Andrew Taylor

In December 2023, the United States enacted the Foreign Extortion Prevention Act (FEPA) as part of the National Defense Authorization Act for Fiscal Year 2024, marking a significant expansion in the nation’s anti-corruption laws.

Complementing the Foreign Corrupt Practices Act (FCPA), which prohibits U.S. individuals and entities from offering bribes, FEPA targets the demand side of corruption by criminalizing the solicitation or acceptance of bribes by foreign officials to influence official acts, induce violations of official duties, or secure improper business advantages.

FEPA broadens the definition of “foreign official,” extending beyond the FCPA’s scope of government officials to include “senior political figures” and those affiliated with foreign government-controlled entities, including state-owned companies. The law applies whether these individuals act in official or unofficial capacities, potentially including employees of private companies that partner with state-owned enterprises and the like.

FEPA mirrors the FCPA in its extraterritorial jurisdiction, empowering the U.S. Department of Justice (DoJ) to prosecute foreign bribery cases involving U.S. interests worldwide. The law covers instances where foreign officials demand bribes on U.S. soil or engage with U.S. citizens, residents, or entities under American jurisdiction, including securities issuers regulated by the Securities Exchange Act.

The penalties under FEPA are notably severe: violators can face fines of up to USD 250,000 — or three times the bribe’s value — imprisonment for up to 15 years, or both. For comparison, FCPA imposes maximum fines of twice the monetary gain or loss and imprisonment of up to five years per violation.

FEPA also mandates transparency, requiring the DoJ to submit detailed reports to the U.S. Congress and the public on foreign bribery demands, enforcement actions, and resource allocation.

U.S. Deputy Attorney General Lisa Monaco has lauded FEPA as a tool for holding powerful actors accountable, stating that the law enables the DoJ to “zealously pursue” wrongdoers and protect U.S. national security.

But what about Brazil?

For Brazil, a country that has long grappled with systemic corruption and its economic consequences, FEPA could serve as a challenge and an opportunity, potentially bolstering the country’s anti-corruption agenda, enhancing its reputation as a trustworthy global partner, and fostering a more favorable environment for international trade and investment.

That said, Brazil is already a signatory to major international anti-corruption conventions, including the OECD Anti-Bribery Convention, the UN Convention against Corruption (UNCAC), and the Inter-American Convention against Corruption (IACAC).

Domestically, laws such as the Clean Companies Act impose stringent penalties on companies involved in corrupt practices, applying civil and administrative fines of up to 20 percent of a company’s gross revenue, along with provisions for suspension or dissolution.

Brazil’s collaboration with the United States on anti-corruption efforts is already well-established. For example, during Operation Car Wash, Brazil’s Public Prosecutor’s Office assisted the DoJ, the U.S. Securities and Exchange Commission, and the Federal Bureau of Investigation in prosecuting high-profile corruption cases. FEPA could further strengthen this bilateral cooperation, enhancing Brazil’s credibility as a reliable partner in global markets.

Nevertheless, FEPA’s extraterritorial reach raises questions about jurisdictional boundaries and principles of international comity. Practical enforcement challenges such as suspect apprehension and extradition remain significant obstacles. Despite these complexities, FEPA represents a landmark initiative in global anti-corruption efforts.

For Brazil, aligning with FEPA offers a strategic pathway to reinforcing its legal and regulatory framework. By embracing this legislation, Brazil can strengthen investor confidence, promote a level playing field for businesses, and enhance its international standing. FEPA thus lays the groundwork for sustainable growth and prosperity, deserving recognition as a critical tool in the fight against corruption.

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André de Almeida
André de Almeida is a founding Partner and CEO of Almeida Advogados. He wrote a book about the story of a massive class-action suit against Petrobras.

David Andrew Taylor David Andrew Taylor is a partner at Almeida Advogados. He specializes in Corporate Law, M&A and Contracts, Compliance and Corporate Governance/White-Collar Crimes (Anti-Bribery and Anti-Corruption)

https://brazilian.report/opinion/2024/11/29/us-anti-corruption-law-affects-brazil/