In Brazil:  Benevolence or Bribery?

In Brazil: Benevolence or Bribery?

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April 03, 2009

During anti-bribery training for almost 200 people in Sao Paulo and Rio de Janeiro this week, some clear themes emerged. TRACE representatives Carolyn Lindsey and Paula Orlando report that many participants expressed concern about frequent requests by government officials for personal favors. Instead of asking for money or gifts, the current trend appears to be toward requests for assistance of some sort. A request might, for example, come from an official with a sick relative in need of an organ transplant. The official may know that a company he deals with has a relationship or influence with the doctors in the local hospital. The official then asks the executive to use that influence to have a relative bumped up the waiting list for a transplant. The request is most often made of medical device or pharmaceutical companies, but may also be made of companies in other industries if the official knows that a particular executive has a connection with the local hospital. (In one example, the executive’s brother was the chief of staff at the hospital).

Often these favors are requested in the context of a long-standing relationship between the parties, who rarely see it as a violation of anti-bribery law. For many, it’s simply a matter of doing a favor for a friend who is also a customer. (Supporting the suggestion that this is a simple exchange of friendly favors is the fact that requests may flow in the other direction, too; the company executive may seek a similar favor from the government official if the official has influence in the local medical community.) Urgent medical care is certainly of value to an official and his family and granting the request would, presumably, increase the official’s goodwill toward the company. Whether there is a direct quid pro quo–an expectation of some business advantage–is more difficult to ascertain.

Company representatives are also asked to provide internships for the children of government officials. Prestigious internships are typically unpaid, helping students gain experience in their preferred field. Many companies in Brazil don’t flinch at such requests; they provide the official’s child with the internship without asking themselves, or their compliance officers, whether granting such a favor might trigger an FCPA violation. As with the transplant scenario, the internship is something of value to the government official’s family member. In both cases, the recipient jumps the queue of qualified candidates. The recipient may not be the most urgent or appropriate (in the case of medical care), or the most qualified (in the case of internships), candidate.

While these favors implicate the FCPA, concerns were expressed at the Brazilian workshops that local norms might trump an edict from headquarters. Some participants argued that in Latin American countries, like Brazil, this situation is more difficult to manage because friendship and business are intertwined to a greater extent than elsewhere. Businessmen may well want to help government officials out of genuine friendship rather than with the expectation that they will receive something in return, but this nevertheless presents a compliance challenge. Prudent management of these situations, which combine business, family, long-standing friendships and, in some cases, humanitarian considerations, is challenging. The consensus appears to be that a coherent, centralized approach will help avoid the risk of each decision being made by the employee closest–and most susceptible–to the influence.

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