It is too easy to ignore the impact that Brazil’s new anti-corruption law will have with a cynical brush of the hand in the air.  It is too easy to dismiss Brazil’s commitment to the anti-corruption movement by suggesting that it merely was in reaction to Brazil’s upcoming appearance on the world stage for the World Cup in 2014 and the Olympics in 2016.  If you live in a bubble, this would be your reaction to Brazil’s enactment of a new anti-corruption law.  If you were a member of the world community, you would see Brazil’s latest actions as a confluence of international and domestic politics and social forces.

The legislative process in the United States has been described as akin to sausage making – imagine what it is like in Brazil.  Whatever had to occur to result in legislation, did occur and Brazil now stands as one of the leading countries with a tough anti-corruption law on the books.

But we all know that is only half of the battle – the question is whether or not it will be enforced and how it will be enforced.   As we have seen, many countries may have adopted tough laws but as the OECD regularly reports, some enforce the laws and some do not.  For Brazil, now that the law has been enacted, the question will boil down to enforcement.

Brazil’s new law creates new bribery offenses and penalties for entities that engage in corruption.  Of significance, companies will be subject to civil and administrative enforcement and penalties.  The new law does not create a criminal offense applicable to companies, which is usually an important test issue for a country’s commitment to anti-corruption enforcement.

Even though the new law has no corporate criminal offense, companies will be subject to strict liability for civil and administrative offenses.  The new law does not require the government to prove that the company board members or senior managers acted with corrupt intent.

Brazil’s existing laws included criminal penalties against individuals for influence pedaling of public officials, bribing public officials, receipt of bribes by public officials, and bribery of foreign officials.  In addition, Brazil had on the books two administrative offenses barring individuals and companies from illicit enhancement of public officials and specific rules for public tenders.  Existing tax laws required companies to keep accurate books and records.

The new law creates civil and administrative liability for bribing domestic and foreign public officials, and includes stiff financial penalties.  The civil and administrative prohibitions apply to promising, offering or giving a bribe to a domestic or foreign government official (or a party related to the official) to improperly influence government action.  The new law also prohibits companies from engaging in fraud or manipulating a public tender process.

Most significantly, the new civil and administrative prohibition applies a strict liability standard to corporations.  Prosecutors only have to prove that the illegal act occurred and that it benefited the company.  There is no requirement for prosecutors to present evidence that the board or senior management knew or failed to exercise reasonable oversight.  Liability extends to all third party intermediaries.

When it comes to cooperation and compliance, the new law allows Brazilian courts to take into account a company’s cooperation and compliance in considering the appropriate punishment.  Prosecutors are authorized to enter into leniency agreements such as deferred or non-prosecution agreements.  To be eligible for such treatment, the company must fully cooperate and help identify others involved in illegal activity.  If successful, a company can reduce its potential fine by two-thirds.

As to extraterritorial reach, the new law applies only to Brazilian companies which engage in foreign bribery and excludes foreign companies, with a presence in Brazil, from foreign bribery liability.   However, the new law covers non-Brazilian companies that operate in Brazil in any way to domestic liability for bribery involving Brazilian government officials.