Trade Compliance according to the Brazilian Anti-Corruption Act
Several countries developed mechanisms to ensure the compliance on international trade operations, with incentive programs that stimulates the companies to prove they comply with Customs regulations, which are called customs compliance programs.
In Brazil, this is a superficial concern that belongs to the reality of a few. With the upcoming Federal Law # 12.846/13, known as the Brazilian Anti-Corruption Act[1], it will be necessary to change this paradigm.
Lately, there has been an international pattern on customs modernization that is based on the early 00’s concept: Customs-Trade Partnership. It was created in Sweden–as the “Stairway Concept”–and through the Safe Frame Work of Standards from the World Customs Organization (WCO) became internationally applicable. The Customs-Trade Partnership consists on providing custom facilitation to companies entitled as “trusted traders”. On the other hand, those trusted traders duly comply with the international trade regulations, by investing in Trade Compliance programs.
In several countries, companies performing transborder operations can submit to a voluntarily internal control evaluation to receive special benefits, which are normally given through the Authorized Economic Operator (AEO) package, created by the WCO, and implemented by the European Union and others countries. There are other nations that use different designations such as Customs-Trade Partnership Against Terrorism (C-TPAT) in the United States and Secure Trade Partnership (STP) in Singapore. The MERCOSUL Customs Code enacts an AEO prevision, which has not been brought to the Brazilian regulations yet.
Brazil has a Custom Compliance program called Blue Line, which offers express customs clearance to trusted traders. The program can be considered successful, gathering 50 companies that represent a large parcel of the national industrial production. Nevertheless – even facing the unquestionable relevance of these companies that are part of this Blue Line’s select group – it has to be considered that it refers to a insignificant universe of active companies in Brazil. Pointing out the official data, 2.155 companies have imported more that 10 million dollars in 2012.
There is an obvious question when facing the aforementioned: would other companies that have large volume of transactions in the trading market, be prepared to comply to the Brazilian Anti-Corruption Act new demands on international operations?
Facing what has been typified as infractions in the Law 12.846/13, there are situations that relate to imports and exports operations. The main one is similar to the penal crime of passive corruption, but more rigid when qualifying it: while in the Article 333 from the Penal Code–to offer or promise undue advantages to a public worked, for practicing, omitting or delaying an action determined by law–the crime materiality depends on the practice, omission or materiality of the conduct, in the Article 5th, I, of the Federal Law # 12.846/13 – to promise, offer or give, direct or indirectly, advantages to public employees, or third person related to them – it isn’t necessary to have the desired results materialized. It consists in a formal infraction.
Federal Law # 12.846 transfers the burden of monitoring the integrity of customs operations to the private sector, and penalizes companies in harsher ways than the misbehaved public employees. These punishments stated in the Anti-Corruption Act relate to fines of almost US$ 25 million, full repair of the caused damages, seizure of goods, suspension or dissolution of the company, prohibition to make use of tax special programs and to obtain public financing, have its conviction publicized through on newspapers of general circulation and in the Punished Enterprises National Register. Moreover, it can also be criminally penalized.
Companies’ answer objectively for the committed infractions, in other words, there is liability regardless of its intentions. Also, the companies’ executives will be punished for their infractions, bearing fines that meet their culpability and guilt in the infraction.
Other Customs related misconducts have been described in the Law 12.846, Article 5th, III – proven, to make use of another person or entity, in order to hide or dissimulate the real interests or actual beneficiaries’ identities –; and V – to interfere in the investigation or inspection activity from public entities and officers, or hamper their actions; and to act likewise against regulating agencies and financial supervisory entities.
In the first situation, it is understood that under contract transactions or on behalf of other parties, if not properly and formally prepared, they can be subject to further analysis. On the second prevision, the lack of basic information, like a robust description of the imported material or concerning the relation between importer and exporter, according to the new Law, it can be presumed that it does not fulfill all requirements, therefore it is illegal. In both cases, we are afraid that Customs can interpret it as misconduct.
Finally, as demonstrated in this text, it becomes clear that the upcoming Brazilian Anti-Corruption Act brings a new paradigm that must be respected by the companies that have businesses in Brazil. Also, even those companies that don’t seek operational benefits – as those brought by the Blue Line program –, it will be mandatory to have a Trade Compliance program. It will be required to have controls on the quality of the information presented to Customs, and control of the workers and logistics agents’ integrity. Consequently, companies that have an expressive import and export volume, but keep resisting with old fashion methods, avoiding investments to improve their international trade controls will take the chance to be severely punished under the terms of the Federal Law # 12.846, suffering financial and image damages, which are sometimes irreversible.