Brazil's tough new anti-corruption law increases the fines that can be levied on companies involved in bid-rigging and bribing public officials to as much as 20 percent of a company's annual revenue. Maintaining a strong compliance program, however, could ease that sting.

The anti-bribery bill was signed into law by President Dilma Vana Rousseff on Aug. 1 and becomes effective on Jan. 29, 2014. It applies to business organizations, foundations, or associations and foreign companies with office, branch, or subsidiary in the Brazilian territory.

Prior to the law's enactment, only individuals could be prosecuted for corruption. Under the new anti-corruption law, however, civil and administrative liability will be imposed on corporate entities, holding them liable for violations carried out by their directors, officers, employees, and other agents acting on their behalf.

Rousseff's veto of specific provisions in the bill ensured stronger legislation. Notably, sanctions will not be capped by the amount of the contract. This means fines can total as much as 20 percent of the previous year's gross revenue of the offending entity. If that amount cannot be accurately calculated, fines will be capped at approximately $60 million reais, roughly $26 million in U.S. dollars. She also vetoed a requirement that the government show intent or fault in applying certain specific sanctions; and

Included in the legislation are factors that will be considered when assessing sanctions. On the punitive side, officials will evaluate the seriousness of the offense, the advantage gained, and the damages caused by the offense.

In addition to fines, penalties can also include dissolution of a company.  As part of the law, a database will report violators, with perpetrators banned from participating in future public bidding.

Factors that warrant leniency will also be considered, says Carlos Ayres, an attorney in at Trench, Rossi e Watanabe Advogados, a Brazilian law firm associated with Baker & McKenzie. Maintaining an effective compliance program, with anti-bribery training for employees and third parties, may obtain credit and more favorable treatment. The criteria for what constitutes an effective program, and what credit will be offered, will be established in a forthcoming, specific regulation.

Sanctions may also be mitigated if the offending entity cooperates with an investigation, or proactively uncovers and self-reports an offense. Under this leniency initiative, fines can be reduced by as much as two-thirds and all other sanctions dropped.

Rousseff vetoed a provision that would have allowed greater leniency for companies based on whether there was willing participation or encouragement on the part of a government official.

The new law has been a long time in the making. In 2007, the Organisation for Economic Co-operation and Development recommended a Brazilian crackdown on bribery.

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