The Cost of Doing Business in Brazil

Brazil is an attractive destination for foreign investors. Yet doing business in Brazil comes with its challenges, including corruption and bribery. American investors cannot forget that despite operating in a foreign country, they’re still subject to US law.

Recently, an American oil and gas trader was charged with bribery and money laundering in connection with his business dealings in Brazil. The charges were brought under the Foreign Corrupt Practices Act (FCPA), which prohibits US companies and individuals from bribing foreign officials to obtain or retain business.

The case serves as a reminder of the risks in doing business in Brazil, where corruption has been a longstanding issue. The country ranks 94th out of 180 countries on Transparency International’s Corruption Perceptions Index, indicating that corruption is perceived to be relatively high.

Corruption can take many forms, from petty bribery to more sophisticated schemes involving intermediaries and shell companies. In Brazil, it often involves corrupt payments to get permits and licenses or to secure favorable treatment from government officials.

Americans that engage in bribery and corruption abroad face serious legal risks back home. The FCPA allows the US government to prosecute individuals and companies for bribery and corruption committed anywhere in the world.

To mitigate these risks, companies should implement compliance programs that include training employees on anti-corruption policies, conducting due diligence on business partners and intermediaries, and monitoring transactions for red flags.

The cost of doing business in Brazil may be high, but companies that prioritize compliance and ethical business practices can reap the rewards while limiting their legal risks.