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Marcus Goncalves
Nichols College Professor and International Business Program Chair, international management consultant and le...
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Dealing with Corruption in Brazil

Posted on Thursday, 01 November 2012 in FCPA


Brazil, with its booming economy, is the largest recipient of foreign direct investment (FDI) in Latin America, even more so due to the World Cup scheduled for 2014 and the Olympic games for 2016. The country, however, continues to suffer from the corruption plague.  Brazil ranks 73 out of 182 on the Corruption Perception Index (CPI).  According to the International Finance Corporation of the World Bank, 70% of companies responding identified corruption as a major hurdle to doing business in Brazil.alt

International companies have reported demands for payment of bribes (extortion) from Brazil government officials.  The U.S. Justice Department and the SEC have an ongoing investigation of Embraer, the third airplane manufacturer in the world, after Boeing and Airbus, for its activities in Brazil.

The good news, Brazil is trying to focus on fighting corruption and staying clear from the U.S. Foreign Corrupt Practices Act (FCPA), as too much business, and reputation is at stake. The Supreme Court in Brazil is prosecuting a few dozens of the country’s best-known politicians and lobbyists for corruption in a vote-buying scheme.  The trial is high profile and is focusing attention on corruption in Brazilian society.  It has been dubbed as the “trial of the century.”

Last year, a massive scandal was uncovered in the Brazilian ministry overseeing Brazil’s new $66 billion infrastructure plan.  Brazilian officials allegedly demanded 5 percent kickbacks on highway construction projects and then pushed carts down the hallways to hand out the cash.  The transport minister and most of his staff resigned or were fired in July of last year, and a new, supposedly more scrupulous group is now in charge.

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