Anti-Corruption in Latin America

From newly enacted legislation to ground-breaking domestic and international enforcement actions, the anti-corruption landscape in Latin America has changed dramatically in recent years – and responding to a corruption crisis in Latin America has become far more complicated as a result. The purpose of this chapter is to assist practitioners in navigating certain key complexities involved in managing such a crisis. First, we consider some of the background diversity in anti-corruption risks that companies confront across the region. Second, we explore some of the most important recent trends in anti-corruption enforcement in the region, including standardisation in anti-corruption legislation and the increase of coordinated enforcement actions and resolutions. Finally, we focus on important ways to mitigate the challenges of navigating and avoiding a cross-border corruption crisis: whether by effectively gathering and sharing information when a problem arises, or by ensuring that compliance programmes are effectively designed and implemented with certain key elements.

Regional diversity in anti-corruption risk

Latin America encompasses a vast geographic area, with many different countries, varied languages and regionalisms. This diversity holds equally true when it comes to anti-corruption risk, as illustrated by Transparency International’s Corruption Perceptions Index (CPI). The CPI ranks 180 countries and territories by their perceived levels of public-sector corruption from one (least corrupt) to 180 (most corrupt) and is used by compliance professionals and enforcement authorities alike as a helpful guide for assessing anti-corruption risk. In 2020, Latin American countries ranged from 21st (Uruguay) and 25th (Chile) on the high end of the scale to 176th (Venezuela) on the low end. Somewhere inbetween fell the region’s four largest economies, as measured by 2020 GDP: Argentina (78), Colombia (92), Brazil (94) and Mexico (124).

In addition to the CPI, practitioners can also look at enforcement actions brought under the US Foreign Corrupt Practices Act (FCPA) as another rough measure of anti-corruption risk. As measured by the total number of companies and individuals that have been charged by the United States Department of Justice (DOJ) and Securities and Exchange Commission (SEC), enforcement actions have been particularly frequent in Latin America over the past 17 years. Indeed, five of the 11 most-named countries in FCPA enforcement actions are located in Latin America, and the number of enforcement actions involving the region has increased at a rapid pace since approximately 2014.

Top 11 countries for FCPA enforcement actions

CountryRegionNumber of FCPA enforcement actions*2020 TI CPI rank

* As measured by the total number of companies and individuals charged from March 2004 to 15 October 2021.

ChinaAsia8378
VenezuelaLatin America57176
NigeriaAfrica47149
BrazilLatin America4294
MexicoLatin America35124
IndonesiaAsia32102
IndiaAsia3186
IraqMiddle East28160
EcuadorLatin America2392
RussiaEurope22129
ArgentinaLatin America2178

But it is not just the perception of risk or the prevalence of FCPA enforcement actions that differs between Latin American countries. The type of corruption risk also varies. Highly regulated or bureaucratic countries, or countries with powerful state-owned enterprises, generally present a higher risk of official bribery, whereas a country with a more free-market system may present a higher risk of commercial bribery. Regional differences in the use of third-party intermediaries in business transactions or a culture of gift-giving also shape anti-corruption risk. And a company’s own business model in the region – for example, whether a company uses third parties in its sales channels or government relations efforts – can also affect anti-corruption risk.

Given this diversity of anti-corruption risk, it is important for anyone responding to, or hoping to avoid, a corruption-related crisis in Latin America to take time to understand the unique factors that may be at play. Understanding the local economy, press, legislation and political landscape are all critical to identifying and responding to anti-corruption risk. To successfully navigate a crisis in the region, language proficiency certainly helps so that matters are not literally lost in translation. Also, an appreciation for the local environment is crucial to understand the legal, social, economic and political aspects that may directly or indirectly impact the potential investigation, resolution and remediation of such a crisis.

The standardising role of multilateral anti-corruption agreements

The array of domestic anti-corruption laws also varies widely between Latin American countries. Since a detailed analysis of each country’s law is beyond the scope of this chapter, we instead focus in this section on the factors that are promoting standardisation in the fight against corruption within the region and, in particular, on the role of multilateral anti-corruption agreements.[2]

Until recently, the United States – through the FCPA – dominated the international anti-corruption enforcement landscape. When the FCPA was enacted in 1977, the United States became the only country in the world with a foreign bribery offence, and companies often viewed paying bribes as an inevitable cost of doing business in certain parts of the world. That outlook began to change 20 years later with the advent of the Organisation for Economic Co-operation and Development’s (OECD) Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the OECD Anti-Bribery Convention).[3] The OECD Anti-Bribery Convention requires its Member States to establish a foreign official bribery offence that is criminally enforceable against individuals and either civilly or criminally enforceable against corporations. Among other things, the OECD Anti-Bribery Convention also requires its members to enforce these laws, regardless of national economic interests or the impact such enforcement may have on international relations, and to cooperate with enforcement efforts by other Member States by providing ‘prompt and effective legal assistance’. The effects of the OECD Anti-Bribery Convention on international cooperation in enforcement matters are discussed below.

As a result of the OECD Anti-Bribery Convention, Member States began to adopt laws similar to, and in some cases more expansive than, the FCPA. For example, in 2010, the United Kingdom adopted the UK Bribery Act (UKBA), which mirrored the FCPA in many respects, but went beyond public official bribery and also prohibited commercial bribery. The UKBA has an extremely broad jurisdictional reach and, as a result, companies with a UK nexus must consider the UKBA when doing business in Latin America.

Today, seven Latin American countries, including those with the five largest economies as measured by 2020 GDP – in descending order, Brazil, Mexico, Argentina, Colombia and Chile – are signatories to the OECD Anti-Bribery Convention and must therefore implement a foreign official bribery offence and related enforcement measures. OECD Member States are subject to a rigorous peer review process. At regular intervals, member countries are evaluated by two of their peers on the adequacy of their implementing legislation (Phase 1), whether they are applying the legislation effectively (Phase 2) and whether they are enforcing the Convention’s requirements (Phases 3 and 4). The OECD review process has driven significant change throughout the Convention’s membership, including in Latin America. Indeed, a key driver of Brazil’s Clean Companies Act, which entered into force in 2014,[4] was the OECD’s insistence in a 2010 Phase 2 follow-up report that Brazil ‘promptly’ enact legislation to create effective liability of legal persons for foreign bribery. The OECD made clear that, while Brazil had been a signatory to the OECD Anti-Bribery Convention for 12 years, it had not done enough to combat corruption. With the passage of the Clean Companies Act, Brazil finally fell in line with the Convention’s standards.

OECD pressure, combined with local factors, has similarly influenced changes in anti-corruption legislation in other countries in the region. For example, on 8 November 2017, Argentina’s legislature passed a law targeting corporate corruption. This legislation, which came into effect in 2018, provides for steep fines to be imposed against companies and introduces ‘leniency agreements’ for companies to resolve corruption-related matters.[5] Argentina’s law was enacted in reaction to the OECD Working Group on Bribery’s 24 March 2017 supplemental report finding that Argentina remained ‘in serious non-compliance’ with key articles of the OECD Anti-Bribery Convention.[6] Similarly, Peru’s Law 30424, which introduced corporate criminal liability for foreign and domestic bribery of public officials, came into effect on 1 January 2018. Companies found guilty of violating this Law face a range of penalties, including fines, debarment from government contracting, suspension of or prohibition on company activities and dissolution. Companies can mitigate responsibility through substantial cooperation, reparation and the existence or implementation of an adequate compliance programme. The legislation was part of Peru’s anti-corruption efforts as it sought to become an OECD member.

In addition to requiring the implementation and enforcement of a foreign bribery offence, the OECD has also been a leader in providing guidance for effective anti-corruption compliance programmes. In 2010, the OECD released its ‘Good Practice Guidance on Internal Controls, Ethics, and Compliance’ (the Good Practice Guidance). The Good Practice Guidance is persuasive to enforcement authorities throughout the Anti-Bribery Convention’s membership and is helping to contribute to a common understanding of the elements of an effective compliance programme. Several Latin American Member States have expressly made compliance programmes either an affirmative defence or a mitigating circumstance of their legislation implementing a corporate foreign bribery offence. Compliance programmes are discussed in more detail below.

The chart below is intended as a high-level summary of key aspects of anti-corruption legislation throughout the region.

Summary of anti-corruption legislation in Latin America

CountrySignatory to the OECD Anti-Bribery Convention?Criminal corporate liability?Corporate civil liability for foreign bribery?Compliance programme: requirement, affirmative defence or mitigating circumstance?

* A bribe payment to a foreign government official is a violation of the Criminal Code, which only punishes the conduct of individuals. There may, however, be ‘accessory consequences’ to an entity, including dissolution of the company.

ArgentinaYYYMitigating circumstance
BoliviaNNNN/A
BrazilYNYMitigating circumstance
ChileYYYAffirmative defence
ColombiaYNYAffirmative defence
Costa RicaYYYMitigating circumstance
Dominican RepublicNYYN/A
EcuadorNYYN/A
El SalvadorNYYN/A
GuatemalaNYYAffirmative defence
HondurasNYYN/A
MexicoYYYMitigating circumstance
NicaraguaNNN*N/A
PanamaNYYN/A
ParaguayNNNN/A
PeruYYYAffirmative defence
UruguayNNNN/A
VenezuelaNYYN/A

The net effect of the OECD’s Anti-Bribery Convention is that those countries with the region’s largest economies are moving closer together with respect to the foreign bribery offence, enforcement and compliance expectations. Although regional differences must still be considered, this increased standardisation does present some good news for companies doing business throughout the region, as they can adopt compliance procedures and responses that effectively address the concerns of multiple enforcement authorities at the same time.

We have focused on the OECD’s Anti-Bribery Convention, but it is not the only multilateral agreement that is relevant in the region. For example, the United Nations Convention against Corruption (UNCAC) is a multilateral treaty between more than 180 signatory countries, including every single Latin American country.[7] UNCAC requires its signatories to implement several anti-corruption measures that focus on five principal areas: prevention, law enforcement, international cooperation, asset recovery, and technical assistance and information exchange.[8] Similarly, the Organization of American States’s Inter-American Convention Against Corruption (IACAC) has the primary purpose of: promoting and strengthening the development of each member’s mechanisms needed to prevent, detect, punish and eradicate corruption; and promoting, facilitating and regulating cooperation between its members.[9] IACAC also provides that ‘the State Parties shall afford one another the widest measure of mutual assistance’ and ‘shall foster exchanges of experiences by way of agreements and meetings between competent bodies and institutions’.[10] Every country in Latin America (and the United States) is a signatory to IACAC. Also, the United States-Mexico-Canada Agreement (USMCA), which entered into force on 1 July 2020, and replaced the North American Free Trade Agreement, contains an anti-corruption chapter (Chapter 27) that requires the United States, Mexico and Canada to adopt or maintain anti-bribery legislation and other measures designed to combat corruption, promote integrity among public officials, promote the participation of the private sector and society in anti-corruption efforts, apply and enforce anti-corruption laws and cooperate with each other in anti-corruption enforcement efforts.[11]

While both UNCAC and IACAC are important mechanisms in the fight against corruption throughout Latin America, these agreements historically have lacked the rigorous peer review process of the OECD Anti-Bribery Convention to keep member countries on track and to be held accountable for the enforcement of anti-corruption laws.[12]

The impact of increased international cooperation in anti-corruption enforcement in Latin America

The increased international alignment created by the OECD Anti-Bribery Convention and other multilateral agreements has complicated the enforcement environment for multinational companies doing business in the region. Ten or 20 years ago, a practitioner could confidently predict that a domestic corruption scandal in Latin America would be addressed by local authorities and that foreign bribery offences in the region would be investigated and prosecuted by the United States under the FCPA. Over the past five to 10 years, however, the lines between domestic and foreign bribery investigations have blurred as enforcement authorities in several countries are now cooperating with their counterparts within and outside of the region. As a result, there has been an uptick in enforcement against companies and individuals both in the United States and throughout Latin America.

As the fight against corruption has become a global initiative, practitioners will find themselves representing companies or individuals that face liability across jurisdictions and on multiple fronts. Perhaps there is no better example than Lava Jato (also known as Operation Car Wash), a sprawling domestic bribery and money laundering investigation in Brazil that has spawned a massive number of individual and corporate prosecutions across the world. Lava Jato began in 2014 as a small-scale probe by the Federal Police in Curitiba into gas service stations suspected of being used for money laundering. The investigation ultimately revealed a massive and systemic corruption scheme by officials of Brazil’s national oil company, Petróleo Brasileiro SA (Petrobras), to overcharge contractors in exchange for a cut in the deals. The investigation ensnared more than 100 politicians, including four former presidents and numerous corporations, including nine of Brazil’s major construction companies. Although there is no centralised database of the number of cases that have been brought at various state and federal levels in Brazil, the Federal Prosecution Service (MPF) reports that, as of October 2021, it had indicted in the State of Paraná alone (where Curitiba is located) 535 individuals resulting in more than 174 convictions that were affirmed by the regional Federal Court of Appeals as part of the Lava Jato investigation.[13] The MPF also reports that, as of January 2021, it has made or received more than 1,250 requests for cooperation in investigations to, or by, 62 countries.[14] Outside of Brazil, the Lava Jato investigation has touched dozens of countries and implicated numerous companies and scores of politicians, including current and former presidents in Argentina, Colombia, Peru and Venezuela, among others.

One notable aspect of Lava Jato is the cooperation and coordination between prosecutors in Brazil and several other jurisdictions, including the Netherlands, Singapore, Switzerland, the United Kingdom and the United States. These jurisdictions have shared both evidence and penalties pursuant to coordinated corporate resolutions.[15] The chart below shows FCPA resolutions brought by US enforcement authorities in connection with Lava Jato and the countries that shared in the penalties.

Lava Jato-related coordinated resolutions

CompanyUS resolution dateTotal resolution*US portion*Other countries

* Amount agreed at time of settlement and rounded to the nearest million.

** The total resolution amount was ultimately reduced to US$2,600 million based on the company’s inability to pay the full resolution amount.

*** US$933 million in disgorgement was also credited to a settlement fund for a securities class action lawsuit.

Odebrecht SA/Braskem SA21 December 2016US$3,500 million**US$350 millionBrazil, Switzerland
Rolls-Royce17 January 2017US$800 millionUS$170 millionBrazil, UK
SBM Offshore30 November 2017US$820 millionUS$238 millionBrazil, Netherlands
Keppel Offshore & Marine22 December 2017US$422 millionUS$106 millionBrazil, Singapore
Petrobras27 September 2018US$1,787 millionUS$171 millionBrazil***
Samsung Heavy Industries Company Ltd22 November 2019US$75 millionUS$38 millionBrazil

In addition to coordinating corporate resolutions, enforcement authorities have cooperated in other ways. For example, in a large foreign bribery investigation involving Brazilian jet manufacturer Embraer SA, the United States and Brazil reportedly agreed to a division of labour in which the United States charged the company with foreign bribery violations (unlike Brazil at the time, the United States had the ability to bring a foreign bribery enforcement action against the company) while Brazil charged the company’s Brazilian executives for related conduct.[16]

This coordination among enforcement authorities can present challenges for companies and practitioners. On the one hand, coordinated resolutions mitigate the risk that a company will pay multiple penalties for the same underlying conduct. On the other hand, it has become increasingly difficult to contain an international anti-corruption investigation to one jurisdiction. Documents and information disclosed to one enforcement authority may be disclosed to another enforcement authority through formal and informal law enforcement information sharing.[17] To obtain self-reporting and cooperation credit in multiple jurisdictions, companies must thus decide which enforcement authorities to report to, the sequence in which they make these reports and the best means to approach the authorities (e.g., whether the company should approach an authority itself or request one authority to help coordinate with other authorities).

While international coordination presents companies with difficult choices, an even more difficult situation arises when countries are not coordinating. A lack of coordination can result in an inability to attain finality as the threat of additional actions by other government entities continues to loom over the company. This lack of coordination can prolong a crisis for years and inhibit a company from moving past the scandal in terms of both reputation and financial impact.

The experience of the family-owned Brazilian construction and engineering conglomerate Odebrecht SA (Odebrecht) dramatically illustrates this point. In December 2016, Odebrecht and its affiliate Braskem SA, a Brazilian petrochemical company, agreed to a US$3.5 billion global settlement to resolve charges with US, Brazilian and Swiss authorities arising out of alleged schemes to pay bribes to foreign officials around the world.[18] Rather than achieving finality with the announcement of this coordinated resolution, Odebrecht has faced an onslaught of investigations across the region since December 2016. Immediately following the announcement of the resolution, there were calls by multiple governments for Odebrecht to explain the corrupt payments in their respective countries, with a number of the countries, including Ecuador and Colombia, opening formal investigations.[19] Odebrecht has since been negotiating individual settlements with countries throughout the region. In 2017, for example, Odebrecht agreed to pay US$220 million in fines to the Panamanian authorities and US$184 million in penalties to the Dominican Republic’s authorities.[20] While formal resolutions have not been reached in various other countries, Odebrecht has been formally or de facto banned from participating in government projects (including suspension of current projects) in a number of countries including Argentina, Colombia and Mexico.[21]

Almost five years after the resolution with the United States, Brazil and Switzerland, Odebrecht has yet to achieve finality as it continues to negotiate separate and uncoordinated resolutions throughout the region. However, the Odebrecht case also illustrates that, even amid the individual negotiations and settlements, there has been an increase in the sharing of information between countries in the region. For example, in the context of the Odebrecht investigations, Brazilian authorities reached a deal with Argentine authorities to provide Argentina with information and evidence concerning Odebrecht.[22]

As coordination spreads throughout the region, more of these jurisdictions may, at the very least, be willing to share information, if not willing to enter into coordinated resolutions. For now, however, the risk for companies for follow-on investigations and prosecutions remains high.

The challenge of competing internal enforcement authorities

In addition to potentially having to engage with enforcement authorities in multiple jurisdictions, companies facing anti-corruption crises in Latin America may also encounter a lack of coordination between domestic enforcement agencies. In Brazil, for example, at the federal level alone, negotiations may involve at least four different authorities: the Comptroller General of the Union (CGU), the MPF, the Union Attorney General’s Office (AGU) and the Union Court of Auditors. The number of relevant Brazilian authorities may increase after factoring in state and municipal regulators. For instance, even after reaching several resolutions with federal authorities in Brazil, the Public Prosecutor’s Office of the State of São Paulo has sought to use information from Odebrecht’s agreement with the MPF to file charges against the company.[23]

The SBM Offshore (SBM) resolution presents a related challenge, this one involving an enforcement agency’s own internal processes. In December 2015, as part of the Lava Jato investigation, the MPF indicted SBM and Petrobras executives on charges relating to the bribery of Petrobras officials.[24] After extensive negotiations, SBM signed a leniency agreement with the CGU, MPF, AGU and Petrobras on 15 July 2016 that was set to become effective following ratification by the MPF’s Fifth Chamber for Coordination and Review and Anti-Corruption (Fifth Chamber).[25] On 1 September 2016, however, the Fifth Chamber raised a number of concerns regarding the leniency agreement and referred the matter back to the MPF prosecutors in charge of the case for further review.[26] This referral affected the presumed finality of the first proposed agreement and a final settlement was delayed for more than two years, finally receiving approval on 14 December 2018.[27]

Similarly, in June 2020, the CGU commenced an administrative enforcement procedure (AEP) against five subsidiaries of the Singaporean infrastructure company Keppel Corporation. The AEP came almost three years after Keppel entered into a US$422 million joint resolution with the US, Singapore and Brazil’s MPF. The AEP seems to have been short-lived: on 20 August 2020, Keppel announced that the CGU had suspended the AEP against its subsidiaries,[28] highlighting the lack of finality and certainty that companies may face in resolving multi-country and multi-agency matters.

The lessons from these and other cases are that practitioners must consider all relevant players – both foreign and domestic – when contemplating settlement discussions, since failure to do so may affect the coverage offered by a resolution and could expose a company to additional fines. Practitioners should consider which enforcement authorities may have jurisdiction over a matter, local agencies’ experience (or lack thereof) in resolving matters, and, in some cases, internal and external political dynamics.

Collateral consequences: debarment and suspension

The use of debarment and suspension from eligibility for contracting with the government or receiving funding from a multilateral development bank (MDB) has been evolving in recent years as a powerful tool to fight corruption. The OECD’s 2009 Anti-Bribery Recommendations called on parties to the Anti-Bribery Convention to: ‘suspend, to an appropriate degree, from competition for public contracts or other public advantages, including public procurement contracts and contracts funded by official development assistance, enterprises determined to have bribed foreign public officials. . .’.[29] Following this recommendation, signatory countries – including throughout Latin America – recently started to include the potential of debarment and suspension into their anti-corruption laws. For example, Colombia’s Transnational Corruption Act includes being debarred from contracting with the Colombian government for up to 20 years as a potential sanction for companies.[30] While not necessarily consistent across systems, other countries in the region, including Argentina, Brazil, Mexico and Peru, have each incorporated the potential for debarment or suspension into their respective anti-corruption laws.

In addition, since 2011, the major MDBs, including most relevant for Latin America, the Inter-American Development Bank and the World Bank Group, signed a cross-debarment agreement. While each MDB maintains its own processes for evaluating when debarment or suspension is appropriate in connection with corruption related to one of its funded projects, the agreement means that a company or individual who is debarred by one MDB (for a term of more than one year) will automatically be debarred by the other MDBs for the same term. As the President of the World Bank announced when the agreement was first reached, ‘with today’s cross debarment agreement among development banks, a clear message on anti-corruption is being delivered: Steal and cheat from one, get punished by all.’[31] As a result of the agreement, the impact of sanctions imposed by one MDB has been greatly enhanced.

Critically, the form of an enforcement action can impact whether a company will face the collateral consequence of suspension or debarment. Debarment systems are not uniform across jurisdictions or MDBs, and not all jurisdictions or MDBs require automatic debarment or suspension even when there are violations of the anti-corruption laws. For example, in some jurisdictions there may be differences between entering a guilty plea versus negotiating a form of leniency agreement. Given the significant implications suspension or debarment can have on a company, a company must consider and seek to mitigate such collateral consequences as part of its strategy in resolving a corruption case.

Recent challenges to enforcement

There have been indications during the past two years that the region has taken a step back with respect to enforcement of some of the anti-corruption measures discussed above. In Brazil and Mexico, for example, anti-corruption enforcement became increasingly politicised following the election of anti-establishment leaders in 2018. For example, since Brazilian President Jair Bolsonaro’s election in October 2018, Lava Jato has been closed[32] and several prominent convictions secured under Lava Jato have been overturned. Meanwhile, the political establishment in countries such as Guatemala and Peru fought back against anti-corruption efforts.[33] The covid-19 pandemic did not help, as several Latin American countries shifted their focus to other priorities, allowing politicians to curb anti-corruption efforts ‘without triggering popular outrage or street demonstrations as witnessed in years past’.[34]

It is too soon to tell, however, whether this is a sustained, regional trend or how it will impact any particular case. For example, despite the official end of the Lava Jato task force in February 2021, four of its prosecutors will continue to pursue Lava Jato-related investigations under the auspices of the Special Action Group for Fighting Organized Crime (GAECO), a specialised unit fighting organised crime in Brazil.[35] In August 2021, the MPF announced bribery charges in a Lava Jato-related case against two executives of an engineering company, a former treasurer of Brazil’s Workers’ Party and two of his assistants.[36] According to the MPF, the engineering executives used a third party to bribe a former Petrobras manager in exchange for US$200 million in engineering contracts for eight platform vessels. The Workers’ Party treasurer also allegedly received bribes through the third party and another company controlled by his two assistants. This case suggests that, despite the closure of the Lava Jato investigation, Brazilian agencies still appear to have an appetite and resources to bring corruption cases involving Petrobras. Moreover, anti-corruption bills are progressing through the legislatures in Chile and Colombia,[37] while in 2021 the OECD Working Group on Bribery noted several ‘positive aspects’ in Peru’s efforts to fight foreign bribery.[38]

Even the impacts of covid-19 might be temporary. For example, the Inter-American Development Bank’s Office of Institutional Integrity and Sanctions System’s Annual Report for 2020 found that the covid-19 pandemic initially impacted the number of incoming allegations of misconduct the Office receives, resulting in a 20 per cent decrease in allegations compared to the five-year median.[39] But the report also noted that 85 per cent of the Office’s current investigations relate to corruption, collusion or other financial fraud – the highest percentage of these types of investigations in five years. If the same patterns hold for law enforcement agencies, it is possible that we could see an uptick in anti-corruption enforcement as the region emerges from the covid-19 pandemic.

Finally, even if Latin American countries reduce their anti-corruption enforcement efforts, US enforcement authorities are likely to step back into the breach and bring cases where there is US jurisdiction.

Information gathering and sharing in Latin America

Any company responding to a potential corruption-related crisis anywhere (including in Latin America) will need to gather facts and information to understand what happened, assess potential exposure to liability and develop appropriate remedial measures. This is true regardless of whether the matter remains internal or becomes a government-facing investigation. How a company goes about investigating a matter and, if necessary, sharing information with stakeholders and enforcement authorities must be thoughtfully considered. Companies must be careful to avoid the pitfalls of myriad often restrictive and conflicting laws, including data privacy, data protection and labour and employment laws. Practitioners need to ensure that, in responding to a corruption crisis, the company does not expose itself to violations of other laws.

Limitations imposed by data privacy and data protection laws

Data privacy and data protection laws, which prohibit the misuse or disclosure of personal information, are an important consideration when starting an investigation in Latin America. Data privacy regimes, and the restrictiveness of each regime, vary widely between countries. Below is a chart showing which Latin American countries have enacted data privacy laws.

Latin American countries with data privacy laws as at September 2021

CountryData privacy legislation enactedLaws with limited data privacy provisionsNo data privacy legislation enacted
ArgentinaX  
Bolivia X 
BrazilX  
ChileX  
ColombiaX  
Costa RicaX  
Dominican RepublicX  
EcuadorX  
El Salvador X 
Guatemala  X
Honduras  X
MexicoX  
NicaraguaX  
PanamaX  
Paraguay X 
PeruX  
UruguayX  
Venezuela X 

Data privacy is a crucial consideration when organising a response team and requires skilful navigation, especially since it can significantly affect costs and legal fees. For example, data privacy concerns might require that the initial phases of an investigation be handled in-country, and personal information might need to be redacted from documents before they are taken out of the country. Practitioners working in the region are advised to retain or consult with both a data privacy lawyer and a vendor equipped to handle cross-border data privacy issues early on in an investigation.

Data privacy issues also create additional challenges for cooperating companies seeking to voluntarily produce documents to foreign enforcement authorities. For example, although heavily redacted documents may not be viewed favourably by enforcement authorities, data privacy laws generally do not contain exceptions for productions made to foreign enforcement authorities. Practitioners representing cooperating companies, therefore, should consider whether any other exceptions may be available (e.g., some data privacy laws have exceptions for litigation defence), whether the company’s IT-use policy permits production of the information for purposes of an investigation or whether the company should seek express consent from its employees to produce their personal information. In some circumstances, companies might consider delivering unredacted documents to domestic enforcement authorities for transfer to foreign enforcement authorities through the mutual legal assistance process. This option may be impracticable, however, if the domestic and foreign enforcement authorities are not otherwise coordinating their investigations and could open the company up to unwanted domestic scrutiny.

Conducting witness interviews and making witnesses available

Investigations in Latin America, like any other investigation, will include witness interviews. In addition to Upjohn-type warnings, practitioners should consult with local counsel regarding any additional warnings that may be required under local law. Practitioners should also consult with local counsel on any limitations on a company’s ability to require its employees to cooperate with an internal investigation or to cooperate with enforcement authorities, which may request to interview employees. Special consideration should be given to requests to conduct such interviews in the United States or at a US embassy, since doing so would subject witnesses to US jurisdiction. In contrast, US enforcement authorities generally cannot interview witnesses in another country without the second country’s express approval, usually through a mutual legal assistance request.

The importance of anti-corruption compliance programmes in Latin America

As in any other region, having a robust, risk-based compliance programme is the best way to avoid a corruption-related crisis in Latin America. An effective compliance programme should be designed to detect and prevent improper conduct. Ideally, the compliance programme will be tailored not only to the company’s business but also to the unique aspects of doing business in a particular country. But, as noted above, because global standards are rapidly converging, the core elements of a compliance programme can be designed to address effectively the concerns of multiple enforcement authorities at the same time.

By way of illustration, below is a chart comparing some key elements of the OECD’s Good Practice Guidance to the compliance expectations set forth under the anti-corruption regimes in Brazil and Argentina.

Compliance programme element requirements

RequirementOECD Good Practice GuidanceBrazil Clean Companies ActArgentina Law 27,401
Tone at the topStrong, explicit and visible support and commitment from senior managementCommitment of senior management and board members to a compliance programmeMay include visible and clear support from senior leadership and management
Articulated policies and proceduresMaintain a clearly articulated and visible corporate policyImplement policies and procedures applicable to everyone at the companyMust include a code of ethics or conduct or equivalent set of policies
Training requirementDesign measures to ensure periodic communication and documented training for all levels of the companyConduct periodic trainingMust include periodic training
Reporting mechanismMaintain internal and, where possible, confidential reporting by and protection of directors, officers, employees and, where appropriate, business partnersImplement a reporting channel that is openly and broadly disseminated and anti-retaliation protection for whistle-blowersMay include reporting mechanism and whistle-blower protection
Periodic risk assessmentConduct periodic reviews of ethics and compliance programmesConduct continuous monitoring of the programme and periodic risk assessmentMay include periodic risk assessment
Third partiesEstablish properly documented risk-based due diligence and appropriate and regular oversight of third partiesAdopt policies and procedures applicable to third parties, including due diligence on third partiesMay include third-party monitoring

As shown in the summary of anti-corruption legislation chart in the ‘The standardising role of multilateral anti-corruption agreements’ section of this chapter, an effective compliance programme serves as a mitigating factor for a corruption offence in several Latin American countries and serves as an affirmative defence in several others. Brazil’s Clean Companies Act, for example, takes into account a company’s compliance programme for purposes of a reduction in sanctions. Similarly, Argentina’s anti-corruption statute considers the existence of an effective compliance programme as a mitigating factor when calculating sanctions. In countries such as Colombia and Peru, an effective compliance programme can serve as an affirmative defence.

Conclusion

There have been significant changes in the enactment and enforcement of anti-corruption laws in Latin America over the past few years. Any practitioner working in this region should be aware of these changes, specifically with respect to the undeniable movement toward the standardisation of anti-corruption legislation across countries.

On the one hand, this trend towards alignment helps companies implement global compliance programmes that can adequately meet the expectations of various enforcement authorities. On the other hand, the increased focus on anti-corruption legislation and the growing pressure to enforce these new laws has led to an increase in enforcement actions across the region, putting companies and individuals at increasing risk of liability. At the same time, recent rollbacks in enforcement, combined with the covid-19 pandemic, could lead to uneven enforcement in the coming years. Practitioners should also be aware of the increasing cooperation and information sharing, both within countries in the region and with countries outside of the region – most notably, the United States. Any step or disclosure taken in one country faces the very real risk of being shared with regulators or prosecutors in another jurisdiction.

Finally, in terms of practical considerations when conducting an investigation in Latin America, practitioners should be aware of the multiplicity of regulators with potential jurisdiction as well as local legal, cultural, political and economic factors that come into play. All of these differences can increase the effectiveness, as well as reduce the time and cost it may take to conduct an investigation and resolve a corruption-related crisis in the region.


Notes

[1] James M Koukios and Ruti Smithline are partners and Gerardo Gomez Galvis and Maria Acosta are associates at Morrison & Foerster LLP.

[2] However, this standardisation has not been uniform throughout the region and the fight against corruption in Latin America is sometimes subject to broader political forces. We discuss some of the recent political setbacks in anti-corruption enforcement below.

[13] http://www.mpf.mp.br/grandes-casos/lava-jato/resultados. Between 2019 and 2020, the MPF changed the methodology used to count convictions. In 2019, the MPF counted convictions in the lower courts, but now counts only convictions affirmed by the Court of Appeals.

[15] In this respect, the DOJ has made coordinated resolutions a part of its official policy. In enacting its anti-‘piling on’ policy, the DOJ explained that the ‘new policy discourages ‘piling on’ by instructing DOJ components to appropriately coordinate with one another and with other enforcement agencies in imposing multiple penalties on a company in relation to investigations of the same misconduct’. http://www.justice.gov/opa/speech/deputy-attorney-general-rod-rosenstein-delivers-remarks-new-york-city-bar-white-collar.

[17] For example, after disclosing information about its internal FCPA-related investigation to the DOJ, it was reported in 2015 that ‘Brazilian authorities had filed a criminal action against eight Embraer SA employees, accusing them of bribing officials in the Dominican Republic in return for a $92 million contract to provide the country’s armed forced with attack planes’. Significantly, the complaint was filed ‘with help from the Justice Department and the Securities and Exchange Commission’. http://www.wsj.com/articles/embraer-in-talks-with-justice-department-1432120068; see also footnote 16.

[30] Ley 1778 de 2016 Congreso de la República - EVA - Función Pública (funcionpublica.gov.co).

[39] https://publications.iadb.org/publications/english/document/Office-of-Institutional-Integrity-and-Sanctions-System-Annual-Report-2020.pdf. The report also explains that the reduction in allegations of misconduct was likely a result of delays in the region’s procurement processes because allegations submitted often arise out of procurement activities.

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