October 2018 marks Latin Lawyer’s sixth annual Anti-Corruption and Investigations Conference, organised jointly with Global Investigations Review. Latin America again experienced an eventful year on the anti-corruption front, with various high-profile investigations, prosecutions, settlements and legislative developments. As anti-corruption compliance and enforcement continue grabbing headlines in the region, it is essential to stay attuned to such developments and to mitigate proactively the related compliance risks.
While there has been some progress on the enforcement and legislative fronts, corruption in Latin America persists as a significant concern. Transparency International’s 2017 Corruption Perceptions Index (CPI), which surveyed 180 countries and territories worldwide, revealed that, notwithstanding steps forward, perceptions remain unchanged in the region, which continues to score poorly for corruption. Transparency International largely credited this to the lack of sustained, long-term policies and reforms tackling more forcefully the historic and structural underpinnings of corruption.
The Americas’ average score on the CPI remained practically unchanged at 44.19, on a scale from zero to 100, with zero signalling extreme corruption. Excluding Canada and the United States, the Americas’ average score dropped below the global average of 43.07. Uruguay and Chile remain the best-ranked countries in Latin America, exceeding by over twenty points the region’s average. A few countries improved their scores in the past year, including Peru and Argentina, which increased two and three points, respectively. But the majority of Latin American countries received the same or lower scores in comparison to the prior survey. Mexico and Brazil, for instance, dropped two and three points, respectively, decreasing in the overall rankings. Even though Venezuela’s score increased by a point, it continues to be Latin America’s worst-ranked country.
Other surveys confirm that corruption remains a substantial deterrent to conducting business in the region. According to the World Bank’s most recent Enterprise Survey, approximately 36 per cent of firms sampled in Latin America and the Caribbean identified corruption as a major constraint. Although that average dropped somewhat from last year’s 41 per cent, it remains high. The majority of firms surveyed in various countries, including Peru (53.6 per cent) and Colombia (62.1 per cent), view corruption as a major constraint. According to the World Bank’s Ease of Doing Business 2018 report, Mexico is the only Latin American country among the top 50 (ranked 49th), and Haiti and Venezuela are among the bottom 10 countries.
While corruption remains a serious challenge, this past year witnessed significant anti-corruption enforcement activity in Latin America, with related conduct in Brazil again topping the charts. According to FCPA Tracker, of the 132 FCPA-related investigations disclosed in company filings and active as of August 2018, 38 mentioned Brazil. This is by far the highest number of any country worldwide, followed by China with 23.
In Latin America, some of the key anti-corruption enforcement developments include the following:
- Late 2017 marked the arrests on corruption-related charges of two high-ranking officials of former President Cristina Kirchner, who now serves as senator. Former Planning Minister and current Congressman Julio de Vido was arrested in October 2017 and currently awaits trial. Former Vice President and Economy Minister Amado Boudou was arrested in November 2017, later found guilty of passive bribery and of engaging in negotiations incompatible with his public function, and sentenced to approximately six years’ imprisonment.
- In early August 2018, Argentina was rocked by the Cuadernos affair, stemming from notebooks kept by the driver of de Vido’s deputy minister that supposedly contain records of bribes paid between 2005 and 2015. These include alleged deliveries of cash to Kirchner’s apartment and presidential residence. Thus far, the case has led to arrests of over two dozen former government officials and important businessmen, the majority of whom already have entered into plea agreements with local prosecutors. In September 2018, Kirchner was indicted, and the judge in charge of the case ordered her provisional arrest and the seizure of approximately US$100 million worth of her assets. As with prior investigations, the judge requested removal of Kirchner’s senatorial immunity, absent which she cannot be arrested. This request is pending confirmation by a local appeals court, after which it would be remitted to the Senate. As part of the same investigation, de Vido, other former government officials and construction executives were indicted.
- Argentina featured in developments in the United States. In late 2017, Argentine businessman Alejandro Burzaco, who owned sports marketing group Torneos, featured as one of the prosecution’s key witnesses in the FIFA trial, which resulted in the convictions of two former FIFA officials. And in March 2018, a former Siemens employee pleaded guilty to conspiring to pay approximately US$100 million in bribes to Argentine officials to secure a US$1 billion government contract for the company in 1998. This was a follow-on action to Siemens’s resolutions with the US and German authorities in 2008.
- In late September 2018, Brazil’s Operation Lava Jato entered its 55th phase. The investigation continues in dramatic fashion, now under the leadership of Attorney General Raquel Dodge. She replaced Rodrigo Janot in September 2017 and pledged to continue fighting corruption with a heavy hand. According to Brazil’s Federal Prosecutor’s Office (MPF) in the state of Paraná, Lava Jato’s task force already has conducted over 1,072 searches and seizures, made more than 260 arrests, and submitted or received 548 requests for international cooperation. The operation involves alleged bribes of approximately R$6.4 billion and, thus far, has led to 82 criminal complaints against 347 individuals, and nine administrative improbity actions against 50 individuals, 16 companies, and one political party. A staggering 176 individual plea bargain agreements have been executed, in addition to 11 leniency agreements with companies. Some 140 individuals already were sentenced to over 2,036 years’ imprisonment.
Lava Jato has continued implicating high-profile executives and politicians over the past few months, including:
- In 2017, the MPF filed two sets of charges against President Temer, accusing him of taking bribes, leading a criminal organisation, and obstructing justice, though he managed to dodge the allegations in the House of Representatives. Former President Lula was not as lucky. In January 2018, the Court of Appeals for the 4th Region upheld his earlier conviction for bribery and money laundering by Judge Sergio Moro, extending his prison term from nine to 12 years. Following dramatic negotiations, Lula turned himself in and currently is imprisoned in Curitiba. Former opposition leader and 2014 presidential contender Senator Aécio Neves also was charged with wrongdoing and will stand trial for corruption and obstruction of justice before the Supreme Court.
- While the fates of JBS, its holding company J&F, and the Batista brothers remain unclear pending a Supreme Court ruling, other notable prosecutions in Brazil have moved forward. In July 2018, Eike Batista, until recently Brazil’s wealthiest man, was sentenced to 30 years’ imprisonment for bribery, money laundering and criminal association, in connection with a scheme involving former Rio de Janeiro Governor Sergio Cabral. Cabral himself was convicted seven times in connection with various charges and was sentenced to over 180 years’ imprisonment. Also in July 2018, the MPF charged the former CEO of US-based Vantage Drilling with corruption and money laundering involving Petrobras.
- There have been ground-breaking developments on the settlement front. In 2018, for the first time since the enactment of Brazil’s anti-corruption law, two companies (advertising agencies MullenLowe Brasil and FCB Publicidade e Comunicação) resolved Lava Jato-related claims with all key Brazilian anti-corruption enforcement agencies. In 2015, the companies signed a leniency agreement with the MPF. Earlier this year, the companies closed a mirroring leniency agreement with the Ministry of Transparency and Comptroller-General’s Office (CGU) and the Solicitor-General’s Office (AGU), with the blessing of the Federal Court of Accounts (known as TCU) and the MPF’s involvement as an “intervening” party.
- In July 2018, approximately a year and a half after resolving corruption charges with the MPF, the US Department of Justice (DOJ), and Swiss prosecutors, Odebrecht executed a leniency agreement with the CGU and the AGU. The company agreed to pay R$2.7 billion in fines, which will be deducted from the amounts owed under the earlier global resolutions. That same month, Dutch company SBM Offshore resolved Lava Jato-related allegations with the CGU, AGU and Petrobras, agreeing to pay approximately R$1.2 billion in fines. A separate deal with the MPF was reached in September 2018, pursuant to which the company agreed to pay approximately R$200 million to Petrobras. Also in October, a US court sentenced two former SBM executives to prison time and ordered them to pay fines, after they pleaded guilty to bribing government officials in Brazil and Africa.
Brazil featured prominently in developments in the United States:
- In December 2017, Singapore-based Keppel and its wholly owned US subsidiary resolved corruption charges brought by Brazilian, US, and Singaporean authorities. These were the first coordinated anti-corruption resolutions involving these countries, with the MPF taking half of the over US$422 million in combined total penalties.
- In early 2018, Petrobras agreed to pay US$2.95 billion to settle a Lava Jato-related class action brought by investors in New York. This is believed to be the largest US class action settlement involving a non-US issuer. More recently, Petrobras agreed to pay a combined total of US$853.2 million in penalties to resolve DOJ, US Securities and Exchange Commission (SEC) and MPF investigations into its role in connection with improper payments to Brazilian government officials and political parties. Brazilian authorities will collect 80 per cent of that amount, with DOJ and the SEC splitting the remainder. Petrobras separately agreed to pay US$933 million to the SEC in disgorgement and pre-judgment interest, offset by its payments to investors in connection with the class action and to Brazilian authorities. Unlike the Petrobras case, in August 2018, Eletrobras announced that DOJ declined to prosecute it without imposing contingencies or conditions, though negotiations with the SEC reportedly remain ongoing.
- In late December 2017, a federal jury in New York convicted the former head of the Brazilian Soccer Confederation, José Maria Marin, of racketeering conspiracy, wire fraud conspiracy, and money laundering conspiracy for his role in FIFA-related wrongdoing. Less than a year later, a judge sentenced him to four years’ imprisonment and ordered him to pay a fine and forfeit ill-gotten benefits. In the coming months, Marin may be ordered to pay restitution to victims, including FIFA and the South American Soccer Confederation (CONMEBOL), as endorsed partially by US prosecutors.
In recent months, other major operations flowing from Lava Jato were launched:
- In September 2017, Brazilian and French prosecutors acting in cooperation with authorities elsewhere launched Operation Unfair Play. This operation centres on an alleged international bribery scheme to secure Rio de Janeiro as the host of the 2016 Olympics, and features Brazilian government officials and businessmen (including Cabral and the former head of the Brazilian Olympic Committee) and the former head of the International Association of Athletics Federations.
- In May 2018, with the support of Uruguayan authorities, Brazilian authorities launched Operation Exchange Switch Off, which investigates an alleged US$1.6 billion money laundering and tax evasion scheme involving dozens of individuals. In what was considered the largest Lava Jato-related operation in Rio’s history, over 50 arrest warrants and 50 search and seizure warrants were issued, and arrests were made in Brazil and Uruguay. Subsequently, 62 individuals, including Cabral, were indicted for related charges.
- In July 2018, Brazilian authorities launched Operation Resonance, arresting businessmen accused of defrauding healthcare bids through price-fixing cartels and freezing R$1.2 billion in assets belonging to them.
Earlier operations also progressed:
- Operation Zelotes, which investigates multinationals and local companies for an alleged multibillion-dollar scheme to bribe members of the country’s tax court, entered its 10th phase in July 2018. Defendants include former Minister of Finance Guido Mantega, who was charged in late 2017 for corruption, influence-peddling and money laundering. Prosecutors previously had requested that certain executives at Brazilian bank Bradesco be sentenced to 24 years’ imprisonment for their alleged involvement in wrongdoing, though an appellate court cleared its CEO.
- Furthermore, the former managers of Funcef and Petros, two of Brazil’s largest state-controlled pension funds, were among 17 individuals charged in connection with Operation Greenfield, which targets fraud and corruption involving these and other similar funds.
- In Chile, a notable prosecution in connection with the so-called Pentagate case came to an end. In 2013, local prosecutors had launched a criminal investigation into financial conglomerate Grupo Penta and others regarding allegations that the group had entered into bogus services agreements with candidates to bypass restrictions on political contributions and evade taxes. The matter ended in July 2018, when controlling shareholders Carlos Delano and Carlos Lavin resolved the government’s tax fraud charges, were sentenced to four years’ probation, and paid fines. A former government official accused of tax fraud closed a similar deal with local authorities. Nevertheless, the Pentagate affair led to further investigations, with repercussions in the United States. In 2017, Chile-based Sociedad Química y Minera de Chile, SA, which trades American depositary receipts (ADRs) in the United States, settled DOJ and SEC criminal and civil charges that it had made improper payments to local politicians, candidates, and individuals and entities connected to them over an extended period of time. In September 2018, its former CEO eventually settled SEC charges relating to his alleged involvement.
- The SEC’s Annual Report to Congress on the Dodd–Frank Whistleblower Program revealed that Chile ranked number two in Latin America (after Mexico) on the number of whistleblower tips provided regarding securities fraud issues.
- Colombia saw an uptick in enforcement. The Superintendency of Trade reportedly has been investigating at least a dozen companies for allegedly bribing foreign government officials. These include Vram Holding, a Colombian agricultural company whose Panamanian subsidiary entered into a contract with a local government in Venezuela and has been fined for obstructing the investigations. In September 2018, the Superintendency of Trade announced that it was looking into potential wrongdoing involving Odebrecht, Corficolombiana, Grupo Aval and Episol, in connection with the construction of a highway in the country.
- Colombia-related developments took place in the United States. In September 2017, US-based medical manufacturer Alere Inc agreed to pay US$13 million to resolve SEC charges that it failed to maintain adequate internal controls to prevent consultants from bribing government officials in Colombia, among other allegations. In August 2018, Colombia’s former National Anti-Corruption Director Luis Moreno and a local attorney who had been extradited to the United States pleaded guilty to participating in a conspiracy to launder money to promote foreign bribery. The guilty pleas stem from charges that the two had negotiated and received bribes in Miami from a Colombian politician cooperating with US authorities, who was under investigation in Colombia. And between late 2017 and early 2018, Mexico-based Cemex announced that the SEC and DOJ are investigating potential FCPA violations in connection with a project in Colombia.
(e) Dominican Republic
- In December 2017, US President Donald J Trump issued an executive order implementing the Global Magnitsky Human Rights Accountability Act (New Magnitsky Order), which provided for sanctions against individuals involved in wrongdoing worldwide. The US Treasury Department’s Office of Foreign Assets Control (OFAC), in consultation with the US secretary of state and attorney general, imposed sanctions on an additional set of affiliated individuals and entities under the New Magnitsky Order. Among others, the New Magnitsky Order targeted Angel Rondon Rijo, a Dominican businessman and lobbyist accused of funneling money from Odebrecht to government officials, who had been arrested by local authorities in 2017. In June 2018, OFAC sanctioned Dominican Senator Felix Bautista and certain entities for corruption regarding efforts to rebuild Haiti, among other things.
- In December 2017, an Ecuadorean court found former Vice President Jorge Glas guilty of taking bribes from Odebrecht and sentenced him to six years’ imprisonment.
- In addition, between late 2017 and mid-2018, DOJ secured guilty pleas from an Argentine contractor, a US-based financial adviser, and two former Petroecuador executives in connection with their involvement in an alleged bribes-for-contracts scheme involving the state-owned oil company. Charges were also pressed against additional individuals, as the investigation moves forward.
- In January 2018, US authorities arrested former Guatemalan presidential candidate Manuel Baldizón in response to an Interpol alert triggered by corruption charges relating to an Odebrecht project. Baldizón unsuccessfully sought asylum to avoid deportation from the United States. Just a few days after Baldizón’s arrest, Odebrecht entered into a settlement with Guatemalan authorities and agreed to pay approximately US$18 million to resolve charges that it had paid the same amount in bribes to local government officials.
- In October 2018, former Vice President Roxana Baldetti was sentenced to over 15 years’ imprisonment for her involvement in a scheme to award a contract to an Israeli company.
- In January 2018, a judge in New York sentenced Honduras’s former Minister of Investment Yankel Rosenthal Coello to approximately two-and-a-half years’ imprisonment, after he pleaded guilty to attempting to launder drug-related money from Honduras in the United States. Among others, US prosecutors have charged Rosenthal’s father, who is Honduras’s former vice president and remains at large, and his cousin, a local politician who pleaded guilty and was sentenced to three years’ imprisonment.
- A few months later, Honduran national Carlos Zelaya pleaded guilty to US criminal charges that he conspired to launder over US$1.3 million in bribes and other funds diverted from the Honduran Social Security Agency with his brother, its former executive director.
- In October 2017, Mexican authorities arrested the former Tamaulipas Governor Eugenio Hernández. He became the fourth former Mexican governor to be arrested that year on corruption-related charges. In early 2018, the Mexican government agreed to extradite Hernández to the United States to face money laundering charges. A few months later, in December 2017, Mexican authorities arrested Alejandro Gutiérrez, a former high-ranking official of the PRI Party, as part of investigating an alleged scheme to divert public funds. A local court dismissed the charges less than a year later for lack of evidence. In January 2018, former Quintana Roo Governor Roberto Borge was extradited from Panama to Mexico, where he faces corruption-related charges. In August 2018, Mexico City’s first penal tribunal acquitted a former union leader on the ground that Mexico’s attorney general and Ministry of Finance failed to obtain a court order before accessing banking records that led to her arrest. In September 2018, former Veracruz Governor Javier Duarte pleaded guilty to charges of criminal association and money laundering and was sentenced to nine years’ imprisonment and fined.
- Between late 2017 and mid-2018, the Mexican government imposed fines worth approximately US$60 million and temporarily debarred two Odebrecht entities in connection with wrongdoing involving Mexican state-owned oil company Pemex.
Mexico was the focus of activity in the United States:
- In November 2017, Wal-Mart set aside US$283 million for a potential FCPA resolution with DOJ and the SEC involving wrongdoing in Mexico. It remains unclear whether the matter is reaching its end, with both sides litigating over privilege issues. The company reportedly has spent nearly three times that amount on internal investigations and compliance measures since the matter began in 2011.
In addition, in May 2018, a US subsidiary of Rabobank pleaded guilty to DOJ charges that it allowed hundreds of millions in transactions involving suspicious sources in Mexico and other jurisdictions in breach of anti-money laundering rules, and agreed to forfeit over US$360 million.
And in August 2018, Citigroup agreed to pay US$4.75 million to settle charges that it failed to devise and maintain adequate internal accounting controls in connection with loans by its Mexican subsidiary Banamex, in reliance on partially fraudulent and inaccurate documents issued by the borrower, a Pemex contractor.
- In 2018, media company Televisa was hit with an amended class action in the United States by ADR holders allegedly harmed by World Cup-related bribe payments that a DOJ cooperator attributed to the company during the FIFA trial.
- In July 2018, OFAC sanctioned Roberto José Rivas Reyes, the President of Nicaragua’s Supreme Electoral Council, and José Francisco Lopez Centeno, the treasurer of the Sandinista party and vice president of a Venezuelan-Nicaraguan joint venture, in connection with their alleged involvement in corrupt activities.
- In January 2018, Panama’s attorney general announced the Blue Apple probe into approximately 40 people, including former high-ranked government officials, allegedly involved in corruption, money laundering, and criminal association in connection with local public works projects. The investigation was suspended by a court order a few months later, but resumed in July.
- In February 2018, Panama-based Mimo International Exports and Imports pleaded guilty in the United States to wire fraud conspiracy charges in connection with its agreement to bribe the former president of Costa Rica’s Soccer Federation. As part of its settlement with the DOJ, Mimo will pay US$1.4 million in restitution and fines, and then shut down.
- In June 2018, former President Ricardo Martinelli was extradited from the United States to Panama, where he is accused of corruption and political espionage.
- In December 2017, a federal jury in New York convicted the former head of the Asunción-based CONMEBOL, Paraguayan Juan Ángel Napout, of racketeering conspiracy and wire fraud conspiracy for his role in FIFA-related wrongdoing. The judge later sentenced him to nine years’ imprisonment and ordered him to pay a fine and forfeit ill-gotten benefits. Like Marin, in the coming months, the court may order Napout to pay restitution to victims, including FIFA and CONMEBOL, as endorsed partially by US prosecutors.
Odebrecht case continued to reverberate in Peru:
- In late 2017, local prosecutors announced they were investigating Odebrecht’s local partners, including Grana y Montero, JJC Contratistas Generales and Ingenieros Civiles y Contratistas Generales. Subsequently, they arrested executives from these companies and the former adviser to Peru’s Transportation Ministry and raided the offices of Grana y Montero and Brazilian construction companies OAS and Andrade Gutierrez.
- In March 2018, Pedro Pablo Kuczinski became the third Peruvian president implicated in connection with Odebrecht. Kuczinski resigned after the release of footage in which aides seemingly offered public works projects to congressmen in exchange for voting against an impending impeachment request triggered by Odebrecht payments.
- In June 2018, Peruvian prosecutors announced money laundering investigations against former presidents Kuczinski, Alejandro Toledo and Alan Garcia, all in connection with Odebrecht.
- Peruvian authorities continue to seek Toledo’s extradition to Peru.
- Recent news reports suggest that Peruvian prosecutors have been receiving Odebrecht-related evidence from the MPF and traveling to Brazil to interview individuals knowledgeable about the relevant facts.
- In July 2018, compromising conversations between members of Peru’s judiciary and Ministry of Justice were leaked. The revelations suggested that judges and magistrates engaged in corruption and influence-peddling, and sparked public outrage, the arrest of a judge, the firing of the minister of justice and resignations from the president of the Supreme Court and the president of the National Council of the Magistrature, among others. In October, Peru’s president urged the attorney general, who was implicated in the audio recordings, to resign.
- In December 2017, Manuel Burga, the former president of the Peruvian Soccer Federation, was found not guilty of racketeering conspiracy in the FIFA case and became the only defendant to escape a guilty verdict at trial.
- Uruguayan authorities have been cooperating with regional authorities, perhaps most notably with Brazilian counterparts, in relation to alleged wrongdoing on matters ranging from the construction of a subway line in São Paulo to the above-mentioned Operation Exchange Switch Off. The intensified cooperation was followed by a cooperation agreement among the prosecution offices of Brazil, Uruguay and Paraguay, in 2018, to advance transnational criminal investigations.
- Venezuela’s political instability resulted in the creation of a near-parallel judicial branch operating from exile. Between 2017 and 2018, Venezuela’s former Attorney General Luisa Ortega and Supreme Court justices continued examining corruption-related issues from exile, despite their effective lack of enforcement powers. In October 2017, Ortega told reporters that she had shared with DOJ evidence of improper dealings between Odebrecht and Venezuelan authorities, including President Nicolás Maduro. In April 2018, Venezuela’s National Assembly – whose authority the US government recognises – stripped Maduro of his presidential powers in order for the Supreme Court to try him in exile. In August 2018, following hearings in Colombia, the Supreme Court in exile symbolically found Maduro guilty of wrongdoing involving Odebrecht, sentenced him in absentia to over 18 years’ imprisonment, prohibited him from continuing to occupy public office, and ordered him to pay hefty fines.
- In addition, a multi-agency US investigation advanced regarding an alleged bribes-for-contracts scheme at state-owned oil company PDVSA. The scheme supposedly involved US companies and individuals, and resulted in the laundering of over US$1 billion through banks in various jurisdictions. Between 2017 and 2018, DOJ secured additional guilty pleas and pressed further charges in connection with the case, including against former government officials, bankers, brokers, and businessmen of various nationalities. Authorities in Spain and Switzerland have arrested individuals involved in the US probe, some of whom already were extradited to the United States. At the same time, Venezuela has been hit with sanctions from the United States, Canada and the European Union, including against Maduro and Vice President Diosdado Cabello.
- Claiming they were defrauded by individuals involved in the PDVSA scheme, Venezuelan authorities fired back by arresting executives at PDVSA’s procurement subsidiary, requesting restitution from US authorities, suing oil traders in the United States and seeking the extradition of confessed wrongdoers.
- In May 2018, as part of Operation Manos de Papel, Venezuelan authorities temporarily took over Banesco, the country’s largest private bank, and arrested more than ten executives over claims they smuggled paper money out of the country or engaged in exchange fraud. Although the executives were released days later, the government in August extended its initial takeover by 90 days.
Various countries in Latin America have complemented their enforcement efforts with new or improved legislative and other initiatives intended to curb corruption, notwithstanding certain setbacks and the need for further action in some instances.
- On 1 December 2017, Argentina enacted Law 27,401, which entered into force in March 2018, imposing criminal liability on corporations for corruption-related offenses. Before that, only individuals could be prosecuted for corruption-related offences. Now, corporations can be prosecuted for crimes including domestic and transnational bribery and influence-peddling, including if committed by third parties. The law also provides for successor liability in the event of mergers and acquisitions involving a culpable entity. In addition, the law deals with adequate compliance programmes, which are required for companies that contract with the federal government, and can serve as a mitigating factor for entities involved in wrongdoing. Moreover, the law establishes the framework for corporate leniency agreements with local prosecutors. Violations of the law can result in sanctions including fines of up to five times the amount of the unlawful benefit that was or could have been obtained, as well as forfeiture, debarment, suspension of activities, loss of state benefits and dissolution and termination.
- In mid-2018, Brazilian and Argentine prosecutors established the terms of an information-sharing agreement regarding the Odebrecht case. In August, an Argentine prosecutor reportedly first made use of the agreement.
- In September 2017, Bolivia enacted Law No. 974, requiring all state and public–private entities to establish transparency units that will be in charge of receiving and investigating corruption allegations and promoting transparency and ethics, among other things. The first such units were created in 2009, when Bolivia issued a decree requiring executive branch ministries to establish them.
- In August 2017, Brazil’s MPF issued a non-binding resolution laying out guidelines for prosecutors negotiating leniency agreements. The guidelines discuss topics including confidentiality, coordination with other agencies, core elements of leniency agreements and fines.
- In October 2017 and February 2018, the state of Rio de Janeiro and the Federal District (where Brasilia is located) passed laws requiring companies to implement compliance programmes as a prerequisite to participate in certain government bids.
- In November 2017, Brazil enacted Law No. 13,506, addressing the ability of its Securities and Exchange Commission (known as CVM) to enter into leniency agreements and expanded its power to impose monetary and other sanctions.
- Also in November 2017, Brazil enacted Decree No. 9,203, setting out “public governance” guidelines for the federal executive branch. Among other things, the decree established that federal government agencies and entities implement compliance programmes designed to prevent, detect, punish and remediate fraud and corruption, in observance of further guidance subsequently issued by the CGU.
- In May 2018, the CGU and the AGU jointly issued Normative Instruction No. 2, laying out the methodology for calculating administrative fines in connection with leniency agreements within the framework of Brazil’s anti-corruption law.
- In September 2017, the CGU published a manual that seeks to provide practical guidance on evaluating compliance programmes of companies under investigation by Brazil’s federal government and to ensure consistency in the calculation of administrative penalties. The CGU recently hired a former DOJ compliance counsel expert as its first-ever foreign consultant.
- Despite the support of Ivan Duque, who recently became Colombia’s president, the awaited August 2018 anti-corruption referendum failed to meet the required quorum. Although over 99 per cent of the 11.7 million voters endorsed the referendum, 12.1 million votes (ie, a third of the country) were required to make it binding.
- As part of wider efforts to deliver more forcefully on its mandate, consistent with Colombia’s recently granted Organisation for Economic Co-operation and Development membership, the Superintendency of Trade has taken additional measures to tackle transnational corruption, including bolstering its forensics laboratory and creating an online ethics channel for potential whistle-blowers.
- Struggles continued between the UN International Commission Against Impunity in Guatemala and the government of President Jimmy Morales, which complains of “selective justice”. The 2007 commission was credited with prosecuting well-known politicians, including then-sitting President Otto Perez Molina, and reportedly has been investigating Morales’s 2015 campaign. Following a failed attempt to expel the head of the commission, Morales announced in August 2018 that the commission’s mandate will not be renewed when it expires in 2019, and that its decisions would no longer be recognised. One month later, Morales barred the head of the commission from re-entering Guatemala.
- In February 2018, the head of the Organization of American States (OAS) Mission to Support the Fight against Corruption and Impunity in Honduras, which was established in 2016, resigned over claims of inadequate support from the local government and OAS leadership. Four months later, Brazilian prosecutor Luiz Marrey replaced him. In May 2018, the Honduran Supreme Court issued a controversial decision in which it partially invalidated an agreement that established the body within the prosecution office that acted with the Mission.
- In May 2018, the Mexican government issued rules requiring companies contracting with PEMEX to have compliance programmes.
- In July 2018, the leader of the National Regeneration Movement, Andrés Manuel López Obrador, won Mexico’s presidential election with a campaign centred on fighting corruption, among other things. The incoming government assumes control on 1 December 2018, amid considerable expectations regarding its promises. That administration reportedly already has started an anti-corruption review of over 100 oil contracts awarded by the prior government.
- Although Mexico’s new anti-corruption system entered into force in 2017, important gaps to its implementation persist, including the appointment of a national anti-corruption prosecutor and specialised anti-corruption judges.
- In October 2018, Mexican legislators proposed an anti-corruption bill that would allow authorities to seize from government officials property obtained through illicit means, including abuse of authority, bribery, embezzlement and illicit enrichment.
- On 1 October 2018, the United States, Mexico and Canada announced a new trade agreement among the three countries that, if approved, would replace NAFTA. The agreement contains a chapter on “Anti-Corruption,” setting out guidelines for implementing anti-corruption regimes across the countries. Many elements are familiar and align with current anti-corruption statutes. The agreement emphasises the importance of international cooperation, and it seeks to ensure legal consequences for officials soliciting or accepting bribes, in addition to those offering or paying them. The chapter also discusses protecting those who report relevant facts to authorities and urges governments to encourage companies to implement appropriate internal controls and to ensure that their financial statements and accounts are subject to adequate auditing procedures.
- Peru’s new corporate corruption law took effect in January 2018. The law establishes heavy fines and sanctions for companies convicted of bribing public officials, money laundering or terrorism financing. Notably, it holds companies liable even if individuals who committed the crimes have not been prosecuted or convicted. Also, the statute exempts from liability any company that implemented an effective criminal compliance programme before committing criminal acts of corruption or money laundering. Executives and employees who evade such prevention programmes and commit criminal acts would still face charges.
For those operating in Latin America (and elsewhere), there is no one-size-fits-all approach to anti-corruption compliance. It remains essential to tailor an anti-corruption compliance programme to the specific risks presented, including by industry and jurisdiction. Outside advisers, including lawyers, forensic accountants and other professionals with substantial first-hand experience in the region can help assess such risks, devise effective compliance strategies, and conduct internal investigations, when needed. To assist in better understanding the relevant legal terrain, this reference section provides an overview of different countries’ anti-corruption frameworks, as well as information about enforcement actions, key risk areas and compliance best practices.The authors wish to thank Daniel Aun for his invaluable assistance in helping prepare this essay, as well as Eileen C Zelek, Sol Czerwonko, Fabio Rawet Heilberg, Victoria Demarchi, Melanie Calero, Jonathan Florez and David C Saltzman for contributing their regional expertise.