Who is actually on the other side of the contract?

A French manufacturer of cosmetics and personal-care products had operated in Brazil for several years exclusively through a distributor, who also acted as its importer, but began investigating the relationship after noticing a decline in the average price charged in the Brazilian market and customer complaints about products purchased outside authorized channels.

Red flag: Analysis of the distributor's electronic tax invoices (NF-e, Brazil's mandatory e-invoicing system) and inventory records, obtained under the contract's audit clause and compared against the volume actually shipped by the factory, revealed a systematic discrepancy: a significant share of stock was being funneled to unauthorized wholesalers, outside the contractually defined pricing and territory policy, through sales made without issuing an invoice and invoices issued by interposed companies, so as to disguise the channel diversion.

Action: Cross-referencing these documents with the sales reports supplied by the distributor itself, and validating the NF-e invoice keys through the public lookup portal, made it possible to reconstruct the actual distribution chain and quantify the diverted volume over twelve months. Because the contract designated Paris as the forum, the damages claim proceeded in France, and the Brazilian side of the matter required trips to Brasília for reasons that could only be handled there. The first was liaising with the Ministry of Justice's Department of Asset Recovery and International Legal Cooperation (DRCI) on the French court's request for judicial cooperation to gather evidence in Brazil. The second was the petition to recognize the foreign judgment before the Superior Court of Justice (STJ) — Brazil's highest court for non-constitutional matters — handled by a partner attorney duly licensed with the Brazilian Bar (OAB), since this is a matter reserved to licensed lawyers; the consultancy's role there was limited to accompanying him. While in the capital, further steps were taken with Brazil's health regulator (Anvisa), to verify ownership of the products' sanitary registrations — all held in the distributor's name as importer and local registration holder, with no contract clause guaranteeing their transfer — with the federal tax authority (Receita Federal), to file a notice of irregularity over the concealed transactions, with parallel notice to the state tax authority of the distributor's home state, which has jurisdiction over the state VAT (ICMS), and at the consular section of the French Embassy, where the manufacturer's legal representative, visiting Brazil, executed the power of attorney for the proceeding under way in France.

Result: The distribution agreement was terminated on documented contractual grounds, preventing its automatic renewal the following quarter. Transferring the sanitary registrations to the new importer designated by the manufacturer was negotiated as a condition of the termination, removing the risk of a disruption to sales in the country, and the petition to recognize the French judgment was filed with the STJ — an indispensable step for enforcing it in Brazil. The manufacturer then structured a new distribution model with periodic audit clauses, mandatory tax traceability, and a guaranteed transfer of sanitary registrations in the event of termination.

A German medical-equipment manufacturer was evaluating hiring a local sales representative to enable its participation in state-level public tenders in Brazil. The proposed representative had an excellent track record with government agencies and promised a fast qualification process.

Red flag: Due diligence found that a former partner of the representative firm — removed from its ownership structure only weeks before negotiations began — had, less than eighteen months earlier, held a leadership position in a state health department directly responsible for procurement — a connection not volunteered during negotiations. Although no formal quarantine-period rule was breached, the conflict-of-interest risk was clear. It also emerged that the firm had won an earlier tender that was later annulled over indications the bidding process had been steered in its favor.

Action: The corporate mapping and the review of past ties to government were cross-checked against state quarantine and conflict-of-interest rules and against the third-party diligence standards under Decree 11,129/2022 (art. 57), which implements Brazil's Anti-Corruption Law (Law 12,846/2013), and under the U.S. Foreign Corrupt Practices Act (FCPA), the latter applicable to the German parent company due to its listing on a U.S. stock exchange. The document review was supplemented by on-the-ground diligence: visits to the representative's registered and operating addresses, interviews with suppliers and former staff, and an in-person check, at the commercial registry and notary offices, of the timeline of changes to the company's ownership — which confirmed that, despite formally leaving the ownership structure, the former public official remained in effective control of the company.

Result: The client decided not to proceed with the representation agreement as originally proposed, redesigning its market-entry model around a partner with no recent ties to the public sector and subjecting the new arrangement to a third-party compliance program with reinforced anti-corruption clauses.

A British fund was structuring a minority acquisition in a Chilean logistics-infrastructure company. In the corporate documents provided, the counterparty appeared as a family holding company with no mention of any public office.

Red flag: Cross-referencing the holding company's ownership chain against politically exposed persons (PEP) lists and international sanctions lists revealed that one of the beneficial owners, though not listed as a formal director, was married to a former cabinet minister — who had left office less than a year earlier — whose portfolio was tied to regulating the very infrastructure sector in which the target company operated: an overlap of interests not disclosed in the initial documentation.

Action: Beneficial-ownership (UBO) analysis was extended beyond the first corporate tier to include family and financial ties, in line with the enhanced due diligence required for PEPs, their family members, and known close associates under the Money Laundering Regulations 2017 (regulation 35), which apply to the fund's manager, and with the 'adequate procedures' defense under section 7 of the UK Bribery Act.

Result: The deal went ahead, but was renegotiated to include specific representations and warranties on PEP status, ongoing monitoring mechanisms, and an independent audit channel over the company's future dealings with the sector's regulators.

A U.S. agricultural-equipment manufacturer was negotiating an exclusive distribution agreement, with credit-backed term sales, with a Paraguayan trading company serving three countries in the region. Before signing, it commissioned due diligence on the counterparty.

Red flag: The corporate review found that the trading company was controlled through a chain of four shell companies registered in the names of nominees, with no employees or declared real operations — a classic pattern for concealing beneficial ownership. The registered address of these shell companies matched that of an accounting office that also served forty other companies with no apparent activity.

Action: Corporate data was cross-checked against public records in Paraguay and Brazil, identifying the real party in control behind the chain — a Brazilian businessman, a former partner in a competing company, previously prosecuted in Brazil for illegal currency evasion — and a risk report was prepared recommending renegotiation of the contract.

Result: The client renegotiated the contract, conditioning its effectiveness on verification of the trading company's ownership structure and beneficial owner, and cut the credit line initially planned by 70%, limiting exposure to a high-risk commercial partner.

A well-established Spanish manufacturer of industrial machinery and components was evaluating a joint venture with a Brazilian importer to import and distribute part of its product line in Brazil. The local partner's financial statements showed operating margins that were unusually low for the sector.

Red flag: Comparing the values recorded in the import declarations (DI, and DUIMP for more recent operations) that the partner itself had provided during negotiations against international reference prices for equivalent products revealed a recurring pattern of overinvoicing in the importer's dealings with suppliers in a third jurisdiction — consistent with trade-based money laundering rather than simple operational inefficiency.

Action: The customs data the partner had provided was cross-checked against aggregated statistics from Brazil's Comex Stat, against mirror export statistics from the suppliers' jurisdiction, against international reference-price databases, and against the corporate history of the foreign suppliers involved, mapping possible undisclosed ties between importer and supplier.

Result: The joint venture was abandoned before signing, and the Spanish company opted for an alternative market-entry structure, importing through its own subsidiary incorporated in Brazil with full control over pricing and customs documentation.