Border Dispute

Land disputes still play a major role in many conflicts around the world. When needed, governing bodies step in and make a ruling to put an end to any violence. That is happening in Brazil right now as the Supreme Court (STF) will decide the dispute between boarding states Piaui and Tocantis after officials from the two were unable to reach an agreement.

The issue stems from unclear borders between the two. This became a problem in the late 1980s when Tocantis became a state when it was created by the Federal Government. As a result, certain cultural and bordering problems were not solved at the time and are still being challenged. On top of that, the region is known for its agriculture production, which can add to any state’s profile.

A hearing took place on August 6 in the office of Justice Luiz Fux and the states were given ten days to layout their case and present any evidence to their claim of the land. Both sides presented their arguments and were unwilling to negotiate. The states did suggest using the anthropic criteria, which takes into account the the dynamics of human occupants of the land, but still no agreement could be met.

Because they have not been able to settle on their own, the STF will now step in to try and end things amicably. There is no telling where the boarder will end up when this is finally concluded.

Possible Cartel Scheme in Sao Paulo

Public bidding on government jobs has long been a favorite plot of large and small screen corporate dramas. Now, one is playing out in real life.

Prosecutors in Sao Paulo, Brazil, have been granted the right to launch a criminal investigation into proposed price-rigging during bidding for Sao Paulo’s metro rail systems. This could lead to the uncovering of a cartel scheme.

“Based on documents from CADE (the Brazilian antitrust authority), there are strong indications of criminal cartel formation in bids called by the Sao Paulo commuter rail company CPTM and the Sao Paulo Metro company from 1999 to 2009,” prosecutor Marcelo Mendroni told news sources. “The (price-rigging) scheme involved millions of dollars, maybe billions of dollars.”

There are several international companies reported to be apart of the investigation including France’s Alstom, Spain’s CAF, Canada’s Bombardier and Japan’s Mitsui. The companies participated in public bids organized by the Municipal Government, which would grant the right to operate the subway and train lines. The allegations are that the organizations colluded and there was no real competition when selecting the winner.

The details about the price-fixing come from Siemens executives who are cooperating with authorities to avoid criminal proceedings. This goes along with the CADE internal procedure to verify if these allegations are plausible. On top of that, last week, the Municipal Government was granted access to the procedure on the grounds of expediting the investigation.

Field investigation is being conducted in order to gather relevant information to ensure nothing is overlooked. The nature of crime, however, is making the search difficult as the companies are slow to disclose confidential information.

Brazil’s New Anti-Corruption Law

Last week, Brazil President Dilma Rousseff signed the highly anticipated anti-corruption bill into law. It will take effect in 180 days from August 2, when it was officially added to Brazil’s journal. Recently Lexology—an online law review forum—broke down the law.

“The anti-corruption law represents a significant development, as for the first time, corporate entities in their own right, including foreign companies with operations and branches in Brazil, will be subject to rigorous judicial and administrative sanctions for corruption,” the article reads. “Previously, only public officials, employees, and corporate officers were subject to criminal sanctions for corruption in their personal capacity.”

There are several significant changes that the new legislation puts into place. First off, it better identifies the offenses which include bribery, illegal sponsoring, concealment, public procurement and extra-territorial application. It also lays out that prosecutors will simply need to prove that one or more of the previous actions took place and not what the intentions behind the act were. So if a company offers a service to a public official with good intentions behind it, it is still considered bribery.

There is also a wide array of sanctions that can be levied, which include administrative penalties, being barred from public tenders, judicial sanctions, banishment from economic activities and the possibility the company could be dissolved. Successors and affiliates to a company in question could also be subject to penalties.

This bill dates back to the ratification of the OECD Anti-Bribery Convention in 2000, but this is a significant step to stopping corruption at all levels.

New Commercial Code

As times goes on, many laws from the past need to be revisited to make sure they still have a purpose and that the meaning can not be improperly construed in anyway. We have all seen outdated legislation like the fact that bullets may not be used as currency in Massachusetts or it being illegal for a mustachioed man to kiss a woman in public in Iowa. Some of these laws have been on the books for over a century, which means reform could be a good plan.

Something similar is happening in Brazil right now as a bill is being discussed on the floor of Congress that would enact a new Commercial Code. The current version has been in place since 1850, but several articles were suspended by Brazil’s Civil Code in 2002. This gap now has a handful of jurists believing it is time to create a new code altogether instead of revamping the existing one.

The new bill (PL 1572/11) was presented by Vicente Cândido, a representative from Sao Paulo and member of Labor Party.

While creating a new code could be a crucial step, it is important to make sure patterns and statutes already established are not affected. This includes things like the “Lei das S.As,” which regulates proceedings encompassing issuance of shares, internal regulation of companies and more. It is also unclear how changing the laws would affect the capital markets.

This is something that any company that does business in Brazil will need to stay on top of as an update to these laws could directly affect investment potential in the country.