The International Investigations Review: Brazil
Several authorities and agencies may investigate and prosecute business crime and regulatory violations in Brazil. Some of the authorities enjoy constitutional or legal protections, separate budgets and immunities designed to ensure their independence and permanence in office, while others are bound to the directions and ultimate decisions of elected officials, official boards or committees, or other higher or senior authorities.
The Federal Prosecution Service (MPF) is an independent federal law enforcement agency led by the Prosecutor General's Office (PGR), which has been very active over the past decade, investigating and prosecuting high-profile cases involving businesspersons, government officials and corporations. Each state in the Brazilian federation also has its own state prosecutors, which are also independent but have not historically had the same appetite and resources to investigate and prosecute similar cases within their jurisdictions.
Criminal investigations in Brazil may be performed by prosecutors but are much more frequently led by police departments, which are organised under the authority and budget of federal or state executive governments. As a result, police departments in the country enjoy less independence than the prosecution services. The Federal Police Department of Brazil has consistently increased its level of activity, particularly in anti-corruption enforcement, healthcare fraud and public asset embezzlement investigations. In comparison with its federal counterpart, state police departments are generally less independent, often poorly equipped and understaffed. Those factors, combined with a much broader jurisdiction over common crime, significantly impair state police departments from dedicating more time and resources to prosecuting corporate conduct in general.
During investigations, federal and state prosecutors may apply for search and seizure, precautionary arrest and other warrants authorising use of wiretaps and third-party listening devices, as well as orders to lift statutory secrecy (such as communication, tax or banking records). The use of these investigative methods requires court authorisation and only prosecutors may file the relevant applications. As a result, the police will always require the intervention of prosecutors to use these investigative options.
The application filing for a warrant must be as thorough as possible to provide the judge with sufficient grounds to decide why a company or individual should be targeted and the scope of the order. The decisions granting search and seizure warrants must describe the place where the raid shall be conducted, the individuals investigated and the reasons and objectives of the search on the specific matter. The court must provide reasons for its decision based on evidence that points to the existence of a concrete crime and justifies the need for the precautionary measure. Also, the warrant itself must be carried out in strict accordance with the judicial authorisation. Raids are frequently performed at dawn by judicial and police authorities and may be accompanied by outside and in-house counsel to guarantee that the limits of the judicial warrant are not exceeded.
Federal and state governments and their agencies may investigate and pursue individuals and corporations for specific administrative and civil violations, as well as for civil damages more broadly. A list of important agencies with law and regulatory enforcement functions within federal and state governments includes the following:
- the Attorney General's Office, which provides legal advice to the executive branch of the federal government and represents and defends federal interests and assets before courts;
- the state attorneys' offices in each of Brazil's 26 states, which provide legal advice to the states' executive branches and represent and defend the respective states' interests and assets before courts;
- the Office of the Comptroller General (CGU), which oversees the use of federal public funds, has the authority to investigate and enforce administrative sanctions against corporations and government officials in matters linked to federal public bodies and funds, as well as to investigate and enforce administrative sanctions for violations of Federal Law No. 12,846/2021 (the Anti-Corruption Law) at the federal level and against foreign governments;
- the Council for Control of Financial Activities (COAF), Brazil's financial intelligence unit, which functions under the Ministry of Economy and the Central Bank and is in charge of providing financial intelligence reports to law enforcement agencies, as well as regulating anti-money laundering compliance in certain industries, in coordination with other industry-specific regulators as part of the national anti-money laundering system;
- the Administrative Council for Economic Defence (CADE), an independent agency reporting to the Ministry of Justice, which is responsible for investigating and deciding competition issues, as well as fostering the culture of competition in Brazil; and
- the Department of Asset Recovery and International Legal Cooperation of the Ministry of Justice, which centralises and coordinates Brazilian efforts for international cooperation on criminal matters and has been increasingly active and effective in the present decade, typically in the role of central authority of the Brazilian government for the execution of mutual legal assistance treaties (MLATs).
The Federal Audit Court is another very important independent law enforcement agency. It is organised independently of the executive, legislative and judicial branches of the federal government and oversees federal public spending, accounts and procurement, performs audits and, in the event of potential misconduct, may initiate assessments, quantify damages, apply fines and debarment to individuals and corporate entities.
Brazil is a country where companies and individuals are traditionally accustomed to litigating matters to the fullest extent. The duration of investigations, prosecutions and lawsuits frequently extends to a number of years, if not more than a decade, before a final unappealable decision is rendered. As a result, taking an adversarial stance and challenging legal and factual grounds in the context of investigations, prosecutions and claims is a realistic option in many cases in Brazil.
However, this traditional approach to dealing with investigations and lawsuits has been significantly impacted in the past decade by the aggressiveness of prosecutorial task forces focused on financial crime and corruption, the introduction of new methods of negotiating resolutions, and improvements to early-settlement options. Those include criminal cooperation and non-prosecution agreements, and leniency and civil non-prosecution agreements, among other penalty reduction and corporate resolution strategies based around cooperation with law enforcement, voluntary payment of fines and damages, and other remediation measures.
As in any other country, the political agenda, policy changes and domestic priorities certainly impact law enforcement in Brazil. For instance, the political agenda and policy changes implemented by the new Prosecutor General appointed by the current President of Brazil are believed to have contributed to the lapse and dissolution of the famous Operation Car Wash task force in the state of Paraná on 3 February 2021.2 These events occurred amid reports of alleged improper prosecutorial practices and investigations that purportedly overstepped Federal Supreme Court jurisdiction to investigate certain authorities, which led to broad investigation data requests from the PGR. Up until that point, former holders of the PGR office had always renewed the term of the task force, which focused on pursuing individuals and companies allegedly involved in schemes connected to Petróleo Brasileiro SA (known as Petrobras), the Brazilian state-controlled corporation focused on oil and gas.
Therefore, the decision whether to remediate internally, actively self-report and cooperate whenever authorities request or to prepare a defence in the face of potential or actual investigations or enforcement must be a product of careful legal strategy, including consideration of the following elements, among many other factors that may be important for the company and its decision makers:
- the nature and seriousness of the allegations;
- the financial, reputational and operational impact of enduring prosecution and the potential penalties or sanctions;
- the potential duration of investigations and litigation;
- the authorities that will conduct the investigation or that may have a potential interest in the alleged conduct, both in Brazil and abroad;
- the local political and enforcement climate;
- business opportunity and defence costs; and
- the company's profile, its shareholders, creditors and other stakeholders.
Whether a company decides to cooperate or not, the individuals who are involved in an investigation have the right not to incriminate themselves and can refuse to answer any questions they do not feel comfortable with, especially if they do not have a lawyer present.
Companies are generally not required to self-report when they discover internal wrongdoings. In some cases, however, regulated companies may be required by law or regulations to perform certain disclosures or report certain events to regulators, such as the identification of non-compliance or fraud that may put the continuity of the company or its operations at risk. These obligations should be carefully assessed for each case and industry.
Entities and individuals covered by Section 9 of Law No. 9,613/1998 (the Anti-Money Laundering Law) are required to implement anti-money laundering compliance policies and controls, and file suspicious activity reports with COAF.
Companies and individuals may have an interest in self-reporting and cooperating in exchange for penalty reductions. Criminal cooperation agreements apply to individuals subject to criminal investigations. Leniency agreements, in contrast, are available to legal entities in relation to reducing and settling civil and administrative liabilities.
Since January 2020, non-prosecution agreements (NPAs) have been available in both criminal and civil matters. Criminal NPAs are available for individuals and civil NPAs are available for both individuals and corporate entities. Nevertheless, there is no immunity for companies willing to cooperate and negotiate leniency agreements in relation to anti-corruption matters.
CADE has a well-established leniency programme for competition violations, through which companies and individuals may be granted either full or partial immunity from applicable penalties or a reduction of the applicable fine, depending on when they contact CADE to negotiate an agreement to this effect.
Federal Law No. 12,846/2013 (the Anti-Corruption Law) allows a company to make a leniency proposal when it admits participation in relevant conduct and voluntarily cooperates with the investigating authorities, in addition to complying with other requirements. Although mentioned in the Law, there is no statutory definition of 'full and permanent cooperation'.
According to Section 16(2) of the Anti-Corruption Law, companies that enter into leniency agreements may get a reduction of up to two-thirds of the fine that would have been applicable. Anti-Corruption Law fines may range from 0.1 to 20 per cent of the gross revenues earned during the fiscal year prior to the filing of the administrative proceedings. Additionally, according to Section 17 of the Anti-Corruption Law, the government may also negotiate leniency agreements with legal entities liable for illegal acts under public procurement laws to exclude or mitigate the administrative sanctions.
However, the amount of the anti-corruption leniency discount may be subject to some discretion on the part of the competent authority, depending on negotiations and the circumstances of the case.
There have been important developments in the area of leniency agreements, contributing to consolidating this practice in the country and bringing greater predictability to signatories. Increasingly coordinated action between authorities, the expansion of institutional dialogue and the definition of clear rules and guidelines on leniency agreements are key elements that should be prioritised to further establish an effective policy to combat corruption in Brazil.
ii Internal investigations
In Brazil, companies may conduct their own internal investigations and are not required by law to share the results with the government, particularly if the internal investigation process and conclusions are covered by attorney–client privilege.
Reports and other communications between attorneys and their corporate clients are legally protected and may not be seized or intercepted. The Brazilian Bar Law3 expressly protects and renders safe from violation lawyers' offices or workplaces, their work instruments and any written, electronic or telematic correspondence, provided that these are related to the performance of lawyer-related activities. By extension, the Law has been interpreted to protect any work products and correspondence of this kind in the possession of the client.
If a company conducts internal investigations without the direction of counsel (e.g., exclusively by means of internal audit or compliance functions) and does not adopt correspondence between legal counsel and itself as client as the primary means of communication during the process, the company will not be able to assert attorney–client privilege over those communications or over the internal investigation documentation.
In the event that those are seized or otherwise disclosed and acquired by authorities, the company will have lost the strongest legal basis on which to exclude those records from the investigation files or court evidence. The company also risks having to comply with orders to produce copies of the investigation records by prosecutors, regulators, other enforcement agencies and private parties such as an employee filing an employment lawsuit. Although such orders may be challenged, there is still no clear answer on issues concerning internal investigations protected by confidentiality but not by attorney–client privilege.
Furthermore, internal investigations may be conducted by internal or external counsel and the choice depends greatly on the nature and severity of the investigated conduct. Normally, when the investigated conduct constitutes a crime, with the risk of investigation and prosecution against the company and individuals, the internal investigation is conducted by external counsel.
Internal investigations in Brazil usually follow international best practice and include document reviews, witness or custodian interviews, transaction testing, forensic review of company devices or systems (e.g., computers, mobile phones, tablets, enterprise resource planning software, email servers, messaging apps), among other investigative techniques. Where interviews are conducted, it is the employees' right to retain and have a lawyer attend the interview.
The adoption rates for reporting channels and hotlines have grown substantially since the enactment of the Anti-Corruption Law and its regulations. As a result, internal whistle-blower reports have become more common in Brazil.
In contrast, whistle-blower reports to government authorities in Brazil relating to unlawful corporate conduct are still uncommon. Whistle-blower protections in this area have received an important improvement with the passing of Federal Law No. 13,964/2019 (the Anti-Crime Package), which provides protections and incentives for whistle-blowers, including monetary payments.
The Anti-Crime Package applies to whistle-blowers reporting any criminal acts and administrative wrongdoings that may harm the 'public interest'. It also applies to matters of public corruption, fraud related to government procurement and public contracts, government-held companies and government-funded projects. The Anti-Crime Package offers a set of protections to whistle-blowers, including: (1) monetary benefits in the form of a 5 per cent reward based on the amounts that Brazilian authorities recover; (2) protection against retaliation; (3) confidentiality; (4) immunity regarding civil and criminal liability; and (5) other protections under the Victim and Witness Protection Law.4
Brazilian law does not expressly provide protections to internal whistle-blowers, but the Anti-Corruption Law regulations provide that corporate reporting channels should contain mechanisms intended to protect good-faith whistle-blowers. Policies and procedures against retaliation are widely considered best practice.
i Corporate liability
Criminal liability is governed by Decree-Law No. 2,848/1940 (the Penal Code) and by a number of separate criminal law statutes and provisions. Only individuals are liable for criminal conduct in Brazil, with the exception of environmental crimes set out by the Environmental Violations Law.5 This specific statute provides that corporate entities can also be liable for the offences committed by corporate or contractual representatives and boards in the entity's benefit or interest.
In contrast to criminal law, civil and administrative liability applies more broadly, to both individuals and corporate entities, and is the main basis for enforcement against companies.
The liability regimes vary. For instance, violations of Federal Law No. 8,429/1992 (the Administrative Improbity Law) may give rise to civil liabilities against corporate entities and individuals under a civil guilt and fault-based system; violations of Federal Law No. 12,529/2011 (the Competition Law) may give rise to administrative liability for corporate entities and individuals regardless of the assessment of guilt (although negligence and wilful conduct may increase penalties for individuals); and Anti-Corruption Law violations may give rise to civil and administrative liabilities for corporate entities pursuant to a strict liability standard.
Pursuant to Section 931, item III of the Civil Code,6 the company or the employer is liable in the civil sphere for any employees, assistants or agents acting within the scope of or as result of their work.
Companies and individual employees or executives may be represented by the same counsel in Brazil as long as their interests are not in conflict and the overall defence strategy is the same.
The range of sanctions available against companies varies significantly depending on the violation and the applicable law. Some sanctions may only be applied administratively, while others require an award from a court. For example, the following range of sanctions apply:
- Under the Anti-Corruption Law, companies may be subject to sanctions and penalties, including administrative fines of up to 20 per cent of the company's annual gross revenue and publication of the conviction, as well as civil sanctions including seizure of assets, rights or amounts gained from the illegal act, partial suspension or prohibition from carrying out business activities, and a ban from receiving benefits, subsidies or credits from government entities. Controlling and controlled companies, affiliates and consortia may be jointly and severally liable for fines and payment of damages arising out of infractions provided for in the Anti-Corruption Law.
- Under the Administrative Improbity Law, civil fines in relation to acts of administrative improbity may be imposed on legal entities whose misconduct results in illicit enrichment of public officials and losses to the public treasury. The fine amounts may be up to three times the value of the unlawful enrichment, two times the harm to public assets or 100 times the compensation of the government official involved in the misconduct. In addition to full compensation by way of damages, sanctions may also include the seizure of assets or amounts obtained by means of the misconduct, and a prohibition on contracting with public entities or receiving any kind of public benefit or incentive.
- Under the Competition Law, companies may be liable to fines of between 0.1 and 20 per cent of their gross revenues in a particular line of business, management may face fines of between 1 and 20 per cent of the fines applicable to the corporate entity, and other individuals may face fines of between 50,000 reais and 2 billion reais. Companies or individuals may also be sanctioned with debarment, registration in an enforcement database, prohibition from trading, and compulsory corporate reorganisation (spin-off, sale of corporate control or assets, or interruption of certain activities).
In Brazil, there is still no consistency in law enforcement and different authorities may have different understandings on the calculation of penalties. Furthermore, despite heavy criticism from the defence Bar, sanctions may sometimes be 'piled on' because of arguments that the same conduct violated different laws subject to different enforcement agencies or policy purposes (e.g., a fine for cartel membership and a fine for public procurement fraud arising out of the same conduct).
In Brazil, there is no full-compliance defence: compliance programmes do not eliminate judicial or administrative liability for corporate entities. Nevertheless, they may reduce penalties and lead to the application of less severe sanctions. Brazilian law does not generally require compliance programmes, or corporate integrity programmes in particular. Hence, Brazil does not generally establish the absence of a compliance programme as a crime or a violation.
One important exception is anti-money laundering compliance, which is required for certain companies and may give rise to administrative sanctions in the event of non-compliance.
The CGU has issued a Practical Guide for the Evaluation of Compliance Programmes (the Practical Guide) describing the methodology that should be used by federal employees during the evaluation of compliance programmes as part of administrative enforcement proceedings.7 The evaluation of a compliance programme is a necessary step in the calculation of fines applicable for violations relating to the Anti-Corruption Law.8
According to Anti-Corruption Law regulations, the fine reduction may represent a maximum discount equivalent to up to 4 per cent of the legal entity's gross revenue. The Practical Guide classifies the 16 evaluation criteria in Section 42 of the Anti-Corruption Law regulations into three major evaluation categories: (1) organisational culture of integrity; (2) integrity mechanisms, policies and procedures; and (3) action by the legal entity in relation to the illicit act.
Under the aforementioned three major evaluation blocks, the Practical Guide states that a strong compliance programme must include: (1) an effective commitment and involvement of the company's high-level management, allocation of proper resources and the autonomy of the officer in charge of the programme; (2) an assessment of the types of risks to which the company may be exposed in its activities; (3) development of internal training programmes and compliance provisions in the company's code of conduct; (4) risk analysis; and (5) continuous review and adjustment of the programme, among other aspects.
Given that only individuals may be held criminally liable for most violations under Brazilian law, the effective existence of a compliance programme has a limited use in criminal court but may work as an argument favourable to the individual to counter wilful intent claims. Compliance programmes can form the basis of an argument that the individual has done everything in his or her power to avoid any wrongdoing, although there is no guarantee that corporate compliance programmes will prove to be effective.
iv Prosecution of individuals
Criminal liability in Brazil is personal and subjective and may include fines, imprisonment and other restrictions of rights. Authorities generally expect implicated employees to be dismissed, but there are exceptions, especially if the company can show that the employee is essential for the continuity of the company's business.
Remediation measures taken by companies may include discipline or termination of the employment or services contract. If the individual is an employee, discipline must conform to a limited set of disciplinary actions authorised by the Consolidated Labour Laws,9 including oral or written warnings or suspension of the employment contract for no longer than 30 days. The individual may also be subject to termination of the employment agreement with or without cause.
In the event of remediation in the employment sphere, including disciplinary actions or termination with cause, the Consolidated Labour Laws require the immediate application of disciplinary measures once the violation actually becomes known to the employer. Depending on the factual circumstances, unconfirmed suspicion or conduct pending investigations may not qualify as knowledge.
Companies may but are not obligated to pay or advance employee's legal fees. The company usually pays for the employee's attorney fees in cases where employee input is important to ensure successful cooperation with investigations.
It is not uncommon for companies to rely on the employee's collaboration if he or she wishes to cooperate with investigations. Therefore, there needs to be coordination between the company's and the employee's lawyers.
In April 2021, an MPF commission stated that the payment of indemnities by companies to executives who become whistle-blowers is a 'valid defence option' and a private relationship in which the government may not interfere, in the context of cooperation and leniency agreements.10 The commission, however, is considering proposing that, during negotiations, prosecutors require greater transparency on the relations between employees and companies, which are not always clear. The commission's coordinator estimates that the guidance will only be issued in the second half of 2021.
i Extraterritorial jurisdiction
Brazilian law is applicable to all crimes committed in Brazilian territory, and Brazil has jurisdiction to investigate and judge any person, including foreigners, whenever the action or the result of the unlawful action takes place in the country.
The Penal Code also establishes some cases of extraterritorial jurisdiction in relation to matters involving the Brazilian people's interest, the conduct of Brazilians abroad, and situations included in international treaties. International corruption is one of the crimes that Brazil has given commitments to the Organisation for Economic Co-operation and Development (OECD) to act upon, and Brazilian law can apply even if the crime happened abroad.
The Penal Code provides for the crime of corruption in the course of an international commercial transaction, which is punishable with one to eight years' imprisonment and a fine. This crime has been included in the Penal Code to give effect to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, and punishes those who directly or indirectly promise, offer or give an undue advantage to a foreign official or third party to take, overlook or delay any action under their authority related to international commercial transactions.
Nevertheless, any measures needed in other jurisdictions must be processed through international cooperation, through rogatory letters or as provided in applicable MLATs.
The Anti-Corruption Law also establishes extraterritorial jurisdiction and may apply to local or foreign companies. The extraterritoriality of the Law is expressly provided for in Section 28, in which illicit acts performed to the detriment of foreign governments by Brazilian legal entities are subject to the sanctions provided therein.
The Anti-Corruption Law prohibits bribery of both local and foreign officials, as well as other harmful acts. Foreign companies that have an office, branch or representation in Brazilian territory may be held liable under its provisions. Punishable acts under the Anti-Corruption Law include: (1) the promising, offering or giving, directly or indirectly, of an undue advantage to a public official (including foreign public officials) or to a third party related to him or her; (2) the financing, funding, sponsoring or in any other way subsidising the performance of harmful acts punishable under the Law; (3) the use of third parties, natural persons or legal entities to hide or disguise the real interests or the identity of the beneficiaries for the harmful act punishable under the Law; (4) the performance of wrongful acts in regard to public bids and governmental contracts; and (5) the hindering of investigations or oversight agencies, entities or regulatory agencies.
Under the Anti-Corruption Law, the CGU has authority to investigate and apply administrative sanctions for illegal acts committed against foreign governments.
ii International cooperation
Brazilian regulators and enforcement agencies have been very active in the field of international cooperation. Until January 2021, the Operation Car Wash task force in the state of Paraná alone had participated in 597 active and 653 passive requests for international cooperation with more than 60 different countries across the globe. The countries with the highest number of passive requests are Peru (41.2 per cent of the requests), followed by Switzerland (36.8 per cent). MPF requests to foreign authorities are mainly directed to Switzerland (31.3 per cent of the requests), followed by the United States (12.9 per cent).11
Most of the requests made by foreign authorities refer to interviewing witnesses, victims or experts in the investigation phase. In the case of requests for cooperation made by Brazil to other countries, the main objectives are obtaining documents subject to financial or tax secrecy, and freezing of financial assets. The requests seek to establish grounds for investigations or processes related mainly to criminal organisations, money laundering, concealment of assets or values, and corruption.12
There is constant cooperation between Brazilian enforcement authorities and their Latin American peers. The most significant example of this is the Brasília Declaration, signed in February 2017 by public prosecutors from Argentina, Brazil, Chile, Colombia, the Dominican Republic, Ecuador, Mexico, Panama, Peru, Venezuela and Portugal. The Brasília Declaration is based on Article 49 of the United Nations Convention against Corruption (also known as the Merida Convention) and creates joint teams for bilateral or multilateral investigations, with a view to allowing enforcers to coordinate investigations related to acts of bribery, corruption, and money laundering between the countries concerned.
Moreover, there are several other bilateral efforts joining Brazilian and foreign prosecutors from different Latin American jurisdictions. Two meaningful examples are the cooperation agreement signed with the Argentinian prosecutors in late 2018,13 and the close cooperation with Peru, which allowed pretrial hearings of the Peruvian Car Wash-related investigations to happen in Brazil at the offices of Brazilian federal prosecutors in 2018 and 2019.14
Extradition in Brazil is possible and has happened before. Brazilian authorities must fulfil all the necessary requirements to ask a country for the extradition of investigated individuals.15 The extradition must be supported by an agreement or treaty signed between the states involved and in compliance with the requirements established in the ratified text. In the absence of an agreement, the extradition request may be formulated with the promise of reciprocity of treatment for analogous cases between the two countries, and manifested in a diplomatic statement.
iii Local law considerations
Although professional confidentiality is enshrined in the Brazilian Constitution as a fundamental right, when multiple jurisdictions are implicated in an investigation, attorney–client privilege in Brazil may be an issue. Although, as explained above, attorney–client privilege is guaranteed by law and in other statutory provisions such as codes of civil and criminal procedure and ethics regulations, Brazilian authorities have a more restricted view of the application of confidentiality, and attorney–client privilege may vary depending on the authority and the case.
Labour rights regarding privacy and intimacy also tend to be treated differently in Brazil compared to other countries, and this may limit internal investigations to some extent. In this regard, Brazilian labour courts have ruled that corporate devices, such as emails, computers and mobile devices are the company's property and are therefore not subject to employees' privacy and intimacy rights because companies may be civilly liable for wrongdoings committed by employees using these corporate devices. Thus, companies may monitor and gather relevant information from such devices in the context of internal investigations.
In September 2020, the General Data Protection Law16 entered into force. This may entail certain significant risks in matters of litigation and prosecution, especially in relation to complex business crime and anti-corruption investigations, as employees' information consent will most likely be discussed.17 How and to what extent the General Data Protection Law will be enforced is still unclear, as is its potential impact on internal investigations touching Brazil and protected rights within the country.
Decree No. 6,747/2009, regarding the MLAT between Brazil and Canada, signed on 27 January 1995, contains several provisions regarding investigations, such as the provision that assistance between the two countries will include making detainees and others available to provide evidence or assist investigations. There is express mention of limitations arising from local legislation, but without any specification. Another example is Decree No. 3,810/2001, relating to the MLAT between Brazil and the United States, signed on 14 October 1997. The Decree contains several provisions regarding investigations, such as the provision in Article I(3), which states that 'assistance will be provided even if the fact subject to investigation or criminal action is not punishable under the legislation of both States'. Limits are also set out in Article VII regarding the use of information or evidence by the requesting state, among other provisions.
Year in review
The Anti-Crime Package entered into force in late 2020 and represents an important recent development because it amended a variety of existing laws. The Anti-Crime Package was passed after congressional debate and generally follows the trend of making penalties tougher. Nevertheless, it also contains some important provisions aimed at creating a more impartial criminal justice system.
The Anti-Crime Package amended 17 different statutes, including the Penal Code, the Code of Criminal Procedure, the Anti-Money Laundering Law, the Administrative Improbity Law and other important statutes.
On 9 December 2020, the Brazilian federal government launched an anti-corruption plan for the period 2020–2025.18 This plan was designed with the objective of structuring and executing actions to improve, within the scope of the federal executive branch of government, the mechanisms of prevention, detection and accountability for acts of corruption, and of making progress in complying with and improving anti-corruption legislation in compliance with international recommendations. The document was developed by the Inter-Ministerial Committee to Combat Corruption, established by the President. The initiative seeks to reflect and reinforce Brazil's commitment in tackling corruption and is in line with the efforts already made in the Anti-Crime Package. The plan is also in line with the federal development strategy established by Decree No. 10,531/2020.
Also, in 2020, the Fifth Coordination and Review Chamber of the MPF (the Fifth CCR) published a technical note in defence of the adherence of individuals to leniency agreements.19 Although not binding, the document seeks to guide the work of public prosecutors and provide greater legal certainty to individuals associated with cooperating companies. According to the technical note, the need to establish guidelines on the subject stems from limitations imposed by the Anti-Corruption Law, which stipulates legal entities as the only subjects able to enter into leniency agreements. On this matter, the Fifth CCR argues that allowing individuals to adhere to these agreements helps harmonise the activities of the MPF in combating corrupt practices. However, this may entail risks such as potential conflicts of interest between legal entities and individuals who carried out illegal acts, because the latter may not find the express legal support necessary to coordinate the process of negotiating and collaborating with authorities.
On 1 April 2021, the President issued the new Public Procurement Law,20 which benefits companies that adopt compliance programmes. Section 156, Paragraph 1, item V of this new Law provides that the adoption of a compliance programme is now a tie-breaking factor in public procurements.21 Under the Anti-Corruption Law, integrity mechanisms and procedures must be considered in the application of administrative sanctions under that Law, and the Public Procurement Law has adopted a similar approach. The Public Procurement Law provides that authorities must consider the 'implementation or enhancement of the compliance programme, following the rules and guidelines of the oversight bodies' in the application of sanctions arising therefrom.
Furthermore, according to the Corruption Perception Index 2020 released by Transparency International, which analysed data from an atypical year severely affected by the worldwide covid-19 pandemic, Brazil showed a modest improvement in performance. In 2019, Brazil occupied the 106th position in the ranking, with 35 points,22 whereas in 2020, it occupied the 94th position, scoring 38 points. Despite this slight rise, Brazil remains stagnant in relation to corruption, below both the average for the major emerging economies of Brazil, Russia, India, China and South Africa (39 points) and the regional average for Latin America (41 points).
In a related development, the OECD recently took an unprecedented decision and created a permanent monitoring group for Brazil.23 The organisation, which Brazil aims to join, is concerned about the recent changes regarding Operation Car Wash and certain obstacles in sharing institutional financial information for investigations.24 The OECD has already notified the Brazilian government of its decision to create the monitoring group. According to an OECD statement, 'In cases where a country has inadequately implemented or continuously failed to adequately implement the OECD Anti-Bribery Convention, further steps might be considered, such as: forming a monitoring sub-group'.
Conclusions and outlook
In the context of the covid-19 pandemic, healthcare contracts became a special focus of federal and state investigations in Brazil. We predict that there may be several investigations on this subject in the months and years to come as it has become a hot topic in the country. The political importance of such investigations and the existence of ongoing Senate investigations into covid-19 issues add to the complexity of the enforcement outlook.
There have also been developments related to the federal government's anti-corruption plan, mentioned above. Among these was the delivery in March 2021 by the CGU of three significant improvements. The first was the implementation of the Public Ombudsman Maturity Model, the second was the new unit for handling complaints from the ombudsman and the third was the delivery of new tools for the protection and safeguarding of system information regarding the ombudsman.25
In a separate development, Bill of Law No. 10,887/2018 regarding the Administrative Improbity Law was approved by the Chamber of Deputies and is now awaiting the Senate's assessment.26 The Bill states that the duration of investigations shall be limited to 180 days, with an option for this to be extended for another 180 days if justified. After this period, the prosecution would have 30 days to file a complaint, if applicable. There are several other proposed provisions that have been the subject of debate and will probably be modified as the Bill advances in Congress.
Overall, Brazil still has plenty of room for improvement before it can be considered to have advanced effectively in the control of business crime and corruption, and it requires legal and institutional reforms to truly change the conditions that perpetuate systemic corruption and crime in the country.
This shift must come from both the public and the private spheres, with a view to effecting an all-encompassing cultural change. The higher the number of Brazilian and multinational companies with a presence in the country that implement, monitor and review internal compliance controls and procedures (while assessing levels of exposure to risks inherent in the location, industry and operating segment) and that conduct effective internal investigations and cooperate with authorities, the more the country will benefit and advance in matters related to business crime and corruption.
1 Paula Moreira Indalecio and Marcel Alberge Ribas are partners at Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados.
2 Available at: https://oglobo.globo.com/brasil/forca-tarefa-da-lava-jato-de-curitiba-deixa-de-existir-passa-integrar-grupo-de-combate-ao-crime-organizado-do-mpf-pr-1-24867140, accessed on 4 June 2021.
3 Federal Law No. 8,906/1994.
4 Federal Law No. 9,807/1999.
5 Federal Law No. 9,605/1998.
6 Federal Law No. 10,406/2002.
7 Available at: https://repositorio.cgu.gov.br/bitstream/1/46645/1/Manual_pratico_integridade_PAR.pdf, accessed on 24 May 2021.
8 Available at: https://repositorio.cgu.gov.br/bitstream/1/44486/5/Manual%20Pr%c3%a1tico%20de%20C%c3%a1lculo%20da%22Multa.pdf, accessed on 24 May 2021.
9 Decree-Law No. 5,452/1943.
10 Available at: https://www1.folha.uol.com.br/poder/2021/04/pagamento-a-delator-e-opcao-de-defesa-valida-e-estado-nao-deve-interferir-diz-comissao-do-ministerio-publico.shtml, accessed on 24 May 2021.
11 Available at: http://www.mpf.mp.br/grandes-casos/lava-jato/efeitos-no-exterior/efeitos-no-exterior, accessed on 24 May 2021.
12 Available at: http://www.mpf.mp.br/grandes-casos/lava-jato/efeitos-no-exterior/efeitos-no-exterior, accessed on 24 May 2021.
13 Available at: http://www.mpf.mp.br/pgr/noticias-pgr/argentina-faz-acordo-com-o-mpf-e-poderautilizar-delacoes-feitas-no-brasil-no-ambito-da-operacao-lava-jato, accessed on 24 May 2021.
14 Available at: https://elcomercio.pe/politica/rafael-vela-jose-domingo-perez-odebrecht-fiscalesperuanos-firman-acuerdo-colaboracion-eficaz-brasil-noticia-nndc-608181, accessed on 24 May 2021.
15 Available at: https://www.justica.gov.br/sua-protecao/cooperacao-internacional/extradicao/arquivos/manualextradicao.pdf, accessed on 24 May 2021.
16 Federal Law No. 13,709/2018.
17 Available at: https://globaldatareview.com/data-privacy/lgpd-boosts-litigation-risk, accessed on 24 May 2021.
18 Available at: https://www.gov.br/casacivil/pt-br/assuntos/noticias/2020/dezembro/lancado-plano-anticorrupcao-para-oo-periodo-de-2020-a-2025, accessed on 24 May 2021.
19 Available at: http://www.mpf.mp.br/pgr/documentos/05.05.RedaofinalNTALcomAdesoesLTIMAVERSO.pdf, accessed on 24 May 2021.
20 Law No. 14,133/2021.
21 Available at: https://www.mattosfilho.com.br/unico/noticias/nova-lei-licitacoes-programas-integridade&lang=en-us. Last accessed on 24 May 2021.
24 Available at: https://www.oecd.org/newsroom/a-capacidade-das-autoridades-publicas-brasileiras-de-investigar-e-processar-a-corrupcao-de-funcionarios-publicos-estrangeiros-esta-seriamente-ameacada-diz-o-grupo-de-trabalho-sobre-suborno-da-ocde.htm, accessed on 24 May 2021.
25 Available at: https://www.in.gov.br/en/web/dou/-/portaria-n-581-de-9-de-marco-de-2021-307510563, accessed on 24 May 2021.
26 Available at: https://www.camara.leg.br/proposicoesWeb/fichadetramitacao?idProposicao=2184458, accessed on 24 May 2021.