BRAZIL Q&A
Brazil: navigating regulatory complexities
Ike Gbadegesin Adeyemi, Manager, Group Legal at BHP Billiton, outlines the both the promises and challenges of harnessing Latin America’s vast economic potential.
Which of the jurisdictions in Latin America where BHP operates re- quires the most intensive legal work? Each jurisdiction presents its own unique, interesting and sometimes chal- lenging, legal issues. For example, one of the more challenging issues that I’ve faced has been working through tax matters in Brazil, whether in the context of transactions or on day-to-day financing issues. Almost everyone is aware of the complexity in the Brazilian tax code – this is a reality to be dealt with as part of our work there. These issues are not insurmountable but it is important to work with experienced counsel with a track record in navigating these areas successfully and professionally.
What are some examples of tax related issues you faced in Brazil? Each company can have hundreds of open tax cases, which have to be man- aged, and depending on the likelihood of loss, provisioned. You may also have to post judicial cash deposits in connection with ongoing tax disputes. In addition, transactions across different states in Brazil may require analysis of the different tax regimes and consequences in each state. For example, VAT rates can vary depending on whether the rate is federal or state, the particular product being sold and the location of the seller – e.g. different VAT rates can apply if the seller is in one state versus another. As you can imagine, dealing with these issues on a day-to-day basis or in the context of one-off transactions requires quite a lot of time, resources and local expertise.
Are you affected by Brazil’s prohibition on local lawyers working for global law firms? Yes we are affected. In order to access local expertise as well as global trans- action skills and know-how, we often need to hire two law firms: one local and one international (often out of New York). If it were possible to have a Brazilian-qualified lawyer based at one of the large international firms in
34 ENERGY & INFRASTRUCTURE | LATIN AMERICA 2013
Brazil it would avoid the complexity of bridging between two firms – you would be able to receive seamless, coordinated advice directly from one ad- viser. In addition to the administrative ease, this would likely offer cost-ef- ficiencies as well.
What do you look for when it comes to choosing counsel? BHP Billiton has relationship firms that are very familiar with the company and have deep and diverse experience advising BHP Billiton – leveraging our relationship with these firms is very important in considering the most appropriate counsel for a new instruction. Each of those firms is a top tier
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Precedent experience (both of the firm and of the individual lawyers) is very important because it’s a tangible way of assessing whether a firm has been successful in working on the type of matter under consideration
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