Source: https://practiceguides.chambers.com/practice-guides/comparison/472/4473/6877-6893-6899-6902-6908-6916
Timestamp: 2020-02-29 03:53:27
Document Index: 186516517

Matched Legal Cases: ['§1', '§3', '§1', '§1', '§2', '§5', '§2', '§14', '§2', '§1', '§1', '§1', '§2']

Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados has four partners and 13 associates in its compliance and corporate ethics practice, which represents companies from various sectors and industries in high-profile cases in Brazil and abroad. The white-collar crime practice also plays a strategic role in the firm, and is well equipped to handle complex criminal law matters for clients. Working together, the two practices can offer full service in this area of the law, not only assessing risks, counselling and conducting internal investigations, but also representing individuals and corporate clients before state agencies and state and federal courts.
Brazil has signed the following international conventions in the area of anti-bribery and anti-corruption:
the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, ratified on 15 June 2000 and promulgated by Presidential Decree No 3,678 of 30 November 2000 (OECD Convention);
the Inter-American Convention against Corruption, ratified on 25 June 2002 and promulgated through Presidential Decree No 4,410 of 7 October 2002 (OAS Convention); and
the United Nations Convention against Corruption, ratified on 18 May 2005 and promulgated through Presidential Decree No 5,687 of 31 January 2006 (UN Convention).
The main laws relating to anti-bribery and anti-corruption in Brazil are:
Decree Law No 2,848 of 7 December 1940 (Criminal Code);
Law No 8,429 of 2 June 1992 (Administrative Improbity Law); and
Law No 12,846 of 1 August 2013 (Anti-Corruption Law).
Such laws cover not only anti-bribery and anti-corruption, but also a number of related crimes and violations, such as bid rigging and fraud in government contracts. Note that Brazilian law does not adopt corporate criminal liability for corruption-related offences. Liability of companies for such offences arises in the civil and administrative spheres.
Enforcement in Brazil is largely guided by decisions on administrative proceedings, prosecutorial strategies, the writings of scholars and court precedents, which are largely non-binding but carry high persuasive value, especially if ruled by higher courts.
Concerning the Anti-Corruption Law, the Brazilian Federal Executive Branch has issued Decree No 8,420, of 18 March 2015 (Anti-Corruption Decree), regulating, among other things, the criteria to be used by Brazilian authorities to assess anti-corruption compliance programmes when enforcing the Anti-Corruption Law in administrative proceedings and providing guidance on the calculation of administrative fines by the authorities, in the form of percentages that the authorities can add or subtract based on certain findings. The final percentage represents the share of the company’s gross revenues in the year preceding the filing of the administrative proceeding to reach the amount of the fine. See 3.2 Guidelines Applicable to the Assessment of Penalties for a more detailed discussion of the Anti-Corruption Decree.
The Federal General Comptroller’s Office (currently known as the Ministry of Transparency, Auditing and General-Comptroller or CGU) has also published certain non-binding guidelines on matters related to the administrative enforcement of the Anti-Corruption Law and corruption prevention in the public and private sectors. The three guidelines issued by Brazilian authorities that are relevant for the purposes of this guide are:
In 2015, the CGU issued the guide Integrity Program – Guidelines for Private Companies to provide details of the CGU’s expectations on best practices for anti-corruption compliance programmes. The guide covers issues such as the commitment of top management to the programme, risk-based compliance mechanisms, codes and internal policies, due diligence of third parties, gifts and hospitality to public officials, charitable donations, reporting channels, and remediation. Note that the CGU used the expression "private companies" in the title of this guide as the opposite of "state-owned companies", and not as the opposite of "publicly-traded companies". The CGU issued specific guidelines on compliance programmes for state-owned companies.
In 2016, the CGU issued the Manual on the Administrative Liability of Legal Entities to provide details on the administrative proceedings to enforce the Anti-Corruption Law. The manual includes an overview of the legal principles applicable to administrative proceedings, details of the phases and procedural rules applicable to the enforcement of the Anti-Corruption Law, and the calculation of applicable penalties.
In 2018, the CGU issued the Manual for Evaluation of Compliance Programs in Administrative Enforcement Procedures, which sets forth guidelines for CGU public officials regarding the evaluation of a compliance programme when applying penalties. If a company is able to demonstrate the effectiveness of its compliance programme, Brazilian enforcers will reduce the fines by granting credits that may add up to 4% of a company’s annual revenues.
There have been no key amendments to the main laws relating to anti-bribery and anti-corruption in Brazil over the past year.
The Brazilian House of Representatives is currently discussing a Bill regarding an update of Law No 8,429 of 2 June 1992 (Administrative Improbity Law). The Bill is under analysis by a special congressional committee and, if approved, will be remitted to the Senate for analysis.
Bribery is defined in Section 333 of the Criminal Code as “to offer or promise an undue advantage to a public official in order to make such public official do, omit or delay any official act”. The Criminal Code does not contain a specific definition of a bribe or "an undue advantage". Due to the language adopted by the Criminal Code, Brazilians refer to this crime as "active corruption".
In 2002, as a result of Brazil’s signing of the OECD Convention, the Criminal Code was amended to include the crime of active corruption of a foreign public official in connection with an international commercial transaction (Section 337-B). The definition of this crime mirrors the definition of active corruption described above.
The Administrative Improbity Law sets forth that an improbity violation occurs if a public official “receives, for oneself or a third party, money, a movable or immovable asset, or any other economic advantage, directly or indirectly, on a basis of commission, percentage, gratification or gift, from one who has a direct or indirect interest that may be attained or supported by an action or omission related to the responsibilities of the public agent” (Section 9, item I).
The Anti-Corruption Law establishes that a violation against the public administration occurs if companies “promise, offer or give, directly or indirectly, an undue advantage to a public official, or to a related third party” (Section 5, item I). Violations also include to finance, cover the costs of, sponsor or in any way subsidise, the undue advantage (item II) or to use an intermediary to conceal the real identity of the beneficiary of the conduct (item III). The Anti-Corruption Law does not define “undue advantage”.
Offer or acceptance of a bribe
The receipt of a bribe is also a crime in accordance with the Criminal Code: “to request or receive, for oneself or a third party, directly or indirectly, even outside of office or before entering it, but in connection to it, an undue advantage, or accept a promise of such advantage” (Section 317). Due to the language adopted by the Criminal Code, Brazilians refer to this crime as "passive corruption".
Brazilian law qualifies the mere offer or acceptance of an unlawful advantage to or by a public official as an offence, regardless of whether the results expected by the perpetrators actually occur. See the definition of "bribe" above for a more detailed discussion on the elements required to define a bribery offence.
Hospitality, gifts, promotional expenditures and facilitation payments
Brazilian laws do not provide universal rules on hospitality or promotional expenditures that are applicable to all public officials. Because Brazil is a federative republic, each federative entity, including the federal, state and municipal entities, and each of their respective branches of government (executive, legislative and judiciary), have jurisdiction to approve internal regulations concerning their own officials.
The Federal Executive Branch has the most extensive and specific regulations with respect to the offer of hospitality and promotional expenditures for public officials in Brazil. For example, Resolution No 3 of the Public Ethics Commission of the Presidency of the Republic (CEP) allows high-ranking federal officials to receive small promotional or marketing gifts of up to BRL100 (approximately USD25) once every 12 months. CGU/CEP Orientation Note No 1, of 6 May 2016 allows companies to cover the costs of travel, lodging and meals of public officials to attend events organised by the company, as long as the event has a connection with the public officials' institutional roles and the expenditures are reasonable and do not involve luxury items, among other requirements.
As a result, regulations on the receipt of hospitality or promotional expenditures by public officials frequently vary, requiring a case-by-case assessment. In general terms, if the expenditure violates a specific rule, an objective threshold set forth in applicable regulations, or has been offered in connection with any action or omission by a public official, such expenditure may be considered an "undue advantage" for the purposes of anti-corruption legislation.
Brazilian law does not contain exceptions for facilitation payments.
Failure to prevent bribery is not an autonomous offence. Under applicable criminal law principles, the failure (omission) is relevant for criminal purposes only if the agent refrains, through fault or wilful misconduct, from taking action when action is required or feasible for the agent. However, it is important to highlight that there is a risk that the authorities may treat the failure to prevent bribery as a bribery offence, especially if the person has a legal obligation of care, protection or surveillance; if they have in some way undertaken responsibility to prevent the result; or if their previous behaviour has created the risk of occurrence of the crime.
Brazilian laws contain different definitions of public officials.
For criminal law purposes, a public official is defined as “one who, even if temporarily or without pay, holds a public position, employment or function” as well as “one who holds a public position, employment or function in a parastatal entity, or in a company hired to perform activities typically rendered by the government” (Section 327, caput and §1 of the Criminal Code).
The Administrative Improbity Law defines a domestic public official as “anyone who performs, even if temporarily or without pay, by election, appointment, designation, hiring or any other type of vesting or bond, a mandate, an office, an employment, or a function” in any government entity or government-controlled entity, by any of the federative entities or branches of Brazil, as well as public foundations or state-owned or state-controlled companies (Section 2 of the Administrative Improbity Law).
Foreign public officials are defined in the Anti-Corruption Law as those “who, even if temporarily or without pay, hold a public position, employment or function in agencies, public entities, or diplomatic offices of a foreign country, as well as in corporate entities controlled, directly or indirectly, by a foreign government, or international public organisations” (Section 5, §3 of the Anti-Corruption Law).
The Criminal Code applies to any crime performed in Brazilian territory (Section 5), and to certain crimes performed outside of Brazil, including the crime of corruption of a foreign public official in connection with an international commercial transaction.
The Anti-Corruption Law applies both to domestic and foreign public officials with an extra-territorial reach, as it applies to infractions committed by Brazilian corporate entities against foreign governments, even when committed abroad (Section 28).
Bribery between private parties in a commercial/other setting
Brazilian law does not define, criminalise or establish particular criminal or civil sanctions relating to commercial or private bribery, although in certain specific circumstances the practice can constitute the crimes of larceny or unfair competition.
Larceny is defined in Section 171 of the Criminal Code as to “obtain, for oneself or for others, an unlawful advantage, to the detriment of another person, inducing or maintaining someone in error, by means of artifice, deception, or any other fraudulent means”.
Unfair competition is defined in Law No 9,279 of 14 May 1999 (Industrial Property Law) as follows: “A crime of unfair competition occurs when someone [...] gives or promises money or other benefit to an employee of a competitor, so that the employee, disregarding his duties, provides him with an advantage” (Section 195, item IX).
In the civil sphere, commercial or private bribery may be treated in a civil lawsuit (or employment lawsuit, as the case may be) as a wrongful act that can result in compensation of damages pursuant to Law No 10,406 of 10 January 2002 (Civil Code).
Section 332 of the Criminal Code defines the offence of influence peddling as “to request, demand, charge or obtain, for oneself or for a third party, advantage or promise of an advantage, with the purpose of influencing an action performed by a public official in the exercise of his or her duty”. The Criminal Code does not contain a specific definition of "advantage".
The Criminal Code, Administrative Improbity Law and Anti-Corruption Law do not contain crimes or violations specifically relating to accounting or bookkeeping. However, the Criminal Code provides that producing or using false documents and creating documents with misrepresentations can be a crime (sections 297, 298, 299 and 304).
In particular, the Criminal Code provides that the books of businesses are equivalent to public documents for criminal purposes (Section 297, §1), therefore making penalties for this type of conduct stricter. Offences relating to accounting or bookkeeping in Brazil can also be prosecuted as tax crimes pursuant to Law No 8,137 of 27 December 1990 (Tax and Economic Crimes Law). As a result, the offences require a taxation component, which may not be present in a corruption case.
The Anti-Corruption Decree establishes the maintenance of accurate and complete books and records as criteria to be used by Brazilian authorities to assess the quality and effectiveness of an anti-corruption compliance programme when enforcing the Anti-Corruption Law in administrative proceedings.
The Criminal Code contains offences related to the misappropriation of public funds by public officials. In particular, Section 315 of the Criminal Code defines it as an offence “to give public funds and income a different use than that provided by law”.
Section 316, §1 of the Criminal Code also defines it as a crime “to charge tax or social security contributions that one knows or ought to know undue […]”, which may be aggravated if the public official diverts, for their own benefit or the benefit of others, funds they have received improperly as a collection to public coffers (Section 316, §2).
The Administrative Improbity Law sets forth that an improbity violation occurs if a public official “receives any economic advantage to intermediate the release or application of public funds of any nature” (Section 9, IX).
Law No 12,813 of 16 May 2013 (Conflict of Interests Law) prohibits Federal Executive Branch officials from acting in situations in which a conflict of interests may arise, which may include disclosing or using privileged information for their benefit or for the benefit of a third party.
The Administrative Improbity Law defines it as an act of administrative improbity to “perform an action with the purpose of achieving a result prohibited by law or regulation or different than that provided in the rule of jurisdiction” (Section 11, I).
Section 312 of the Criminal Code defines the embezzlement of public funds by public officials as “to misappropriate public funds or any other public or private assets in one’s possession due to one's position, or to divert it, for one’s benefit or the benefit of others”.
The Administrative Improbity Law also sets forth that an improbity violation occurs if a public official “incorporates into his or her assets, in any way, assets, funds, or amounts belonging to entities of the public administration” (Section 9, XI).
The Criminal Code prohibits public officials from “violating the confidential nature of a proposal in a public bid or allowing a third party to have access to it” (Section 326).
Law No 8,666 of 21 June 1993 (Public Procurement Law) sets forth administrative and criminal sanctions for violations of the competitive nature of bids or fraud in public bids and administrative contracts.
The Administrative Improbity Law considers it an act of administrative improbity to “reveal a fact or circumstance of which one is aware due to his/her attributions and which should be confidential” (Section 11, III).
The Anti-Corruption Law classifies it as an act against the public administration to “thwart or defraud the competitiveness of the public tender by an adjustment, arrangement or any other means” (Section 5, IV, a).
The Criminal Code, the Administrative Improbity Law and the Anti-Corruption Law can apply to offences or violations that are committed indirectly. In addition to that, the Anti-Corruption Law provides that “strict liability shall apply to corporate entities, in the civil and administrative levels, for harmful acts set forth in the Law and performed in its interest or benefit” (Section 2), thereby creating liability for the offence of an intermediary.
The statute of limitations for the crime of bribery is 16 years (Section 109, item II of the Criminal Code). According to the Criminal Code, the years start to count from the date of the crime, which is whenever the crime is completed in all its aspects (Section 111, item I).
The statute of limitations for violations of the Administrative Improbity Law is:
five years counting from the end of the term of office of the implicated public official;
according to the statute of limitations for legal disciplinary measures, applicable to certain public officials; or
if the affected government entity renders accounts, five years counting from the final date of the rendering of accounts (Section 23, items I to III of the Administrative Improbity Law).
The statute of limitations for infractions of the Anti-Corruption Law is five years. These five years start to count from the date the public authority becomes aware of the violation, or in the case of a permanent or continued infraction, from the date the illegal activities have ceased (Section 25 of the Anti-Corruption Law).
On 8 August 2018, the Federal Supreme Court issued a binding precedent (Extraordinary Appeal No 852475) ruling that, in the case of wilful conduct, no statute of limitations applies to lawsuits for the recovery of damages caused to the Brazilian government in connection with acts of improbity (Section 37, §5 of the Constitution of the Republic of Brazil). In cases of negligence, however, the limitation periods mentioned above shall apply.
The Criminal Code applies to any crime performed in Brazilian territory (Section 5), and to certain crimes performed outside Brazil, including the crime of corruption of a foreign public official in connection with an international commercial transaction. The Administrative Improbity Law applies only in Brazil and with respect to Brazilian public officials and any person (entity or individual) that is found to have induced, participated, or became the beneficiary of an illegal act committed with the aid of public officials. The Anti-Corruption Law applies both to domestic and foreign public officials with an extra-territorial reach, as it applies to infractions committed by Brazilian corporate entities against foreign governments, even when committed abroad (Section 28).
Only individuals can be held liable for crimes in connection with bribery and corruption in Brazil.
In the civil sphere, corporate entities are generally liable for damages arising out of acts of employees and agents, during their professional activities or due to their work (Section 932, item III of the Civil Code), even without fault (Section 933 of the Civil Code). Under the Administrative Improbity Law, corporate entities may be held liable for any wilful misconduct or fault of officers and employees that results in a violation (Section 3).
The Anti-Corruption Law applies to corporate entities, including “business entities and partnerships, with a legal personality or not, independently of the form of organisation or corporate type, as well as to any foundations, associations of entities or individuals, or foreign companies, with headquarters, branches, or offices of representation in Brazil, organised legally or in fact, even temporarily” (Section 1, sole paragraph). Controlling and controlled companies, affiliates (coligadas) and consortia are jointly liable for fines and for payment of damages arising out of infractions provided in the Anti-Corruption Law (Section 4, §2), and adopt the doctrine based on strict liability – that is, liability irrespective of proof of the corporate entity’s wilful conduct or negligence as long as the act is performed by anyone in the corporate entity’s interest or benefit (Section 2).
Pursuant to the Brazilian constitution, “litigants, in judicial or administrative processes, as well as defendants in general are ensured of the adversary system and of full defence, with the means and resources inherent to it” (Section 5, item LV).
Apart from the lack of violation defence, criminal law defences are found in the Criminal Code, including state of necessity, self-defence, and fulfilment of a legal duty or exercise of a legal right (Section 23). There are also other traditional defence arguments not expressly addressed by the Criminal Code but widely used in practice regarding an individual’s culpability and regarding the substantive qualification of a crime. Duress and extortion are frequent defence arguments in anti-corruption and anti-bribery enforcement cases.
In the civil sphere, apart from the lack of infraction defence, there are no specific defences available in the Administrative Improbity Law and the Anti-Corruption Law, though it may be possible to use duress and extortion as a defence. Although the existence of an effective compliance programme can be used as a potential mitigation of penalties from the Anti-Corruption Law, there are no compliance defences available for corporate entities that would legally avoid the application of sanctions altogether (Section 7, item VIII).
The Brazilian concept of a de minimis defence is the principle of insignificance. When the crime is formally verified, but the conduct and its result do not substantially harm the institution, principle or legal value that the criminal provision was designed to protect, the principle of insignificance may apply. However, Brazilian precedents (non-binding) show that courts refuse to dismiss criminal cases of bribery, embezzlement of public assets, and other crimes against the government based on the grounds of insignificance.
There are no safe harbour or amnesty programmes based on self-reporting or adequate compliance procedures/remediation efforts in Brazil. Neither the fact that a corporate entity has an adequate compliance programme, nor the fact that it self-reports, will exempt the corporate entity from liability.
Nonetheless, Brazilian law recognises co-operation mechanisms such as plea-bargain agreements for individuals and leniency agreements for corporate entities (similar to the DPAs and NPAs used by US authorities), which may result in reduced penalties in exchange for co-operation with enforcement authorities and other requirements.
Plea-Bargain Agreements
Individuals may enter into plea-bargain agreements pursuant to Law No 12,850 of 2 August 2013 (Criminal Organisations Law). Due to the language adopted by the Criminal Organisations Law, Brazilians refer to this type of settlement as a "collaboration agreement".
For the purposes of obtaining a plea-bargain agreement in accordance with the Criminal Organisations Law, the individual must collaborate wilfully (freely) and effectively with the criminal investigation and lawsuit, leading to one or more of the consequences below (Section 4):
identification of the other co-authors and participants of the criminal organisation and criminal offences committed;
identification of the hierarchical structure and division of tasks of the criminal organisation;
the prevention of criminal offences arising out of the activities of the criminal organisation;
the total or partial recovery of the product of crime related to the infractions committed by the criminal organisation; and
the location of potential victims, with their physical integrity preserved.
The individual entering into a plea-bargain agreement must co-operate during hearings and must waive their constitutional right to silence. Therefore, the individual will be under a duty to tell the truth (Section 4, §14 of the Criminal Organisations Law).
The plea-bargain agreement can result in the following benefits to the individual:
forgiveness of the crime;
reduction by up to two thirds of the time of imprisonment, or substitution of the penalty of imprisonment with penalties of restriction of rights;
suspension of the charges for up to one year until the bargain obligations are met;
reduction of charges if the individual is not the leader of the criminal organisation and if they are the first one to enter into an agreement with the authorities; or
improvement of imprisonment regime, from closed imprisonment to semi-open imprisonment or open imprisonment (Section 4, caput and §§2–6 of the Criminal Organisations Law).
A plea-bargain agreement requires court approval and may be negotiated jointly or separately by the police or by public prosecutors.
Corporate entities may enter into leniency agreements pursuant to the Anti-Corruption Law. The following prerequisites apply if a company wishes to enter into a leniency agreement with a government entity (Section 16, §1):
the corporate entity must be the first to manifest its interest in co-operating with the investigation of the infraction;
the corporate entity must completely cease its involvement in the investigated infractions, from the date it proposes to enter into the leniency agreement; and
the corporate entity must admit its participation in the unlawful act and fully co-operate with the investigations and the administrative proceeding, attending at its own expense and whenever required, all procedural acts until its final closure.
Furthermore, the leniency agreement must be capable of leading to (Section 16, caput and items I and II):
the identification of other participants in the violation, if applicable;
the swift gathering of information and documents that provide evidence on the violation under investigation; and
the co-operation of the company with the investigation.
The leniency agreement under the Anti-Corruption Law does not require court approval. However, if the leniency agreement also generates effects in the criminal sphere and/or combines effects from the Criminal Organisations Law and/or other laws, it may require approval from a court or other regulatory agencies (for example, the Brazilian Securities and Exchange Commission).
In practice, prosecutors have been combining the provisions from the Anti-Corruption Law, the Criminal Organisations Law and many other laws to craft settlements that are negotiated both with individuals and with corporations, at the same time. Although the Administrative Improbity Law contains a provision that excludes settlements for its violations (Section 17, §1), Brazilian authorities have interpreted this provision as having been superseded by recent provisions in other laws, and recent agreements have been reached for violations under the Administrative Improbity Law.
Bribery Pursuant to the Criminal Code
The penalties on conviction for bribery, including active corruption and passive corruption, are closed imprisonment of between two and 12 years and fines (sections 317 and 333).
The penalties on conviction for bribery in an international commercial transaction are closed imprisonment of between one and eight years and fines (Section 337-B).
If the public official (domestic or foreign) does perform, omit or delay any official act, disregarding a duty, the judge may aggravate the sentence of the agent and of the public official by one third (Section 317, §1; Section 333, sole paragraph; and Section 337-B, sole paragraph).
If the public official performs or does not perform or delays an official act, disregarding a duty, at the request or influence of someone else, the penalty for the public official is semi-open imprisonment of between three months and one year, or a fine (Section 317, §2).
Pursuant to the Criminal Code, the amount of the fine is calculated in days-fine, and will be at least ten and at most 360 days-fine. The amount of the day-fine is fixed by the judge who rules in the case and may neither be less than one-thirtieth of the highest monthly minimum wage in force at the time of the fact, nor more than five times that wage.
Infractions Pursuant to the Administrative Improbity Law
The Administrative Improbity Law establishes sanctions on public officials and, as applicable, on any person (entity or individual) that is found to have induced, participated, or become the beneficiary of an illegal act committed with the aid of public officials, in cases of unlawful enrichment, violations of the principles applicable to the public function in the exercise of their position, job or function in the government, and damages to government assets.
The consequences of becoming liable for infractions pursuant to the Administrative Improbity Law may include civil compensation of damages and the following sanctions (Section 12):
prohibition from entering into contracts with the government or to receive tax or financial incentives, which may be extended to companies in which the implicated entity owns a majority stake:
unlawful enrichment of public official – up to ten years;
damages to the government – up to five years; or
violation of public duties or principles – up to three years; and
civil fines:
unlawful enrichment of public official – three times the value of the illegally afforded benefit;
damages to the government – twice the amount of damages suffered; or
violation of public duties or principles – up to 100 times the compensation of the public official involved.
Infractions Pursuant to the Anti-Corruption Law
The following sanctions are set out in the Anti-Corruption Law:
Administrative fines ranging from 0.1% to 20% of the entity’s gross revenue in the year prior to the initiation of the administrative proceeding, which should never be less than the advantage amount obtained through the unlawful act. If it is not possible to estimate the gross revenue, such fine shall be fixed in an amount between BRL6,000 and BRL60 million.
The Anti-Corruption Law also provides an administrative reputational sanction consisting of the obligatory extraordinary publication of the condemnatory decision, at the implicated entity’s own expense, in all of the following:
a widely circulated newspaper within the area where the infraction was committed and where the legal entity does business, or in a national newspaper;
a public notice in the entity’s place of business, where it can be seen by the public, for a minimum of 30 days; and
a highlighted position on the website of the entity, for 30 days.
Court-enforced sanctions
Public prosecutors, the federal union, the states, the federal district and the municipalities, through their respective public attorneys’ office or equivalent legal representation bodies, may file a lawsuit seeking court-enforced sanctions and damages.
Court-enforced sanctions are the following:
seizure of assets, rights, or value obtained from the illegal act;
partial suspension or prohibition of activities;
compulsory dissolution of the implicated legal entity; and
impairment of receipt of donations, grants, subsidies or funding from public entities and financial institutions, for up to five years (Section 19 of the Anti-Corruption Law).
The Criminal Code provides that the judge must consider a wide array of circumstances to apply a base penalty, including the records, the social conduct, the personality of the individual, their motives, the circumstances and consequences of the crime, and the behaviour of any victim (Section 59 et seq).
After establishing the base penalty, the judge must consider a series of other aggravating and mitigating circumstances, and lastly, the causes of a lower and higher sentencing in accordance with the law (Section 68).
When more than one lower and higher sentencing applies, the judge may limit the causes to only one lower and one higher sentencing modifier, always considering the higher modifier (Section 68, sole paragraph).
Administrative Improbity Law
Pursuant to the Administrative Improbity Law, the judge must take into the account the amount of damages caused, as well as the amount of the asset increase obtained by the agent (Section 12, sole paragraph).
The Federal Public Prosecutor’s Office (MPF) issued:
in 2015, the MPF Calculation Manual on Fighting Corruption, with recommendations to federal prosecutors on how to calculate damages and fines when filing lawsuits to enforce the Administrative Improbity Law; and
in 2019, the MPF Manual and Guidance to Enforce the Sanctions Applied by the Lawsuits related to Improbity, which seeks to improve the effectiveness of the enforcement of the judicial orders.
According to the Anti-Corruption Law, the sanctions shall be assessed considering the following guidelines (Section 7):
the seriousness of the infraction;
the advantage obtained or desired by the wrongdoer;
the consummation of the infraction;
the degree of harm caused or the potential harm;
the negative effect caused by the infraction;
the economic situation of the wrongdoer;
the co-operation of the corporate entity with the investigations;
the existence of internal mechanisms and procedures for integrity, auditing and encouragement of reporting of irregularities and the effective application of codes of ethics and conduct within the corporate entity; and
the value of contracts held by the corporate entity with the affected public entity or agency.
According to Federal Regulations, at the federal level, fines ranging from 0.1% to 20% of gross revenues of the fiscal year prior to the initiation of administrative proceedings, excluding taxes, will be calculated considering the following guidelines:
if the infractions continued over a period of time – add 1% to 2.5%;
if management had knowledge of or tolerated the infraction – add 1% to 2.5%;
if the infraction resulted in the suspension of civil works or of public services – add 1% to 4%;
if, in the fiscal year before the wrongdoing, the company’s general solvency index and general liquidity was superior to one, and it made net profits – add 1%;
if the company was found liable of an infraction covered by the Anti-Corruption Law in the last five years – add 5%;
if the value of the contract was:
greater than BRL1.5 million – add 1%;
greater than BRL10 million – add 2%;
greater than BRL50 million – add 3%;
greater than BRL250 million – add 4%; and
greater than BRL1 billion – add 5%.
After obtaining the above-mentioned sum, deduct the following percentages:
if the infraction was not concluded – deduct 1%;
if the legal entity compensated any of the damages it caused – deduct 1.5%;
if the legal entity collaborated with the investigations, regardless of entering into a leniency agreement – deduct 1% to 1.5%;
if the legal entity spontaneously disclosed the infraction before administrative proceedings were initiated – deduct 2%; and
if the company is able to prove it applies an anti-corruption compliance programme in compliance with Brazilian regulations – deduct 1% to 4%.
In 2016, the CGU issued the Manual on the Administrative Liability of Legal Entities to provide details on the administrative proceedings to enforce the Anti-Corruption Law. The manual includes an overview of the legal principles applicable to administrative proceedings, details on the phases and procedural rules applicable to the enforcement of the Anti-Corruption Law, and the calculation of applicable penalties. In 2018, the CGU issued the Manual for Evaluation of Compliance Programs in Sanctioning Administrative Procedures, which gives guidance to CGU public officials regarding the evaluation of a compliance programme when applying penalties.
Although the Anti-Corruption Law does not include an obligation for companies to implement a compliance programme, it does grant credit to companies with effective compliance programmes that are subject to enforcement actions. The criteria for the evaluation of compliance programmes by enforcement authorities under the Anti-Corruption Law are set forth in the Anti-Corruption Decree and are generally consistent with international best practices.
Section 42 of the Anti-Corruption Decree provides that enforcement authorities must evaluate compliance programmes in accordance with the following criteria:
commitment of senior management to the programme;
standards of conduct, code of ethics, integrity policies and procedures applicable to all employees and senior management, and extended, if necessary, to third parties;
periodic training on the integrity programme;
periodic risk analysis;
accounting records that accurately reflect all transactions;
internal controls that ensure the timely preparation and reliability of financial statements;
specific procedures to prevent fraud and illicit acts in public procurement, execution of public contracts or interactions with the public sector, even when intermediated by third parties;
independence, structure and authority of the internal body responsible for enforcing the compliance programme;
channels for reporting irregularities that are available to employees and third parties, as well as mechanisms aimed at protecting whistle-blowers;
disciplinary measures in cases of violations of the compliance programme;
procedures that ensure prompt interruption of irregularities or violations and timely remediation of any violations;
procedures approved for procurement and, where appropriate, supervision of third parties such as suppliers, service providers, etc;
due diligence in mergers and acquisitions;
continuous monitoring of the compliance programme; and
transparency as to donations made to political candidates and parties. (This parameter is no longer applicable, as current Brazilian law does not allow companies to make political donations.)
Certain Brazilian states (for example, the State of Rio de Janeiro and the Federal District) have enacted state laws requiring that companies implement an anti-corruption compliance programme to enter into agreements with state government entities. Likewise, companies in certain regulated sectors, such as financial institutions and insurance and electricity distribution companies, are also required to implement compliance mechanisms and controls.
Brazilian laws do not impose mandatory disclosure requirements, either for violations of anti-bribery and anti-corruption provisions of which individuals and/or companies become aware, or for potential wrongdoings in the award and/or performance of government contracts in which individuals and/or companies are involved. However, it is increasingly common for government entities and state-owned companies to include specific clauses in agreements setting forth obligations for contractors to report any suspected wrongdoings. Certain disclosure obligations may apply to publicly-traded companies under the jurisdiction of the Brazilian Securities Commission.
The Anti-Corruption Law grants credit in the form of reduced fines for companies that self-disclose violations. The Anti-Corruption Law includes a leniency programme whereby companies can obtain a reduction of up to two thirds of the amount of the applicable fine, and be exempt from debarment and other penalties that restrict future business with the government (such as the prohibition to receive subsidies or credit for government-owned entities).
Brazilian Law No 13,608 of 10 January 2018 established a government-managed whistle-blowing hotline for citizens to report crimes and administrative violations. The law sets forth that whistle-blowers who use this hotline will have their identity protected, but it does not contain specific protections. However, further regulation on Brazilian whistle-blowing mechanisms is expected.
Further to that, it is worth noting that Brazilian Law No 9,807 of 13 July 1999 (Witness and Victim Protection Law) establishes standard protections for victims and witnesses of crimes, as well as for defendants who voluntarily and effectively collaborate with investigations and proceedings.
Brazilian Law No 13,608 of 10 January 2018 allowed federal, state and local level government entities to create reward mechanisms for whistle-blowers who assist with the prevention, repression or the identification of crimes and administrative infractions, including cash payments. Note that further regulation on Brazilian whistle-blowing mechanisms is expected.
At this stage, the main provisions regarding whistle-blowing may be found in Brazilian Law No 13,608 of 10 January 2018, in corporate policies and sparse government rules regarding hotlines approved under the scope of certain regulatory or enforcement agencies.
Brazil has civil, criminal and administrative enforcement of anti-bribery and anti-corruption laws. Companies are subject to civil and administrative liability. Individuals are subject to civil and criminal liability.
Federal and State Public Prosecution Offices
The Brazilian constitution vests the MPF and state Public Prosecution Offices (PP) with the power to bring criminal charges, and to pursue criminal and civil cases in court. In addition to the police, public prosecutors of the MPF and PP may conduct criminal investigations, but often do not investigate unless purported offences involve public assets, public officials or the public interest. The MPF and PP are also in charge of supervising police work and police investigations. Among other activities, the MPF and PP may bring lawsuits to court based on the Administrative Improbity Law, including requests for damages and for the application of administrative and civil sanctions.
Federal and State Police Departments
Federal and state police departments are responsible for investigating crimes and enforcing the law in the criminal sphere. The police are responsible for conducting criminal investigations and gathering evidence that will later be used by the MPF and PP in bringing criminal charges and/or public civil actions. The state police departments are also known as the “civil police”, as opposed to the military police.
The CGU
The CGU is the agency of the federal government in charge of assisting the Brazilian president in matters within the federal executive branch that are related to defending public assets and enhancing management transparency through internal control activities and audits, corrective and disciplinary measures, corruption prevention and law enforcement, and co-ordinating ombudsman activities. Among other activities, the CGU is responsible for the enforcement of the Anti-Corruption Law at the administrative level, regarding violations committed against the federal executive branch of the Brazilian government and against foreign governments.
Higher Authority of Public Agencies or Entities
Brazil has adopted a decentralised structure for the enforcement of the Anti-Corruption Law. At the administrative level, the enforcement of this law is incumbent upon the highest authority of each agency or entity of the executive, legislative and judicial branches. Such highest authority acts on their own initiative or upon third-party requests to initiate administrative proceedings against violators, with due regard to due process of the law. At the civil level, each public agency or entity may initiate legal proceedings in court through their public attorneys or equivalent legal representative.
Enforcement bodies are generally empowered to request documents or meetings, perform audits or inspections, initiate investigative or administrative proceedings and file lawsuits, as required.
Without a court order, enforcement bodies generally cannot authorise dawn raids, perform covert surveillance, intercept telephone or other telematic communications or correspondence, and/or lift bank or tax secrecy.
Enforcement bodies are empowered to require documentation and information within the scope of their jurisdiction. However, if an individual or corporate entity does not co-operate, enforcement bodies are generally required to petition a judge for a court order to compel them to provide documentation and information. In some instances, certain regulatory agencies may impose fines for the failure to comply with document and information requests.
In general, enforcement bodies must prepare and deliver a written official notice with the details of the investigation or administrative proceeding, the scope of the information or documentation request and the signature of the competent public official. In some instances, certain regulatory agencies may resort to electronic communication channels that are specific and official to a particular industry or business activity.
The MPF and PP have significant discretion for mitigation in enforcing the law and negotiating settlements, as long as their negotiations and settlements do not violate the law or the Brazilian constitution.
The police are generally required to investigate suspected crimes with a minimum amount of credibility and do not have discretion to mitigate any applicable penalties, except in the context of a plea-bargain agreement, with the authorisation of a judge.
The CGU and the higher authority of each public agency have discretion for mitigation in enforcing their powers within the confines of the Anti-Corruption Law and its leniency provisions.
The jurisdictional reach of Brazilian enforcement bodies is generally limited to the territory of Brazil. However, under the Anti-Corruption Law, Brazilian authorities can investigate the conduct of Brazilian entities outside of Brazil that are acting in violation of its terms.
In the last few years, Brazil has seen several landmark investigations and decisions involving bribery and corruption, and a dramatic rise in enforcement activity. As a result, the awareness of corruption and bribery in Brazil has increased. Between 2016 and 2018, Brazil dropped from 79th place (out of 176 countries) to 105th place (out of 180 countries) in the Global Corruption Perception Index, published annually by Transparency International, which analyses countries and territories according to the perceived levels of public sector corruption.
The largest and most significant of the recent high-profile corruption investigations in Brazil is the "Car Wash Probe". Originally launched by the Federal Public Prosecutor’s Office and the Federal Police in March 2014, and initially focused on investigating a money-laundering scheme, the Car Wash Probe brought to light allegations of cartels and bribery in connection with oil and gas and construction contracts with Petrobras (Petróleo Brasileiro SA), the Brazilian government-controlled oil company. Since then, the authorities have launched 67 phases of the Car Wash Probe, and several related probes, reaching beyond the oil and gas sector into healthcare, toll-road concessions, meat-packing, marketing and advertising, and several others.
According to information provided by the MPF, up to 5 July 2019, the Car Wash Probe enforcement task force has:
initiated 2,476 investigation procedures;
carried out 1,237 search and seizure orders, 227 coercive hearings, 161 preventative arrests and 155 temporary arrests;
either requested or received a request for 754 co-operation agreements with international authorities;
executed 184 plea-bargain agreements and 11 leniency agreements;
brought 99 criminal charges against 438 different individuals; and
obtained 244 convictions against 159 individuals, for a total conviction period of approximately 2,249 years.
The total indemnification amount requested by enforcement authorities, including fines, is approximately BRL40.3 billion.
On 10 February 2017, the OECD Working Group on Bribery issued a report with the summary and conclusions of the progress made by Brazil in implementing the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and the 2009 Recommendation of the Council for Further Combating Bribery of Foreign Public Officials in International Business Transactions.
The report outlined Brazil's efforts to implement the recommendations it received during its Phase 3 evaluation in October 2014. According to the report, of the OECD Working Group’s 39 recommendations to Brazil, 18 have been fully implemented, 13 partially implemented and eight not implemented. The report highlighted the positive progress made by Brazil in implementing such recommendations and stated that the country has been very active in raising private-sector and civil-society awareness of foreign bribery.
In November 2019, the OECD Working Group on Bribery issued a statement expressing concern that the enforcement capacity in Brazil to investigate and prosecute foreign bribery has been threatened by measures taken by the Brazilian legislative and judicial branches, which, in the OECD’s opinion, will restrict the ability of Brazilian authorities to identify wrongdoings. The next evaluation of Brazil’s implementation of the OECD Anti-Bribery Convention is slated to take place in December 2022.
There are several bills of law under discussion in the Brazilian Congress. However, none of the proposed changes to the applicable legislation or the enforcement bodies are expected to be adopted in the foreseeable future.
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