FORUM: Anti-corruption and bribery developments in Latin America


Financier Worldwide Magazine

February 2015 Issue

February 2015 Issue

FW moderates a discussion on anti-corruption and bribery developments in Latin America between Roberto Hernández-García at COMAD, S.C., Mauricio Almar at Halliburton, Isabel Franco at KLA-Koury Lopes Advogados, Ivan E. Velez at KPMG LLP, and Patrick Henz at Primetals Technologies.

FW: To what extent have Latin American countries – historically viewed as being generally soft in terms of their anti-corruption efforts – transformed this perception over the last 12 months or so?

Henz: There are different situations in Latin America. In Brazil, the new government appears to be willing to give priority to compliance topics. In Mexico, the government faces demonstrations and falling approval ratings in public surveys, the combination of which may force them to act. The 2014 Transparency International Corruption Perception Index confirmed the impression provided by local news organisations: the last 12 months brought very little progress for Latin America in the fight against corruption. However it must be noted that local pressure may force national leaders to change.

Hernández-García: We cannot generalise the idea that all Latin American countries are more aware and active on anti-corruption matters today, however some of them have been working hard to understand how corruption affects them and how to face this problem for the benefit of their reputation in the international market. The Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act, as extraterritorial regulations that may apply in any country in the world, have been very important in helping to accelerate the consciousness of the problem. The Latin American country which has seen the most activity in the space in recent months is Brazil, not only due to its new regulations, but also as a result of its decision to disclose the details of the Petrobras case and the commencement of proceedings against a number of public officers and companies. The situation in Brazil has had an enormous impact, particularly as the real issues around corruption in Brazil are not corruption itself, but the level of impunity and lack of punishment enjoyed by guilty people and institutions in the past.

Almar: There was significant activity in several Latin American countries regarding anti-corruption efforts in 2014. The most notable changes came in Brazil, where that country enacted sweeping anti-corruption and anti-fraud legislation with the Clean Companies Act. Although often cited as major anti-corruption enforcement reform, the legislation also tackles fraud and other inappropriate activity in the public tendering process. The new law is also not focused squarely on bribery outside of Brazil, but addresses domestic and foreign bribery and impacts both domestic and foreign companies operating in Brazil. Although the passage of new anti-corruption and anti-fraud legislation is noteworthy, there have been instances globally where proposed new legislation does not always turn into actual enforcement. By contrast, authorities in Brazil thus far have taken an aggressive enforcement position regarding both past and new anti-corruption laws. What makes this posture of particular interest is that the enforcement activity has largely been focused on powerful Brazilian corporations, including both privately-owned and state-owned, as well as their high-ranking executives.

Franco: Certainly the perception of corruption has changed in most countries in Latin America, particularly over the last year or so. That is definitely the case in Brazil. After seeing its people take to the streets in the first half of 2013 campaigning against corruption in the government and receiving criticism from all over the world, the Brazilian government passed its Clean Companies Act in August 2013. The bill had been stalled in Congress for over a decade but President Dilma, under a lot of local and international pressure, sanctioned the law to appease the crowds. The most recent scandal involving state controlled oil company Petrobras has disgusted many Brazilians, even those in favour of President Dilma’s government. There has also been a similar case in Mexico, where the publicity on corporate corruption, especially the Walmart bribery case, accelerated the passing of their national anti-bribery law. In addition, the tragedy of the 43 students who disappeared in Iguala has raised an unparalleled awareness of the issue to a society that is more connected than ever thanks to social networking.

Velez: I would characterise the transformation as moderate, consistent with anti-corruption efforts in other parts of the world. You have to remember that serious efforts to combat corruption have been present only during the past 15 years or so, and meaningful enforcement by the US only started around the beginning of the last decade, despite the FCPA’s enactment in 1977. The rest of the industrialised world did not formally show a decided commitment to combat corruption until the late 1990s, with the acceptance and ratification of the OECD Anti-Bribery Convention. Therefore, the transformation of this perception of softness in combating corruption will take significantly more than 12 months. Countries such as Argentina, Brazil, Colombia, Chile and Mexico have adopted the OECD Anti-Bribery Convention, the OAS Inter-American Convention against Corruption, and have already enacted legislation or modified their criminal codes to address their commitments. The above sounds good on paper, however attaining real change is contingent upon adopting a culture of transparency and honesty, and that is no easy task. Transformations that not only change the laws, but address the culture of corruption that is present in the region will take significant efforts and resources. Time will tell if these measures are sincere and whether they reflect an actual commitment by these governments to combat corruption.

The 2014 Transparency International Corruption Perception Index confirmed the impression provided by local news organisations: the last 12 months brought very little progress for Latin America in the fight against corruption.
— Patrick Henz

FW: Do you believe that recently introduced anti-corruption reforms – such as Brazil’s Clean Companies Act and Mexico’s National Anti-corruption Commission – are aggressive enough to deal with foreign and domestic companies that commit acts of bribery?

Velez: These are two very important initiatives by Brazil and Mexico that show their commitment in the fight against corruption. Looking back even further, over the past five years Chile enacted its anti-corruption and anti-money laundering law in 2009, Colombia enacted its anti-corruption law in 2011, Peru passed anti-corruption and whistleblower protection legislation in 2010 and Argentina amended its criminal code in 2011 to address money laundering. These initiatives reflect progress in the fight against corruption, and these countries should be commended for their efforts. Are these measures by themselves aggressive? A law in the books is not effective unless it is enforced, and the key question will be how aggressively the countries enforce these laws and commit resources to their enforcement efforts.

Franco: Most countries within Latin America suffer more from the failure to enforce their own laws than a lack of adequate legislation. Impunity prevails – a clear sign of corruption. Brazilians, for example, are very disillusioned regarding punitive measures and claim that often the police arrest criminals and the judges free them. In the most notorious case involving the detention of corrupt politicians in Brazil, known as the mensalão, most of the defendants were given minimum jail time and many of them were simply released by using the best defence attorneys in the country. On the other hand, there have been a few signs of progress. In Mexico, the stock exchange seems to be taking a more active role, and in Brazil the Office of the Comptroller General (CGU) has consistently taken measures to tackle corruption in the government. The CGU has moved to punish government officials and has created mechanisms to evaluate and certify corporate compliance programs. Still, Transparency International’s latest annual progress report on enforcement of the OECD Anti-Bribery Convention claims that the majority of Latin American countries continue to show “little or no enforcement”.

Almar: There has been significant commitment from the Brazilian authorities over the past year. Considerable efforts have been made to enforce the country’s anti-corruption laws, both new and pre-existing. The fact that the focus last year was and continues to be on Brazilian companies, as opposed to foreign investors, is noteworthy. Brazilian authorities have also been receiving training from their international counterparts on enforcement and prosecution of these kinds of cases and have expressed publicly their intention to maintain an aggressive enforcement posture where appropriate. With the recent focus in Mexico, both internally and externally, regarding corruption-related matters, there is likely to be more local enforcement in the future as well. However, to date publicly-known enforcement efforts are not at the same level as what has occurred recently in Brazil.

Hernández-García: In order for a law to be effect, the institutions that apply that law have to be strong enough. Thus far, Brazil´s Act has started to have an important effect on the environment. On the other hand, the authorities in Mexico have not been sufficiently aggressive to fight corruption – particularly as the discussion regarding the Commission, and related institutions, has been delayed without a real, justified, objective cause.

Henz: The new laws alone cannot be aggressive – it is imperative that they have to be fulfilled with action. Until now, the Latin America problem was not a lack of relevant laws but a lack of efficient execution. Arguably this will change with the implementation of the new regulations. The Brazilian and the Mexican governments are being pressurised by their populations to provide positive results in their fight against corruption. Other Latin American governments are in similar situations.

A law in the books is not effective unless it is enforced, and the key question will be how aggressively the countries enforce these laws and commit resources to their enforcement efforts.
— Ivan E. Velez

FW: Depending on the jurisdiction in Latin America, what defences might be available to companies accused of bribery and corruption?

Almar: Defences are varied depending on the jurisdiction. The Clean Companies Act in Brazil, for example, provides potential defences similar to those found in the US Sentencing Guidelines and under the UK Bribery Act. The existence of internal mechanisms and procedures of integrity, audit and incentive for the reporting of irregularities may be taken into consideration when sanctions are imposed. The law also contemplates a leniency program, whereby a corporation may have its potential fines reduced by up to two-thirds if it is the first to report the allegation, ceases involvement and admits its participation.

Hernández-García: There is no defence for deliberate corruption, since it is a criminal offence. In Mexico, the will behind the conduct is important. One of the chief concerns in Latin America is that governments have accused companies of corruption when it is not technically corruption. One could argue that a number of parties have been pursuing a degree of ‘political revenge’.

Franco: The Brazilian Clean Companies Act provides leniency agreements giving companies the chance to, under certain conditions, reduce any applicable fines by up to two-thirds, as well as other exemptions. But these agreements are very different from the US Deferred or Non Prosecution Agreements. Under Brazilian law, to qualify for leniency, the company must be the first to offer cooperation, cease any act related to the wrongdoing and admit involvement, fully cooperating with the investigation. Most lawyers are sceptical of the value of these leniency agreements but only time will tell how they will actually work. Chile also offers benefits such as exemption from criminal liability for those entities that design, implement and apply compliance programs that meet certain legal requirements. Argentina offers no leniency option or cooperation between the enforcing authorities and those accused of corruption, transforming any self-reporting attempt by the company into a plain confession.

Velez: Some of the legislation enacted in certain countries in Latin America consider mitigating factors in enforcement action. For instance, Chile’s anti-corruption law provides some mitigating factors, such as “adopting and implementing programs… to prevent violations of the law”. Additionally, under the Chilean law organisations can implement compliance programs and seek certifications that such compliance programs have been implemented and are operating effectively. Brazil’s new Clean Companies Act also provides for mitigating circumstances in reducing fines and penalties under the law. Factors that enforcement bodies in Brazil will consider include cooperation during an investigation and the existence of an effective compliance program. Regardless of the differences by jurisdiction, it is important that US companies investing in the region have a well-defined and established compliance program, in accordance with US Federal Sentencing Guidelines, to mitigate corruption risks. An anti-corruption program should include a clear code of conduct, effective policies and procedures, internal controls, training, risk-based third-party due diligence, detection mechanisms and response protocols, among other program elements.

Henz: In general, Latin American countries have complete laws regarding bribery and corruption. Facilitation payments are locally considered to be bribes and are therefore forbidden. Companies have clear guidance regarding what is allowed and what is not. As most governments are interested in receiving investment from both local and global companies, unsubstantiated accusations are rare. Companies can be sued based on existing laws and experienced local law experts should be able to defend a company against accusations of bribery and corruption. Even if a lack of transparency does not lead to official accusations, it can be used by the media and other interest groups to fuel rumours against a company. As a result, it is advisable to have an action plan in place, including working with a specialised external communications company.

Most lawyers are sceptical of the value of these leniency agreements but only time will tell how they will actually work.
— Isabel Franco

FW: As foreign investment and business in Latin America continues to grow, how confident are you that stringent due diligence is taking place to an appropriate level?

Franco: The level of intensity applied to due diligence activities is governed by the investor or the buyer of a business, not the team of due diligence advisers, unfortunately. It is clear that US and UK investors, who are more aware of the risks involved in the succession of corporate liability in these transactions, are more familiar with conducting stringent due diligence procedures in Latin American countries. This is not generally the approach of most European investors, although this is changing more and more. What is clearly visible is the disregard of local investors of the need for due diligence in domestic transactions within Latin America – but that is also likely to change as a result of recently enacted legislation in Brazil and Mexico, for example.

Henz: As several global and local companies were required to face corruption allegations in Latin America over the last 12 months, it must be said that due diligence procedures have not been executed to a required standard in the past. However, on the other hand, in most cases the companies cannot be viewed purely as victims. Employees have actively exploited opportunities to benefit themselves or their organisations. Accordingly, in many cases the issue has not simply been a result of a lack of appropriate due diligence procedures, but rather the lack of an adequate compliance culture inside companies. When sending employees from Europe or the US to Latin America, it is important to be up front with them about what to expect when conducting business in the region. There are likely to be temptations, but we expect them to comply with internal and external bribery and corruption standards as they would in any other global jurisdiction. Promoting this type of a mentality can be encouraged by special compliance workshops.

Hernández-García: Unfortunately there is some doubt over whether some national and foreign companies want to go further with their due diligence processes. Many companies and their lawyers act ‘formally correct’ but when a crisis arises, fall into temptation and pay bribes or the like. This is because in Latin America there is an ‘understanding’ that corruption is a cultural problem embedded in the roots of the region. While this is simply untrue, it can be used as justification for continued malfeasance. There are companies with strong compliance programs that recognise that they pay bribes, arguing that there is ‘no other way to do things’. Until companies make a stand and no longer pay bribes, the problem will persist.

Almar: The level and quality of due diligence varies based on location and the size of the corporations involved. I still see a majority of the due diligence being spearheaded by large multinational corporations investing in the region, although major local players have also begun enhancing their programs. In my experience, large multinational corporations tend to have more developed due diligence programs that incorporate expected core elements, such as questionnaires, background checks and anti-corruption affirmations. Many hire external resources to assist in reaching an independent assessment of their potential business partners in the region. In some countries, such as Brazil, Argentina and Mexico, major local companies have also enhanced their due diligence procedures and compliance programs. The quality of a due diligence exercise can only be as good as the quality of the public information available during the process. Access to reliable information in Latin America is varied, with more developed countries tending to have greater access to public records. However, due diligence exercises can face significant difficulty and lead to incomplete information in less developed countries and local, rural areas across the continent. This presents a key challenge in the process.

Velez: One result of high profile enforcement action in recent years is greater awareness of global corruption risks. This new awareness has compelled companies to consider anti-bribery and corruption compliance as part of pre-acquisition due diligence. Companies have taken corruption risks seriously and there has been a significant increase in pre-acquisition anti-bribery and corruption due diligence projects in Latin America over the course of the last five years. Organisations looking to expand in Latin America need to know the risks before making investments in the region. One notable case of a deal gone wrong was the acquisition of Latin Node, Inc by eLandia International in 2007, which is often cited as a case study of what could happen when you fail to conduct effective due diligence. In 2009, Latin Node paid a $2m criminal fine for payments of bribes to government officials in Honduras and Yemen. eLandia eventually wrote down its investment and discontinued Latin Node’s operations a short time after acquisition.

FW: In your opinion, do the authorities in Latin America possess the will to monitor and enforce anticorruption laws, given that some prosecution cases could involve public officials?

Hernández-García: The problem in many Latin American countries is the lack of will to punish guilty parties. This is primarily a result of the many links between offenders and government officials. Such connections make it much harder for the authorities to punish people with significant relationships. If Latin America is to overcome bribery and corruption more objectively, honest and unbiased authorities are required – authorities that are prepared to punish corruption wherever they uncover it.

Henz: Latin American society is changing. People are no longer tolerating corrupt behaviour by public officials. Twitter, blogs, Facebook and Instagram have partially replaced radio and television, which in parts had been perceived as being too close to the government. Besides, through globalisation, the young generation in particular has experienced the advantages of living in a country with an effective anti-corruption law system. This educated generation represents the future of the country and is self-conscious enough to observe the institutions around them. Countries such as Chile and Uruguay understand this. Other nations are currently unaware, though they must quickly adapt. New laws are making the prosecution of public officials possible, so we must wait and see if governments will use these weapons when given the chance.

Franco: In several Latin American countries, it is often the very authorities involved in corrupt practices that are responsible for enforcing anti-corruption laws. This may result in allowing ‘the fox to guard the hen house’. This is certainly the case in Brazil, where a multitude of authorities may enforce the law, and also in Mexico where the authority that monitors compliance is the Ministry of Public Administration. In Venezuela, for example, when President Nicolás Maduro was granted one year of extraordinary powers, he promised an intense offensive against corruption, but Venezuelans are sceptical about the excessive powers of some government bodies, and of the judiciary system. The same distrust is found in Argentina where Transparency International’s report cites serious suspicions regarding the lack of independence of Argentine courts.

Velez: Enforcement bodies in many Latin American countries have the will and motivation to prosecute cases of corruption. The main impediments historically have been the lack of a comprehensive regulatory framework and insufficient resources to enforce the laws. Transparency International, in its latest progress report of 2014 on enforcement of the OECD Convention, classified the Latin America OECD signatory countries as achieving “little or no enforcement”, with the exception of Argentina which it found to have achieved “limited enforcement”. Transparency International referred to these results as “far from satisfactory”. The scenario may change in the future and recent enforcement activity looks promising. Since enacting new anti-corruption legislation, some Latin American countries have started allocating resources to combat corruption, and the governments of Argentina, Brazil and Mexico have recently initiated several high-profile enforcement actions addressing allegations of corruption.

Almar: As with any region in the world, the will to monitor and enforce anti-corruption laws depends on many circumstances, and there is not one consistent response for every country in Latin America. Certainly, Brazilian authorities have shown in the past year that they are willing to aggressively investigate and prosecute potential corruption, even when it involves public officials in the government and at state-owned enterprises. Colombian authorities last year also launched an aggressive local investigation into potential corruption.

While foreign investors should choose their local partners with care, in most industries there will be local players that understand local and global anti-corruption expectations and have developed their businesses accordingly.
— Mauricio Almar

FW: With many Latin American companies possessing little awareness of local or international anti-corruption laws, how would you characterise the level of risk when conducting business or investing in this area of the world?

Franco: Investors should do their homework when conducting business or investing in Latin America. The world renowned NGO Transparency International is a pioneer in informing the level of risk in investing in almost any country in the world. Its Corruption Perceptions Index is a well-established and respected parameter that any investor should heed in starting that homework. The index ranks countries based on how corrupt their public sector is perceived to be. A country’s score indicates the perceived level of corruption on a scale of zero to 100, where the lower the number the higher the perception of corruption in the country. To illustrate the indicators for some of the countries in Latin America in 2014, Chile and Uruguay are perceived as the least corrupt countries with a score of 73, followed by Brazil with 43, Peru with 38, Argentina with 34, Mexico and Bolivia both at 35, leaving Venezuela, at 19, as the most corrupt country of this group.

Almar: Most countries in Latin America received a low score in Transparency International’s 2014 Corruption Perceptions Index. Taking this as a barometer, a conservative assessment of the region from a corruption perspective would suggest operating with caution. That said, the level of awareness about global anti-corruption laws has been steadily increasing. While foreign investors should choose their local partners with care, in most industries there will be local players that understand local and global anti-corruption expectations and have developed their businesses accordingly.

Henz: Transparency International’s Bribe Payers Index ranks the world’s 28 largest economies in terms of the perceived likelihood that companies from these countries would pay a bribe abroad. This is interesting, as you can assume that companies normally start growing inside a country, before they expand into other ones. Therefore, if they use bribes outside of their home territory, they have likely learnt this ‘strategy’ as a successful business behaviour at home. Within Latin America, Mexico and Argentina are at the bottom of list, with Brazil right in the middle. This index is a good representation of the reality. In general, Brazilian companies demonstrate a higher awareness of national and international anti-corruption laws than we find in Mexico or Argentina. However, it is difficult to generalise. Organisations such as the Mexican Ethics and Compliance Forum, where around half of the participating members are compliance experts from local companies, are attempting to raise understanding of ethics and compliance. Awareness is often heavily dependent on the relevant compliance officer. For firms planning to partner with a local company, companies should aim for an active and positive contact with the local compliance department.

Velez: Organisations that are contemplating expansion into overseas markets and considering investing in Latin America need to know that the region is considered to be high-risk from a corruption perspective. As highlighted in Transparency International’s 2014 Corruption Perception Index (CPI) survey, most of the countries in the region achieved a score lower than 50. Low CPI scores are generally considered to be indicative of, and attributed to, poor governance practices, excessive influence of private interests and perceived weak government institutions. Some of the higher risk countries according to Transparency Internationals’ survey include Venezuela, Paraguay, Nicaragua, Honduras and Guatemala. Countries where risk is lower include Chile, Uruguay and Costa Rica.

FW: Companies that prepare well and do their homework are better placed to prevent incidents. How important is it to undertake robust, culturally-sensitive and practical anti-corruption training for employees, as well as for third parties?

Henz: Latin America consists of different cultures and different ways to conduct business. Compliance is key to being active in the region. Firms looking to operate in Latin America must gain the trust of local employees. One way to achieve this is to respect locals and create culturally-sensitive training with case discussions relevant to the country. A meaningful compliance program earns the respect of local employees. This level of respect is much needed when attempting to implement an effective ‘speak up’ culture. Third parties, including business partners, understand the cost of corruption and the risk that they are presenting. For companies that decide to work with a third party as partner, compliance should be included in all discussions.

Hernández-García: It is absolutely imperative that companies undertake training for employees. The same preparation should be applied to third parties. Training should be carried out to ensure that staff members are aware of what is right and what is wrong. Believe it or not, in many cases this distinction is not clear for some people. In other cases, people do not know the effects of corrupt actions. Finally, for those who will never behave correctly, this is an excellent opportunity for a company to understand its people better and to reinforce the desired philosophy. While many companies have robust programs, often their directors insist that their businesses cannot be made honest. What kind of tone from the top is this?

Velez: Having an anti-bribery and corruption training program is considered to be one of the key elements of an effective compliance program. In fact, US Federal Sentencing Guidelines identify training as a key component that could allow companies to mitigate sentences, and it can be one of the mitigating circumstances in the new anti-corruption laws enacted in some countries in the region. Companies should incorporate targeted, periodic risk-based training on anti-bribery and corruption compliance matters as part of their compliance programs. Comprehensive training should be in the local language – Spanish or Portuguese in the case of most of Latin America. It may be impractical in many cases to provide training for all third party intermediaries. However, as part of the periodic risk-assessment process, companies should identify those key relationships that introduce a higher risk of bribery and corruption and decide whether to provide targeted training to those third parties. In lieu of company-provided training, at a minimum companies should address anti-corruption training requirements in the anti-corruption certifications that must be signed by key third parties.

Almar: The importance of undertaking robust, culturally sensitive and practical anti-corruption training for employees and third parties cannot be understated. It is important to emphasise, however, that this is not merely a check-the-box exercise. Rather, the training must be informative, engaging and provide practical real-life skills to the audience. A significant risk of any training program is that the audience will not feel engaged or that the material is not relevant to their daily activities. This leads to lower audience participation during the session, fewer questions being asked, less attention to the material being conveyed, and, most importantly, insufficient retention of the key teaching points being taught. Furthermore, one always faces the risk that the audience may see the presenter as removed from their operations, their challenges and their interests. This risk is potentially enhanced when the presenter is not a member of the local operations team, but rather from the company’s global headquarters or law department. While online training and policy-specific modules are key to any compliance program, you should also consider live, in-person, case-scenario based training programs. The idea of these workshops is not to provide a nuts-and-bolts recitation of the law, company policies and company procedures, but instead to provide a facilitator-led, not instructor-taught, workshop that invites, encourages and requires audience participation.

Franco: It is extremely important that companies with a presence in any Latin American country understand the value of a robust compliance program. However, most importantly, the company’s top management must understand and sincerely engage in the program or else the project is doomed to fail. More than in any part of the world, the programs will only be respected by employees and third parties if management is truly involved. The so-called ‘tone at the top’ is essential as Latin Americans are very culturally sensitive and resentful towards hypocritical management rules and policies.

Look for an expert in the matter and do not try to hide, modify or eliminate any evidence. Often, corruption comes from independent members of a company and not as an instruction.
— Roberto Hernández-García

FW: What action would you recommend that a company take in the event of regulatory investigation into suspected bribery or corruption?

Almar: The first and most important step is to ensure that you have some form of a compliance apparatus and program in place. The size and depth of this will depend on your organisation, the firm’s independent risk assessment and available resources. Second, do not panic. Each investigation is different and will take a different course. Based on your internal resources and the nature of the investigation, you may want to consider hiring external legal counsel to assist in the investigation and management of the process. Third, make certain that you have protocols and resources in place to collect and securely store documentation that may be relevant to the investigation. You are likely to receive significant document inquiries, in addition to possible requests to interview individuals at the company. Fourth, companies must take the investigation seriously. Depending on the nature of the allegation, you may need to take immediate steps regarding your relationships with third parties, payments to vendors, and company employees. Finally, ensure that the right people in the company know about the investigation but do not unnecessarily disseminate the information. Each investigation will be different concerning who should be aware and who does not need to know. Again, internal or external counsel can help advise you on how and when to disseminate information about the investigation.

Hernández-García: Look for an expert in the matter and do not try to hide, modify or eliminate any evidence. Often, corruption comes from independent members of a company and not as an instruction. Secondly, companies should collate evidence of all efforts that have been made to train staff and promote ethical conduct. Thirdly, companies should assess the impact of the misconduct upon the government, press and various third parties and face them honestly. Finally, organisations should prepare for the worst. This is something that nobody wants in their life, particularly as it affects not only their business but also their social, family and personal lives.

Franco: If a regulatory investigation is initiated by US authorities, I would certainly recommend full cooperation, especially in the case of Latin American companies that are issuers of securities traded on the US stock exchange. In such an instance it is clear that they may receive benefits in agreements with the US authorities to defer prosecution or even avoid it altogether. In Brazil, in light of the new anti-corruption statute, I would also strongly recommend cooperation as the law provides for the possibility of a leniency agreement, although this is still a very controversial issue in the law that awaits guidelines to shed light on the benefits that it may provide. Companies should also conduct their own internal investigations so that they are ahead of the authorities in gaining intelligence of the situation. Fully understanding the circumstances will allow more educated decisions in relation to, for example, the employees involved in an attempt to avoid labour troubles and other potential liabilities.

Henz: In the case of a regulatory investigation, a company should take similar actions in Latin America as it would do in the US, Europe or any other part of the world. Proactively collaborating with the official investigators and complying with local laws are important steps, but firms must also be serious about their own values and levels of social responsibility. As local anti-corruption laws and their execution are a complex topic, a company should verify if it wants to include an external law and investigation expert. As many Latin American countries present a higher perceived corruption level, it may be beneficial to engage in role-play exercises. Such exercise should include all strata of a company, even down to how the receptionists should react to a dawn raid, how the company should work with official investigators and how such a situation would be internally and externally communicated.

Velez: Companies should have an effective fraud risk management program which includes comprehensive response protocols. Those protocols should be designed to address potential scenarios that anticipate various levels of severity. Regulatory investigations, especially when related to allegations of corruption, should require the full attention of senior management, the board of directors and the company’s office of general counsel. The process can often be long and exhausting, but companies do not have to approach such a complex matter alone. Firms should consider involving experienced outside counsel early in the process who can provide advice on issues such as disclosure protocols, cooperation with regulators, immediate document preservation measures, and the potential need to retain forensic accounting specialists to conduct an investigation.


Roberto Hernández-García is a managing partner at COMAD, S.C. For more than 20 years, Roberto Hernández-García has been involved in top-level projects related to construction, public procurement in Mexico and abroad, as well as disputes derived from these areas of practice as counsellor and as adjudicator. More recently, he has been involved in important corporate compliance matters. He is currently managing partner of Corporación Mexicana de Asesores en Derecho, S.C (COMAD, S.C.), where he has worked since 1989. He can be contacted on +52 55 5661 3733 or by email:

Mauricio Almar is Latin America regional compliance counsel at Halliburton Law Department. Mauricio Almar is responsible for executing and enhancing Halliburton’s global anti-corruption compliance program, with primary responsibility for supporting business operations in Latin America. This role includes providing guidance, advice, and solutions regarding US and global compliance systems design, implementation and ongoing assessment, and assisting clients with evaluating corruption risks. He can be contacted on +1 (713) 839 3283 or by email at:

Isabel Franco is a partner at KLA-Koury Lopes Advogados. Isabel C. Franco is a partner at the Brazilian law firm KLA-Koury Lopes Advogados where she heads its Anti-Corruption & Compliance practice group. Ms Franco’s practice focuses on counselling clients on anti-corruption legislation, designing and implementing compliance programs, due diligence and investigations. Ms Franco has been voted as No. 1 leading corporate counsel in Latin America in Anti-Corruption & Compliance by The Latin American Corporate Counsel Association (LACCA) in 2014. She can be contacted on +55 11 3799 8189 or by email:

Ivan E. Velez is a director at KPMG LLP. Ivan Velez is a director in KPMG LLP’s Forensic Advisory Services practice. He is a certified public accountant, certified valuation analyst and certified fraud examiner with over 17 years of business advisory experience. Mr Velez’s practice focuses on the investigation of complex financial fraud and white-collar crimes; bribery and corruption (FCPA) due diligence and investigations, reconstruction and analysis of financial records and transactions; and supporting legal counsel in connection with civil and criminal proceedings. He can be contacted on +1 (305) 913 2742 or by email at:

Patrick Henz is regional compliance officer at Primetals Technologies. Patrick Henz is the regional compliance officer for the Americas at Primetals Technologies. He began his career in compliance at the end of 2007, when he was responsible for the implementation of the Siemens Anti-Corruption program in Mexico and several Central American and Caribbean countries. This gave him valuable insights into global compliance programs, with a focus on Latin America. Since 2009, he has been responsible for an effective compliance program based on prevention, detection and reply. He can be contacted on +1 (770) 740 3752 or by email:

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