Brazilian criminal procedure law establishes that the investigation of crimes committed within or by companies may be carried out by federal and state civil police forces. The Public Prosecutor's Office (at the state and the federal level) may also conduct its own investigation. In both situations, the judgment of the case still rests with the courts. Police officers, public prosecutors and members of the court have discretionary powers to conduct their cases free from external influences, as far as the conduct of these authorities respects the guarantees of due process and the right to privacy.
In the context of administrative offences, companies and their employees and executives can also be investigated by other bodies, such as parliamentary investigating committees (at the local, state and federal levels), which have subpoena powers, and by audit tribunals (at the local, state and federal levels), which are empowered to investigate wrongdoing within the public administration.
Concerning the practices of corruption against the public administration, Decree 8,420/2015, which regulates the Brazilian Anti-corruption Law (Law 12.846/2013), provides that the investigation of civil and administrative liability rests with the highest authority that the aggrieved entity has recourse to. To assess the responsibility of such practices, the entity must start a preliminary investigation and, based on the evidences gathered, the authority may determine the commencement of the administrative procedure wherewith it will be possible to establish the sanctions by the investigated wrongdoing. A finding of guilt is always subject to judicial review.
Private agencies and investigators, even though authorised to operate in Brazil, do not have special powers of investigation (e.g., to force people to give testimony or produce evidence), but they may collect evidence to the extent that this does not violate any rights of the targeted individuals, such as intimacy, freedom of movement and property.
Recently, the Brazilian parliament enacted Law 13,432/17, which provides the legal basis for the exercise of private investigators' powers, especially concerning how they may influence the gathering of evidences by public authorities. In this sense, there can be cooperation, by which evidence discovered through private efforts can be submitted to the authorities, as long as the evidence was obtained within the confines of the law. By means of this law, companies and individuals are legally allowed to cooperate with the authorities by providing evidence gathered by an investigator in an internal investigation.
As a rule, private companies are not required to report irregularities committed by their employees to the authorities. However, the Money Laundering Law (Law 9,613/98) lists the individuals and legal entities engaged in business activity that are required to communicate to the Council for Control of Financial Activity, within 24 hours, all transactions suspected of involving money laundering (Article 11.II.b). In general, the parties with this obligation are individuals and legal entities that - permanently or occasionally, principally or secondarily - engage in activities connected to the following markets: finance; real estate; luxury goods; sports or arts; transport of valuables; and livestock breeding.
Under the Money Laundering Law, no benefit is granted to those who comply with their reporting duties. Still, the public authority may impose more severe penalties on those who fail in the duties under Article 12.
For those accused of money laundering, it is possible to obtain leniency by spontaneously collaborating with the authorities, providing information on the crime, identifying the other perpetrators, etc. As a consequence of the collaboration, a shorter jail term or a sentence to probation may be imposed (or less severe conditions, e.g., a minimum security prison or permission to work during the daytime).
Other laws besides that on money laundering allow leniency, called ‘rewarded denunciation'. Besides this, in Brazil any individual accused of engaging in organised crimes can collaborate with the authorities in return for a lighter sentence or other benefits (Articles 4-7 of Law 12,850/13).
In the area of antitrust law, cartel formation is both an administrative and criminal offence. Although there is no obligation to report such behaviour by individuals or companies, both can be eligible for benefits from cooperation, in the criminal sphere (individuals only) or administrative sphere, under the leniency programme established in Article 86 of Law 12,529/11. That programme is made operational by signing a consent decree between the member of the cartel or individuals involved in its operation and the Administrative Council for Economic Defence (CADE), the antitrust agency, in return for cooperation in identifying and producing evidence against the other participants.
With respect to the criminal sphere, Article 87 of Law 12,529/11 establishes that the consent decree prevents pressing charges against the individual signatories, but suspends the running of the time-bar of crimes against the economic system (Article 4 of Law 12,529/11) and related crimes, such as fraud in public tenders (Article 90 of Law 8,666/93) and criminal conspiracy (Article 288 of the Penal Code). Upon compliance with the obligations assumed in the consent decree, the competent criminal judge will declare that the person is not eligible for punishment (Article 87 of Law 12,529/11).
Such benefits are granted by the authorities responsible for the establishment of the collaboration agreement and the leniency programme and are subject to the authorities' subject valuation. The lack of object parameters is often criticised by legal entities.
ii Internal investigations
Companies that receive denunciations or suspect irregular acts are being committed by their employees may conduct their own internal investigations to identify such behaviour and penalise those found responsible. They can also engage external advisers, particular detectives or audit firms to conduct such investigations. As a rule, the investigation should involve as few people as possible, to protect the person making the accusation, the accused individual or individuals and to preserve the investigation itself. For this reason, all those involved are typically asked to sign a confidentiality undertaking.
Audit reports, spreadsheets, institutional e-mails and transcripts of interviews are examples of evidence that can be obtained during the investigation. During the proceedings, the suspect is entitled to retain a lawyer to accompany him or her to interviews, and while there is no legal requirement, the lawyer can be allowed to see internal documents regarding the investigation related to the client.
Generally, these kind of investigations are conducted by external counsels, or by internal counsels assisted by external professionals, so that the impartiality of proceedings is unaffected. At the end of the investigation, a report should be prepared describing the case and the findings regarding the alleged irregularities and respective authors, as well as proposing solutions and recommendations to the compliance area, alongside any penalties applied. Despite the fact it is not mandatory to submit the content of the report to public authorities, courts may require its presentation and, unless the delivery of the information presents a risk to the company, the order may be fulfilled.
Finally, attorney-client privilege still applies on investigations conducted by companies, due to its broad scope established in the Brazilian Bar Association Statute. However, since this is a disposable right, this secrecy can be waived by the client, for example, if the accused person wants to benefit from collaboration with the company. In situations like this, it is recommended that the individual and the company be represented by separate counsel to avoid future allegations of coercion or abuse of rights by both sides.
A whistle-blower, by definition, is an individual who denounces behaviour that is perceived to be illegal or improper within the company or public agency for which he or she works, without being involved in the allegedly criminal conduct.
Despite the fact that the Decree No. 8,420/2014 stipulates the creation of internal channels in companies to enable the denunciation of irregularities, for which benefits may be used as a reward, the Brazilian legal system does not provide any specific mechanism to protect whistle-blowers. On the other hand, there are also no provisions on administrative penalties or punishments for those that make denunciations in bad faith or that are knowingly false. Also, there are no specific rules on anonymous denunciation of irregularities.
Furthermore, if a whistle-blower feels he or she has suffered repercussions by using the denunciation channel, such as dismissal or mental harassment, he or she can file a labour suit against the company.
i Corporate liability
Companies can be held civilly liable for the acts of their employees in three situations, two general and one specific:
a by reason of culpa in eligendo (the poor choice of those entrusted with carrying out certain obligations);
b by reason of culpa in vigilando (insufficient oversight of carrying out certain obligations); and
c when an employee commits an act injurious to the public administration, in Brazil or abroad.
The first and second situations of corporate responsibility are provided under Article 932, Section 3, of the Civil Code and Súmula 341 from the Federal Supreme Court. The third situation, by its turn, a new form of corporate responsibility and was first established by the Anti-corruption Law (Law 12,846/13), which contains provisions on strict civil and administrative liability for acts that are injurious to the national or foreign public administration.
The civil and administrative corporate liability under such provision does not preclude the personal liability of the individuals involved in such conduct.
Criminally, only companies can be held liable for the commitment of environmental crimes, regardless of the individual responsibility of their agents. Article 3 of the Environmental Crimes Law (Law 9,605/98) establishes that companies shall be held criminally liable in cases of environmental infractions committed ‘by decision of their legal or contractual representative, or collegiate body, in the interest or benefit of the entity.'
Finally, there is no legal impediment for the company and employees to be represented by the same lawyer, in administrative or criminal proceedings. This will depend on the situation, namely if there is the possibility of a conflict of interest.
The possible penalties will depend first of all on the category of culpability, among those defined above. For situations of culpa in vigilando or culpa in eligendo, the company will be liable in proportion to the loss caused.
In relation to practices injurious to a national or foreign governmental entity, according to Article 19 of the Anti-corruption Law, the company may be subject to the following penalties:
a seizure or forfeiture of money, rights or other assets gained directly or indirectly from the infraction, with reservation made for the rights of injured parties or third parties that acted in good faith;
b partial suspension or interdiction of activities;
c prohibition from receiving incentives, subsidies, donations or loans from governmental entities or official financial institutions, for between one and five years; or
d compulsory dissolution, when the company is found to have habitually facilitated or engaged in illegal acts or was incorporated to conceal illicit interests or the identity of the beneficial owners.
According to Articles 21-24 of Law 9,605/98, the penalties applicable to companies for environmental crimes are:
b partial or total suspension of activity;
c temporary interdiction of an establishment, project or activity;
d prohibition from contracting with governmental entities or obtaining subsidies or donations from them;
e payment for environmental programmes of projects;
f reclamation of degraded areas;
g maintenance of public spaces;
h contributions to public environmental or cultural entities; or
i forced liquidation, with the assets realised being transferred to the National Penitentiary Fund.
iii Compliance programmes
The Environmental Crimes Law does not envisage any softening of penalties for companies that have compliance or integrity programmes. Rather, it establishes that the penalty must be set in light of the gravity of the infraction, its motives and the consequences for public health and the environment, as well as the antecedents regarding compliance with environmental laws or regulations, and the economic situation of the company.
The situation is different regarding civil and administrative liability for acts injurious to national or foreign governmental entities. The Anti-corruption Law specifies that in applying penalties, the parameter of the sanction must be established by considering the existence of internal mechanisms and procedures for integrity, auditing and incentive to denunciation of irregularities and effective application of codes of ethics and conduct within the company.
The parameters for evaluating the compliance programme are listed under Article 42 of Decree 8,420/15. Such provisions comprise the existence of periodic employee training concerning the scope of the company's integrity programmes, the existence of independent structures for the application of the integrity programme, the use of disciplinary measures in case of violation of the programme's provisions and also the transparency of the donations made by the companies to political parties, among others. These provisions are used as a guide for organisations when creating or reviewing compliance programmes.
Therefore, the existence of compliance programmes must be taken into consideration when imposing administrative or civil penalties for acts deemed injurious to the public administration, by express provision of the Anti-corruption Law. In the environmental sphere, there is no such provision, but this does not preclude consideration in this respect by the judge when imposing punishment.
iv Prosecution of individuals
Besides the prosecution of individuals for administrative, civil or criminal liability as discussed above, the company may dismiss the employee from their job, at their discretion, in case the public authorities seek to hold the individual liable or in case of an existing investigation into that person.
On the other hand, the company can, if there is no conflict of interest, help to defend the employee, by presenting documents, depositions, etc. Indeed, it is common for companies to pay the legal costs of the employee's defence, depending on whether there is a conflict of interest.
i Extraterritorial jurisdiction
Brazil's Antitrust Law (Law 12,259/11) applies to the conduct of individuals and companies outside the country in cases when the practices took place wholly or partially inside the national territory; or the consequence of such practices produces or might produce effects in Brazil.
Concerning the second situation, the possibility of extraterritorial application of Brazilian law requires that the potential injury caused by the conduct be real and effective, not just hypothetical, or there will be no configuration of a crime.
Likewise, the Anti-corruption Law allows the application of civil and administrative penalties to Brazilian individuals or companies that commit crimes against foreign governmental entities, even if committed abroad.
In the criminal sphere, the rule in Brazil, as in many other countries, is of territoriality, by which criminal laws only apply to acts committed in the country or:
a for crimes committed against the life or freedom of the President;
b for crimes committed against the property of the public entities, the state of Brazil, the federated states and the municipalities;
c crimes committed against the public administration; and
d for crimes of genocide when the criminal is Brazilian or resident in Brazil, and also for crimes that Brazil is obligated to repress due to international treaties and conventions.
However, the application to companies is unclear, because the extraterritoriality rule was established at a time when the liability of companies for corrupt practices was not set forth in the legal system.
ii International cooperation
The Brazilian government can cooperate with application of the law of other countries by means of passive international legal cooperation, which consists of the practice of national public acts that are instrumental to the functioning of foreign jurisdiction. This cooperation exists in three modalities: direct (direct and immediate contact between the authorities of the two countries); indirect (through an intermediary for processing of requests); and direct assistance (postulation, through an intermediary, of a national decision in benefit of the requesting state, in substitution of it).
The countries that cooperate with each other generally have treaties regarding these matters. However, the absence of such a bilateral accord does not preclude cooperation of the Brazilian government with foreign governments. In these cases, the solicitation must be sent to the Superior Tribunal of Justice via letters rogatory, and if the matter may not be decided there, it will be sent to the Ministry of Justice for the necessary steps to provide direct assistance.
Extradition is common in Brazil, and is regulated by the Foreigner Statute (Law 6,815/80), Decree 86,715/81, and Article 22, XV, of the Federal Constitution. For extradition to be granted, it is necessary for certain conditions to be fulfilled, among them: (1) that the act be considered a crime in Brazil and in the requesting state; (2) that the prospective person to be extradited is a foreigner; and (3) the existence of a treaty or convention signed with Brazil, or if none exists, a promise of reciprocity by the foreign government.
The Federal Supreme Court has original jurisdiction over extradition requests, according to Article 102.I.g of the Federal Constitution, which is why its final decision is not subject to appeal.
iii Local law considerations
As stated previously, Brazil adopts the principle of territoriality as a rule for application of criminal law, both substantive and procedural, although there are exceptional situations where local law can be applied to crimes committed by Brazilians abroad. Therefore, if the Brazilian justice system has competence to judge a certain crime even though it was committed abroad, the procedural rules applied will be those of the Brazilian Criminal Procedure Code.
Brazilian higher courts have a consolidated approach concerning the existence of lis alibi pendens investigations in the sense that the closure of investigations being held by Brazilian public authorities may not occur in ordinary instances, provided that the admissibility exam of a foreign sentence depends on the analysis of the Superior Justice Tribunal. By determining the closure of the investigation, the ordinary judge would be anticipating the analysis of a higher court.
Likewise, if another state is competent to judge a crime committed by a Brazilian national, its own procedural rules will apply, even if they are in conflict with Brazilian guarantees. On this point, international treaties and conventions on human rights come to the fore, which establish protection and guarantee the rights of individuals facing prosecution in another signatory state.
Hence, for example, personal and banking data are protected by secrecy and may only be disclosed by court order, pursuant to the constitutional principle of intimacy and private life (Article 5, X, the Constitution). If any such information is obtained illegally, it will not be admissible in court.
V YEAR IN REVIEW
Two topics in particular are current in Brazil:
a the new law regulating the practice of the private detective;
b the signature of the collaboration agreement made executives from Odebrecht in the context of ‘Operation Car Wash'.
The first, Law 13,432/17, regulates the exercise of the profession of private detective. In this sense, the law lists the necessary elements for a contract of service provision and establishes the rights and duties of this professional. The law lists the impediments that the profession is subject to.
The second consists of the biggest collaboration agreement made by public authorities in Brazil and mainly includes the relationship established by executives of the Odebrecht and politicians in an irregular donations to political campaigns scheme as a counterpart for aiding the company in the bidding process.
The collaboration agreement has provided evidence for the commencement of at least 200 investigations countrywide.
VI CONCLUSIONS AND OUTLOOK
Based on the above, the following conclusions may be drawn.
Private investigation in Brazil, although considered legal, does not have any specific regulations, which limits the evidentiary value of any information discovered, and, hence, the possible collaboration of companies with the competent authorities.
Since the Anti-corruption Law is recent, the applicability and materialisation of the compliance programmes to which it refers are not clear, especially for small and mid-sized companies, which are more common in Brazil.
In conclusion, in line with the international trend, there is currently a two-pronged movement in Brazil, on the one hand for the law to demand more from companies in fighting corruption, transferring investigative obligations to them, and on the other for companies to assume a more active role in this respect, for the sake of transparency and good corporate citizenship, which are increasingly valued by the market.
1 João Daniel Rassi is a partner and Gauthama C C Fornaciari de Paula is a senior associate at Siqueira Castro Advogados.
2 Mostly, the competence of the federal justice is provided under Article 190 of the Brazilian Federal Constitution.
3 Federal Supreme Court (STF), RE 593.727.
4 Article 4 of Decree 8,420/2015.
5 Article 5 of Law 13,432/2017.
6 The situation is different in the public sector, where the duty to report suspected criminal behaviour applies to federal civil servants, as per Law 8,112/90.
7 The law covers crimes of money laundering, concealment of assets and use of the financial system for commission of crimes, and created the Council for Control of Financial Activities, among other things.
8 It is possible for the parties who fail to inform the suspect transactions to face charges for complicity in money laundering, although the theme of criminal liability of compliance officers for omission is still polemical in Brazil.
9 The list, which is comprehensive, can be found in Article 9 of Law 9,613/98.
10 Among the penalties established in the law are: (1) warning; (2) fine; (3) temporary ineligibility to hold management positions; and (4) cancellation or suspension of authorisation to engage in activity, operation or functioning.
11 Article 1, Section 5 of Law 9,613/98.
12 Rewarded denunciation is also applicable to the crimes committed against the national financial system (Law 7,492/86, Article 25, Section 2), tax crimes (Law 8,137/90, Article 16), drug trafficking (Law 11,343/06, Article 41) and kidnapping (Penal Code, Article 159, Section 4).
13 It was through rewarded collaboration of this nature that ‘Operation Car Wash', the biggest investigation of corruption and money laundering involving important executives that Brazil has ever seen, was successful.
14 Law No. 12,529/11. The administrative and criminal spheres are autonomous even though, in some cases, the collaboration in the administrative sphere can be reflected in the criminal area (e.g., the leniency agreement). In this sense, considering that benefits from the law can reflect in the two different areas and their interest towards investigation is mutual, the Administrative Council for Economic Defence and the Federal Prosecutor's Office of Cartel Combat signed Memorandum No. 1/2016 in order to strengthen their cooperation.
15 Article 4 of Law No. 8,137/90.
16 There is also the cease-and-desist agreement (TCC), related to the practice under investigation or its harmful effects. According to Article 85 of the Brazilian Competition Law, the TCC should contain the following elements: (1) the specification of the defendant's obligations not to practise the investigated activity or its harmful effects, as well as obligations deemed applicable; (2) the settlement of the fine to be paid in case of failure to comply, in full or in part, with the undertaken obligations; and (3) the settlement of the pecuniary contribution to be paid to the Diffuse Rights Defence Fund, whenever applicable. The act of signing a TCC grants no benefits in the criminal area such as a lighter penalty, no criminal action, suspension of the time bar etc. This will only happen in the leniency agreement.
17 On its last Peer Review on Competition Law and Policy in Brazil, OECD recommended the modification of the leniency programme to eliminate the exposure of leniency participants to prosecution under criminal laws other than the Economic Crimes Law.
18 Concerning non-related crimes, it is possible for the defence to request the diminishing of criminal penalty for confession under Article 65, III, d of the Brazilian Penal Code.
19 O acordo de leniência e seus reflexos penais. M B Salomi, Faculdade de Direito da Universidade de São Paulo: São Paulo, 2012, p. 186.
20 Manual de Compliance: preservando a boa governança e a integridade das organizações. M A Coimbra, V A M Binder, org. São Paulo: Atlas, 2010, pp. 98-101.
21 Ibid, pp. 98-101.
22 The best policy is both to specify the rule in the code of conduct and to require all employees to sign a consent form when hired.
23 Depending on the gravity of the act, the employee can be dismissed with or without cause, under the situations described in Article 482 of the Consolidated Labour Law (Decree-Law 5,452/43).
24 Whistle-blowers should be differentiated from those who in some way have participated in or contributed to the crime and decide to cooperate with the authorities in return for leniency, as in the case of rewarded collaboration (V Greco F, Comentários à Lei de Organização Criminosa, São Paulo: Saraiva, 2014).
25 D M Cardoso, A extensão do compliance no Direito Penal: análise crítica na perspectiva da Lei de Lavagem de Dinheiro, Faculdade de Direito USP: São Paulo, 2013, p. 66.
26 The Brazilian Penal Code, in Articles 138-140, defines the crimes of calumny (falsely accusing someone of a criminal offence), defamation (harming someone's reputation by false accusations) and libel or slander (offending someone's dignity or decorum with false claims). These crimes are subject to private penal action prosecuted by the offended party (as opposed to public penal actions, in which the plaintiff is the people, represented by the public prosecutor).
27 In these cases, labour legislation allows indirect termination of the labour contract in the cases listed in Article 483 of the Consolidated Labour Law (Decree-Law 5,452/43). Employees can also file suits for moral damages against acts of the employer, according to Articles 186 and 927 of the Civil Code.
28 A súmula is a statement of consolidated position, or jurisprudence, from a higher court.
29 The culpability of the employer or principal for the acts of the employee or agent is presumed.
30 The list of injurious acts is contained in Article 5 of Law 12,846/13.
31 Article 3, Section 1 of Law 12,846/13.
32 Article 6 of Law 9,605/98.
33 Article 7, VIII, of Law 12,846/13.
34 In this respect, the Environmental Crimes Law allows reduction of penalties for ‘prior communication to the agent regarding the imminent risk of environmental degradation', as well as for ‘collaboration with agents entrusted with environmental vigilance and control', circumstances that can be interpreted as resulting from the existence of a compliance programme.
35 The jurisprudence from the labour courts takes the position that an employee can only be discharged for cause due to commission of a crime after a final guilty verdict. However, the company can fire employees for cause based on other grounds, such as malpractice or administrative improbity, which are not crimes.
36 Article 2 of Law 12,259/11.
37 G Oliveira, J G Rodas, Direito e Economia da Concorrência, Rio de Janeiro: Renovar, 2004, pp. 381-382.
38 Article 28 of Law 12,846/13. See in this respect V Greco F, J D Rassi, O combate à corrupção e comentários à lei de responsabilidade de pessoas jurídicas (Law 12,846, of 10 August 2013), São Paulo: Saraiva, 2015, p. 214.
39 Article 7 of the Penal Code.
40 Such as the bilateral and multilateral accords on mutual assistance in criminal matters listed at the website of the Federal Prosecution Service: www.internacional.mpf.mp.br/normas-e-legislacao/tratados/tratados
41 A S Fernandes and M A C Zili, coord, Direito Processual Penal Internacional, São Paulo: Atlas, 2013,
p. 365. On the matter of direct assistance, H Estellita states that unlike the procedure for letters rogatory established in Resolution 09/2005 from the STJ, it ‘does not put the affected person as a subject of the cooperation and does not offer the guarantees regarding observance and respect for his fundamental rights to defence, rebuttal and inadmissibility of illegally obtained evidence.' In R J M Silveira and J D Rassi coord, Cooperação internacional penal passiva e garantias processuais do afetado. Estudos em homenagem a Vicente Greco Filho, São Paulo: LiberArs, 2014 p. 195.
42 On the theme, see the publication (in Portuguese) by the Federal Supreme Court at www.stf.jus.br/arquivo/cms/bibliotecaConsultaProdutoBibliotecaBibliografia/anexo/extradicao_nov2009.pdf.
43 See in this respect the American Convention on Human Rights (Decree 678/92) and the International Covenant on Civil and Political Rights (Decree 592/92).
44 Some argue that a court order is not necessary to obtain basic information such as name, address and telephone number, only a command from a police authority.
45 Article 157 of the Criminal Procedure Code and Article 5, LVI, of the Federal Constitution.