Global Investigations Review - The law and practice of international investigations

The Practitioner’s Guide to Global Investigations, Fourth Edition

Brazil

Trench Rossi Watanabe

General context, key principles and hot topics

1Identify the highest-profile corporate investigation under way in your country, describing and commenting on its most noteworthy aspects.

Operation Car Wash is the largest corruption and money-laundering investigation in Brazil. There has been series of developments since the operation was launched in March 2014. It led to the indictment and imprisonment of key political figures in Brazil, such as former president Luiz Inácio Lula da Silva, and well-known businesspersons. Moreover, the operation has been divided into additional cases, including Operation Resonance, Operation Fratura Exposta, Greenfield and others.

2Outline the legal framework for corporate liability in your country.

In Brazil, criminal liability is personal and subjective, which means that only individuals who have some degree of involvement in a criminal activity may be held liable for it.

In the vast majority of cases, legal entities, such as corporations or other non-natural persons, cannot be charged with crimes, but only for administrative and civil sanctions. The exception to this general rule is criminal liability for environmental crimes.

3Which law enforcement authorities regulate corporations? How is jurisdiction between the authorities allocated? Do the authorities have policies or protocols relating to the prosecution of corporations?

In case of violations of the Anti-Corruption Law (Federal Law No. 12,846/2013), the highest authority of the relevant agency or entity of the executive, legislative and judiciary branches may investigate the matter and impose administrative sanctions. The Office of the Federal Comptroller General (CGU) has authority to investigate, process and sanction illegal acts set forth in the law that are committed against foreign public administration. At the federal executive level, the CGU will also have concurrent authorisation to initiate administrative proceedings against legal entities as well as to audit the proceedings handled by other authorities. In the case of judicial sanctions, prosecutors follow the procedure established by the Brazilian Class Action Law set forth in Law No. 7,347/1985.

Other authorities have power to enforce rules relating to specific legal areas, such as the Administrative Council for Economic Defence, which enforces antitrust violations, and the Securities Commission, which enforces rules relating to publicly traded corporations.

The Federal Court of Accounts has powers to review public disbursement and violations of public procurement laws.

4What grounds must the authorities have to initiate an investigation? Is a certain threshold of suspicion necessary to trigger an investigation?

The authorities must be aware of minimum elements of the occurrence of a crime to initiate an investigation. This means that a mere suspicion would not allow authorities to trigger an investigation; however, it is not necessary to have certainty about the occurrence of a crime or about the individuals responsible for it.

According to a Brazilian Supreme Court precedent, no criminal investigation can be initiated based only on anonymous information.

5How can the lawfulness or scope of a notice or subpoena from an authority be challenged in your country?

Individuals and legal entities may challenge the lawfulness or scope of a notice or subpoena from a law enforcement authority in the courts. Depending on the matter, individuals and entities may file a habeas corpus or an injunction.

6Does your country make use of co-operative agreements giving immunity or leniency to individuals who assist or co-operate with authorities?

Individuals can enter into a plea agreement with local authorities in exchange for a reduction in sentencing. Note that the agreement is usually signed by a federal or state prosecutor and only imposes the reduction.

7What are the top priorities for your country’s law enforcement authorities?

Corruption is the main object of the most recent and ongoing investigations in Brazil, which include Operation Car Wash, Operation Resonance, Operation Fratura Exposta, Weak Flesh, Greenfield and others. Operation Zelotes is looking into bribery payments to tax authorities and politicians, in addition to an ongoing tax evasion investigation.

Cyber-related issues

8Does your country regulate cybersecurity? Describe the approach of local law enforcement authorities to cybersecurity-related failings.

Brazil has no specific regulation on cybersecurity, but has approved a data privacy law that will enter into force in 2020. Certain violations, including distributing private photos, may be investigated and prosecuted by local authorities.

9Does your country regulate cybercrime? What is the approach of law enforcement authorities in your country to cybercrime?

Brazilian law includes specific norms against cybercrime activities (e.g., hacking of devices and illegal wiretapping). Also, other norms may apply to illegal activities conducted via the internet, software or hardware (e.g., terrorism, crimes against intellectual property of computer software, crimes against children and teenagers, crimes against honour, racism and xenophobia).

As a rule, cybercrimes are investigated by the Brazilian state police departments. However, the Federal Police is specifically allowed to investigate (1) terrorism crimes, (2) crimes involving misogynistic crimes, or internet activity that amounts to hatred or aversion of women and (3) crimes that have a transnational characteristic, all of which Brazil is committed (via international treaties) to combat and prevent.

In general, the state police departments, Federal Police and public prosecutors’ offices will have specialist teams in charge of the criminal investigation and prosecution of cybercrime and wrongdoing committed via the internet, software and hardware. Police departments, public prosecutors’ offices and court teams work round the clock and are available for considering and deciding emergency criminal cases.

Brazil has entered into multilateral and mutual legal assistance treaties with various countries, which set forth proceedings and include provisions for dawn raids, freezing of assets, interviews, delivery of documents, etc. to obtain information or documents to be used in a criminal investigation or lawsuit, including any relating to cybercrime.

Cross-border issues and foreign authorities

10Does local criminal law have general extraterritorial effect? To the extent that extraterritorial effect is limited to specific offences, give details.

The Criminal Code sets forth the requirements for applying Brazilian criminal law to crimes that have occurred abroad (from start to finish) (Articles 7 and 8, Criminal Code). Brazilian jurisdiction has extraterritorial effect in two sets of possible situations. The first of these is the consideration of genocide (when the offender is Brazilian or is living in Brazil) and crimes committed against:

  • the Brazilian president’s life or freedom;
  • public trust;
  • property owned by public administrative bodies;
  • companies owned by public administrative bodies or public foundations; or
  • a public administrative body, including crimes against an individual who is acting on behalf, or under the orders, of a public administrative body.

An offender who commits any of the above-mentioned crimes should be punished according to Brazilian criminal law even if he or she has been acquitted or convicted by a foreign court.

The second series of situations require different conditions to be applied according to the type of crime, including crimes that Brazil is obliged to repress based on an international treaty or convention, or those committed by Brazilian individuals or in Brazilian aircraft or vessels (commercial or private) in a foreign territory if no other court decision on its merits has been issued.

In addition, for Brazilian jurisdiction to be applied, all the following conditions should be fulfilled:

  • the offender must be in Brazil for criminal prosecution to begin, and must:
    • not have been previously acquitted by a foreign court or fully served a penalty abroad;
    • not have been acquitted or pardoned by a foreign court; and
    • be criminally liable (e.g., the statute of limitation was not reached);
  • the fact must be deemed a crime under the criminal law of both countries; and
  • Brazilian law must authorise extradition in such a case, if required.

If a Brazilian citizen is the victim of a foreign individual’s conduct, Brazilian jurisdiction is applied provided that (1) the above-mentioned conditions are fulfilled, (2) extradition of the offender has not previously been requested or denied, and (3) the Brazilian Minister of Justice has requested the law enforcement authorities to punish the crime.

Note that the hypothesis of jurisdictional extraterritorial effects is related to crimes that occurred abroad (from start to finish). Indeed, if any part of an individual’s action or omission essential to the occurrence of a crime has taken place in Brazil, Brazilian Criminal Law determines that the crime was committed in Brazil. Also, if an individual’s action or omission essential to the occurrence of a crime has taken place abroad, but its result occurs in Brazil, again the crime is considered as having been committed in Brazil. Consequently, both hypotheses (action/omission and its results in Brazil) would be under Brazilian jurisdiction. This means none of the conditions relating to the extraterritorial effects, as described above, needs to be complied with for the offender potentially to be criminally charged in Brazil.

11Describe the principal challenges that arise in your country in cross-border investigations, and explain whether and how such challenges depend on the other countries involved.

Brazilian authorities both co-operates on criminal matters with foreign authorities and requests the co-operation of foreign authorities. Co-operation between authorities can involve the execution of acts relating to the collection of evidence (interviews, breach of bank secrecy), transfers of convicted individuals, freezing of assets, etc., during criminal investigations or lawsuits. Brazil has multilateral and bilateral co-operation agreements with various countries. If there is no previous agreement between the countries, it is possible to enter into a mutual commitment for future situations.

The main challenges faced in cross-border investigations are (1) the time spent waiting for other countries’ answers or proceedings, (2) the necessary observation of formalities to ensure that the evidence collected abroad would be considered valid in Brazil (not null or illicit), and (3) situations in which Brazil does not have a previous agreement.

12Does double jeopardy, or a similar concept, apply to prevent a corporation from facing criminal exposure in your country after it resolves charges on the same core set of facts in another? Is there anything analogous in your jurisdiction to the ‘anti-piling on’ policy as exists in the United States (the Policy on Coordination of Corporate Resolution Penalties) to prevent multiple authorities seeking to penalise companies for the same conduct?

As a general rule, double jeopardy is not allowed according to Brazilian law.

Exceptions apply regarding the extraterritorial effects of genocide (when the offender is Brazilian or is living in Brazil) and crimes against (1) the Brazilian president’s life or freedom, (2) public trust or property owned by public administrative bodies, or companies owned by public administrative bodies or public foundations, (3) public administrative bodies, including crimes against an individual who is acting on behalf of an administrative body (see question 10).

However, those hypotheses do not relate to crimes against the environment, which are the only crimes for which legal entities are potentially criminally liable in Brazil (see question 2).

13Are ‘global’ settlements common in your country? What are the practical considerations?

Brazilian legislation has no clear disposition regarding global settlements, including the possibility and requirements. Nevertheless, a higher number of global settlements have involved Brazilian companies (e.g., Embraer, Petrobras, Odebrecht/Braskem).

14What bearing do the decisions of foreign authorities have on an investigation of the same matter in your country?

Although Brazilian authorities should conduct their own investigations, it is common for the essential evidence to be collected to ensure a conviction relying on co-operation agreements with foreign authorities investigating similar matters. Moreover, the Criminal Code provides that, and respecting foreign judicial decisions, when the application of Brazilian law would produce the same consequences and civil remedies, such as damages orders and restitution, or other security measures, can be recognised and enforced in Brazil if the necessary requirements are fulfilled.

Economic sanctions enforcement

15Describe your country’s sanctions programme and any recent sanctions imposed by your jurisdiction.

The Brazilian Clean Company Act, issued in 2013, may require financial penalties to be imposed on companies involved in corrupt acts, which can amount to as much as 20 per cent of the gross revenue in the year prior to commencement of the administrative sanctioning proceeding, plus loss of assets representing the undue advantage obtained. Other Brazilian legislation may regulate similar irregularities and lead to companies facing debarment from entering into contracts with the government.

In terms of economic sanctions, the Head Minister of the CGU has signed 11 leniency agreements involving the payment by sanctioned companies of more than 11 billion reais to the Treasury (including fines and reimbursement of damages). Also, at the federal level, Brazilian authorities have, to date, barred more than 12,000 companies from entering into contracts with public administration authorities.

16What is your country’s approach to sanctions enforcement? Has there been an increase in sanctions enforcement activity in recent years, for example?

The level of enforcement action has increased dramatically during the past decade. In the past, executives of large companies and politicians were rarely arrested. Currently, based only on the Federal Public Prosecutor’s website regarding Operation Car Wash in Paraná (updated in July 2019), almost 2,500 proceedings have been conducted, including 1,237 search and seizure warrants, more than 300 arrests and 11 leniency agreements.

17Do the authorities responsible for sanctions compliance and enforcement in your country co-operate with their counterparts in other countries for the purposes of enforcement?

Brazil has signed several co-operation agreements with enforcement agencies in countries such as Chile, Switzerland and the United States.

18Has your country enacted any blocking legislation in relation to the sanctions measures of third countries? Describe how such legislation operates.

Brazil has not enacted any blocking legislation.

19To the extent that your country has enacted any sanctions blocking legislation, how is compliance enforced by local authorities in practice?

Not applicable.

Before an internal investigation

20How do allegations of misconduct most often come to light in companies in your country?

Allegations of misconduct most often come to the attention of companies through whistleblowers, either in-house or external, investigations conducted by enforcement authorities and internal audits (often with the assistance of external auditors).

Information gathering

21Does your country have a data protection regime?

Brazil has passed data protection legislation that will enter into force in 2020. The law will limit access to an individual’s personal data.

22To the extent not dealt with above at question 8, how is the data protection regime enforced?

It is still uncertain how the data protection regime will be enforced. The Data Protection Authority was created only in July 2019, and no directors have been appointed yet. It is therefore not yet clear whether the main purpose of the Data Protection Authority will be to educate society in general or to impose sanctions.

23Are there any data protection issues that cause particular concern in internal investigations in your country?

The new data privacy law may generate discussions about data collection and access to employees’ personal information during an internal investigation.

24Does your country regulate or otherwise restrict the interception of employees’ communications? What are its features and how is the regime enforced?

No. Under the current system, accessing employees’ communications on corporate devices is permitted.

Dawn raids and search warrants

25Are search warrants or dawn raids on companies a feature of law enforcement in your country? Describe any legal limitations on authorities executing search warrants or dawn raids, and what redress a company has if those limits are exceeded.

Yes. Recent major criminal investigations (e.g., Mensalão, Car Wash, Zelotes and Greenfield) show that search warrants and dawn raids have been the mechanism for public authorities to collect evidence more quickly and effectively. Under Brazilian criminal law, the police must present a specific search and seizure warrant, duly authorised by the court, for a particular department of the company or for material pertaining to certain employees. General searches inside company premises are not allowed. If authorities exceed the limits of the search warrant, both the individuals and companies involved and affected by the improper collection of evidence can claim for such documents to be retracted and excluded from the case.

26How can privileged material be lawfully protected from seizure during a dawn raid or in response to a search warrant in your country?

Under Brazilian law, attorney–client communication is privileged and confidential. The definition of specific spaces within the legal department and the explicit identification of documents covered by privilege are ways to protect material from being improperly seized during a dawn raid.

27Under what circumstances may an individual’s testimony be compelled in your country? What consequences flow from such compelled testimony? Are there any privileges that would prevent an individual or company from providing testimony?

Under Brazilian criminal law, individuals who are suspected of involvement in committing an offence cannot be compelled to give testimony. Such individuals also have the right against self-incrimination and there is no crime of perjury. Compelled testimonies regarding such individuals are illegal and cannot be used in criminal procedures.

Witnesses, on the other hand, are obliged to collaborate with an investigation. If witnesses do not comply with an order to attend a hearing, they can be sanctioned with a fine, can be coercively conducted to a police station or court, and be charged with the crime of disobedience.

Whistleblowing and employee rights

28Describe the whistleblowing framework in your country. What financial incentive schemes exist for whistleblowers? What legal protections are in place for whistleblowers?

Law 13608/2018 establishes that any individual may report a crime to public authorities and may have their identity protected. There is no financial incentive to whistleblowers in Brazil.

In the corporate world, the Clean Company Act regulates the requirements for a compliance programme, which should contain a proper whistleblower channel and policies regarding confidentiality and non-retaliation.

29What rights does local employment law confer on employees whose conduct is within the scope of an investigation? Is there any distinction between officers and directors of the company for these purposes?

Employment law in Brazil has undergone major changes, but it continues to be protective towards employees. As regards conduct within the scope of an investigation, it is recommended that an employee be allowed to defend their actions and counter any accusations.

The investigation must adhere to the required levels of secrecy and discretion to avoid anything being revealed that might cause harm to the employee.

There is no distinction between officers and directors.

30Do employees’ rights under local employment law differ if a person is deemed to have engaged in misconduct? Are there disciplinary or other steps that a company must take when an employee is implicated or suspected of misconduct, such as suspension or in relation to compensation?

An employee involved in misconduct may be reprimanded or dismissed with cause. In either case, he or she has the right to apply for the matter to be addressed in court.

31Can an employee be dismissed for refusing to participate in an internal investigation?

No.

Commencing an internal investigation

32Is it common practice in your country to prepare a document setting out terms of reference or investigatory scope before commencing an internal investigation? What issues would it cover?

This should be assessed on a case-by-case basis, taking into consideration the company and the complexity of the investigation to be undertaken. However, in general, it is deemed good practice to prepare a document that sets out a list of the matters that need to be clarified by the investigation and which mechanisms will be used to achieve those clarifications (e.g. gathering computer records and mobile phone data, interviews and background checks), such as identifying the parties potentially involved in the alleged irregularities, any violations of the relevant legislation and which authority has jurisdiction in the matter.

33If an issue comes to light prior to the authorities in your country becoming aware or engaged, what internal steps should a company take? Are there internal steps that a company is legally or ethically required to take?

In the first instance, is it recommended that, according to Brazilian labour laws, any individuals who may be involved in an offence be suspended. Second, companies must make sure that they collect as much evidence as possible relating to the offence, as this can be used in the company’s defence (if a charge is brought) or to conclude a leniency agreement (as it will require the company to provide clear evidence of the misconduct and to help identify the individuals involved). In addition, the Brazilian Anti-Corruption Law includes provisions relating to interference with investigations and, therefore, the company must issue a retention notice to all employees warning that no documents or data should be eliminated until further notice.

34What internal steps should a company in your country take if it receives a notice or subpoena from a law enforcement authority seeking the production or preservation of documents or data?

If a company receives a subpoena, it should immediately involve its legal team (in-house, external or both) to identify the extent of the allegations, the potential risks, whether other authorities would also have jurisdiction, and which stakeholders should be informed.

The company must respond to the relevant authority in a timely manner, be co-operative, transparent and provide all the information requested, in an accessible format. It is also very important to establish which documents are subject to the attorney–client privilege and that they be dealt with accordingly.

The company should also evaluate and indicate which information and documents should be treated by the authorities as confidential, such as trade secrets.

35At what point must a company in your country publicly disclose the existence of an internal investigation or contact from a law enforcement authority?

The timing and quality of disclosure should be considered in each case or event. Therefore, the decision to publicly report the existence of an internal investigation or contact by law enforcement depends on several factors, including whether the company has shares that are publicly traded.

36How are internal investigations viewed by local enforcement bodies in your country?

Internal investigations are currently encouraged by local law enforcement agencies and, in some cases, local authorities request the assistance of internal investigators to structure their cases.

Attorney–client privilege

37Can attorney–client privilege be claimed over any aspects of internal investigations in your country? What steps should a company take in your country to protect the privilege or confidentiality of an internal investigation?

Any communication between an attorney and a client in the context of a representation are protected in Brazil and are not subject to disclosure to third parties, with limited exceptions. Considering this main rule, an internal investigation may claim privilege over any investigative act conducted under the direction of a lawyer duly registered with the Brazilian Bar Association. To safeguard the protection of privilege, the involvement of individuals who are not lawyers must be as limited as possible.

38Set out the key principles or elements of the attorney–client privilege in your country as it relates to corporations. Who is the holder of the privilege? Are there any differences when the client is an individual?

Under the Brazilian legal system, privilege rules protect any communication between a lawyer and a client in the context of legal representation. The Brazilian Bar Association Code of Ethics provides that an attorney has a duty to maintain confidentiality of all facts of which he or she has become aware while practising law, including activities of mediation, conciliation and arbitration. The rule makes no distinction between a company or an individual.

39Does the attorney–client privilege apply equally to in-house and external counsel in your country?

The attorney-client privilege protects communications involving lawyers and makes no distinction between in-house or external lawyers. To claim such privilege, the lawyer must be licensed by the Brazilian Bar Association and must have received a power of attorney from the client (individual or company) that is being represented.

40Does the attorney–client privilege apply equally to advice sought from foreign lawyers in relation to (internal or external) investigations in your country?

If the legal advice was provided by a lawyer licensed and registered at a foreign bar association and the advice was requested under the direction of a Brazilian lawyer, the advice is protected by Brazilian legislation.

41To what extent is waiver of the attorney–client privilege regarded as a co-operative step in your country? Are there any contexts where privilege waiver is mandatory or required?

Waiver of the attorney–client privilege may be requested by authorities as part of a plea agreement or a leniency agreement. Usually, at the beginning of settlement discussions, the authorities and the individual or company sign a non-disclosure agreement to protect the information that will be shared in the context of the negotiation. After the agreement is signed, a waiver may be included in the resolution.

The attorney–client privilege may be waived in other circumstances, including at the client’s request, and may be breached if the communication is in furtherance of a crime, if it may avoid a threat to someone’s life or honour, or if an attorney needs the information for his or her own protection or in defence of the client.

42Does the concept of limited waiver of privilege exist as a concept in your jurisdiction? What is its scope?

There is no specific regulation covering the extension of a waiver or the prohibition of a limited waiver. In this context, the client may claim a limited waiver. Note that legal proceedings in Brazil have a different level of secrecy and, in some instances, the docket case file may be deemed entirely confidential at the court’s discretion.

43If privilege has been waived on a limited basis in another country, can privilege be maintained in your own country?

As discussed in question 42, clients may claim limited waiver in Brazil and thus privilege may be claimed over information provided from another country.

44Do common interest privileges exist as concepts in your country? What are the requirements and scope?

Parties with a common interest may share privileged information in Brazil as long as lawyers duly represent them and they have authorised communication between counsel.

45Can privilege be claimed over the assistance given by third parties to lawyers?

Considering that the attorney–client privilege in Brazil requires the directive involvement of a lawyer, it is not clear whether the protection may be extended to other parties and must therefore be considered on a case-by-case basis.

Witness interviews

46Does your country permit the interviewing of witnesses as part of an internal investigation?

Yes.

47Can a company claim attorney–client privilege over internal witness interviews or attorney reports?

Yes. Provided an attorney was involved in the process, privilege may be claimed.

48When conducting a witness interview of an employee in your country, what legal or ethical requirements or guidance must be adhered to? Are there different requirements when interviewing third parties?

Brazilian legislation has no provision in this regard. Nevertheless, it is deemed advisable to indicate that the content of the interview is privileged and that the witness should regard the matter as confidential.

49How is an internal interview typically conducted in your country? Are documents put to the witness? May or must employees in your country have their own legal representation at the interview?

Typically, the lawyer conducting the investigation should have a list of questions and documents to be shown as evidence to a witness. Employees, if they so wish and at their request, may have their own legal representation at the interview.

Reporting to the authorities

50Are there circumstances under which reporting misconduct to law enforcement authorities is mandatory in your country?

Reporting misconduct is not mandatory in Brazil. However, if a company or individual wants to enter into a leniency agreement or plea agreement, co-operation is required.

51In what circumstances might you advise a company to self-report to law enforcement even if it has no legal obligation to do so? In what circumstances would that advice to self-report extend to countries beyond your country?

Self-reporting is advisable when a company wants to enter into a leniency agreement to obtain the benefits of self-reporting and co-operation.

Prior to self-reporting, it is highly recommended to identify which authorities are likely to have jurisdiction over the matter and contact them all, to mitigate any risk of legal uncertainty in connection with a subsequent investigation and to avoid any lawsuits being initiated by other authorities on the basis of the information reported to a specific authority.

This same process should be extended to foreign countries. If other potential jurisdictions are identified, it is recommended to seek legal advice in those countries to establish whether self-reporting is advisable, and to aim to reach a global settlement.

52What are the practical steps you need to take to self-report to law enforcement in your country?

Self-reporting can be very complex in Brazil as more than one enforcement agency may have an interest in any single case. For example, based on the Clean Company Act, the federal comptroller general, the Federal Prosecutor’s Office and the Office of the Attorney General should participate in a leniency agreement.

Responding to the authorities

53In practice, how does a company in your country respond to a notice or subpoena from a law enforcement authority? Is it possible to enter into dialogue with the authorities to address their concerns before or even after charges are brought? How?

In cases where a company has already launched an internal investigation and may be expecting contact from the relevant authorities, the counsel conducting the investigation should recommend the best strategy. When a notice or subpoena is issued unexpectedly, the company should immediately retain an experienced counsel and discuss the best approach.

Some authorities are open to being approached by companies and may agree to initiate discussions on a possible settlement. Other authorities are more restricted and may not agree to provide any information to companies. In the latter case, companies may claim access to investigative proceedings in court.

54Are ongoing authority investigations subject to challenge before the courts?

Any individual or company under investigation may challenge proceedings in a court of law if any rights are violated. The challenge may be broad, such as to terminate the investigation, or limited, with respect to a specific act or piece of evidence.

55In the event that authorities in your country and one or more other countries issue separate notices or subpoenas regarding the same facts or allegations, how should the company approach this?

Based on recent cases in Brazil, it is clear that Brazilian and foreign authorities are in constant communication and have shared relevant information between them. Thus, it would be advisable to retain counsel in all countries that may be involved in the enforcement actions. Counsel should decide the best strategy on a case-by-case basis and, if possible, should initiate communications with all authorities at the same time.

56If a notice or subpoena from the authorities in your country seeks production of material relating to a particular matter that crosses borders, must the company search for, and produce material, in other countries to satisfy the request? What are the difficulties in that regard?

In general, a company must search and produce any material requested by the authorities. It is important to note that, if the material or documents are located in a country with restricted privacy laws, the company must retain local counsel and must report the legal conflict to the authorities. In certain cases, to avoid local claims, the foreign authorities should request production of the document directly to a local authority and not to the company.

57Does law enforcement in your country routinely share information or investigative materials with law enforcement in other countries? What framework is in place in your country for co-operation with foreign authorities?

As has been seen during the Operation Car Wash investigations, the Brazilian authorities have shared and received information from several authorities, including in the United States and Switzerland. Brazil has signed bilateral co-operation agreements with several other countries, including Chile and Switzerland, and has ratified international agreements such as the Palermo Protocols and the US Foreign Account Tax Compliance Act.

58Do law enforcement authorities in your country have any confidentiality obligations in relation to information received during an investigation or onward disclosure and use of that information by third parties?

The Supreme Federal Court is expected to deliver a final decision (by the end of 2019) regarding the legality and extent of the sharing of information obtained by financial intelligence units with prosecutors, and whether prior authorisation from a judge is necessary. That decision will be a key factor in current and future investigations.

As regards the content of a leniency agreement, its provisions will regulate restrictions on the sharing of information. There are court precedents authorising the sharing of information with other authorities, provided that the restrictions agreed by the parties are respected.

Any evidence gathered during the course of investigations conducted by prosecutors shall be confidential, and withheld from any third parties.

59How would you advise a company that has received a request from a law enforcement authority in your country seeking documents from another country, where production would violate the laws of that other country?

Some authorities have a duty to preserve the confidentiality of investigation proceedings (such as the police and the Council for the Control of Financial Activities). However, they must share any information that relates to criminal activities or felonies with other authorities who have launched criminal proceedings. A docket criminal case may be deemed to be sealed (to protect a victim or if the victim is a minor), but the main ruling deems that any criminal case should be public and accessible. Companies may claim secrecy, but the matter will be decided by the judge responsible for the case.

60Does your country have secrecy or blocking statutes? What related issues arise from compliance with a notice or subpoena?

Brazil has just promulgated a data protection law that is expected to enter into force in 2020. According to this law, companies and individuals may only retain information about other individuals or companies if supported by particular requirements. It is not clear how the law will be implemented.

There is existing legislation that regulates international law and requires approval from the Superior Court of Justice for the enforcement of international decisions or subpoenas. Such decisions or subpoenas will not be deemed valid and enforceable if they violate Brazilian sovereignty.

61What are the risks in voluntary production versus compelled production of material to authorities in your country? Is this material discoverable by third parties? Is there any confidentiality attached to productions to law enforcement in your country?

There is no particular risk for voluntary production. Considering that co-operation may result in a reduction of sanctions in the context of the Brazilian Anticorruption Law, companies may consider voluntary disclosure. Once produced (voluntarily or compelled), the material may be discoverable if there is no requirement to maintain secrecy in the case. There is no particular confidentiality in the production of material, but a company may request secrecy in respect of all material or business-related information.

Prosecution and penalties

62What types of penalties may companies or their directors, officers or employees face for misconduct in your country?

Following conviction, penalties that may be applied to individuals (including company directors) are imprisonment, restriction of rights, or fines.

The restriction of rights may be substituted for imprisonment if the following requirements are fulfilled: (1) the penalty applied is less than four years’ imprisonment and no violence or serious threat was used (in case of negligent conduct, there is no temporal limit); (2) the convicted person should not have committed the same wilful crime previously (specific recidivism prevents this substitution); and (3) the offender’s personal characteristics and behaviour should indicate that such penalties are adequate.

According to the Criminal Code, restriction of rights can include:

  • payment to the victim or to charitable entities;
  • confiscation of assets and valuables;
  • attending conferences or courses, or participating in educational activity at a prison facility, for five hours on a Saturday and Sunday;
  • community service;
  • temporary removal of certain rights, such as holding a public or elective position, joining a profession that requires a special licence or authorisation from public agencies, visiting certain locations, or applying for public competitions, evaluations or exams.

Other types of restriction of rights penalties can be applied in specific instances, such as for crimes against consumers (under Federal Law No. 8,078/1990) or environmental crimes (under Federal Law No. 9,605/1998).

Legal entities are subject to the following criminal penalties:

  • fine;
  • community service;
  • partial or total suspension of activities;
  • temporary restrictions on establishments, plants, projects or activities;
  • disqualification from contracting with government entities, and from obtaining public subsidies, grants or donations for up to 10 years (Article 22, Federal Law No. 9,605/1998).

63Where there is a risk of a corporate’s suspension, debarment or other restrictions on continuing business in your country, what options or restrictions apply to a corporate wanting to settle in another country?

From a criminal perspective, settlement in another country does not prevent a company (or its directors) being held criminally liable in Brazil. In view of the co-operation between authorities, information presented to a foreign authority can potentially be shared with Brazilian authorities and, therefore, expose the company and its directors to criminal liability in Brazil.

64What do the authorities in your country take into account when fixing penalties?

Brazilian courts should follow three steps to determine the penalties that will be imposed on an individual. In the first instance, the court should consider:

  • regarding the individual: his or her culpability, criminal background and social behaviour;
  • regarding the crime: the motivations, circumstances and consequences; and
  • regarding the victim: his or her conduct (i.e., any contribution to, or facilitation of, the crime).

Second, penalties should be made more severe in consideration of:

  • recidivism by the offender;
  • the motivation for the crime;
  • how the crime was committed;
  • who the victim is;
  • the behaviour of the offender during the crime;
  • the context in which the crime was committed; and
  • the leadership of the offender.

Conversely, penalties may be reduced in consideration of:

  • confession of the crime by the offender;
  • the offender’s age;
  • the motivation for the crime; and
  • any attempt by the offender to mitigate the consequences of the crime.

As a third step, the court should consider general or specific criteria – depending on the crime in question – to increase or decrease penalties (e.g., attempted use of a firearm).

In relation to fines, criminal law prescribes certain parameters. In addition, the financial situation of the offender should be considered in applying an appropriate penalty.

Resolution and settlements short of trial

65Are non-prosecution agreements or deferred prosecution agreements available in your jurisdiction for corporations?

No. However, Brazil has settlements in place to mitigate sanctions in the form of leniency agreements.

66Does your jurisdiction provide for reporting restrictions or anonymity for corporates that have entered into non-prosecution agreements or deferred prosecution agreements until the conclusion of criminal proceedings in relation to connected individuals to ensure fairness in those proceedings?

Reporting restrictions or anonymity for corporates are determined in each leniency agreement to ensure the effectiveness of the collaboration and the useful outcome of the lawsuit. In general, to ensure fairness in these proceedings, a proposed leniency agreement will not be announced to the public until after the agreement is effective or after the district attorney’s office presses charges against the defendants.

67Prior to any settlement with a law enforcement authority in your country, what considerations should companies be aware of?

Companies must understand that a settlement must be negotiated with all the enforcement agencies at the same time.

68To what extent do law enforcement authorities in your country use external corporate compliance monitors as an enforcement tool?

There is no legal provision regulating the use of external monitors, although there has started to be some use of this tool in Brazil, such as in the Odebrecht case.

69Are parallel private actions allowed? May private plaintiffs gain access to the authorities’ files?

Third parties may file an indemnity or contractual judicial claim and a court or authority may decide to provide access to third parties.

Publicity and reputational issues

70Outline the law in your country surrounding publicity of criminal cases at the investigatory stage and once a case is before a court.

According to Brazil’s Criminal Procedure Law, a police investigation is generally public. However, an investigation may be conducted in secret when this measure is necessary for the police to ensure the effectiveness of the investigation or to protect the identity of a suspect or victim. Individuals under investigation and their attorneys are entitled to have access to the records of the investigation, except any measures that are still being conducted (e.g., searches and seizures that are still being prepared or ongoing wiretapping).

Criminal lawsuits are also public, unless secrecy is necessary to protect the privacy and identity of the defendant or the victim.

71What steps do you take to manage corporate communications in your country? Is it common for companies to use a public relations firm to manage a corporate crisis in your country?

It is common for larger companies to use external public relations companies, and publicly traded companies make use of their internal investor relations departments. These are the most common options for handling external communications. In view of the vast repercussions from involvement of the media in Brazilian corruption cases, it is suggested that companies seek the assistance of consultants who specialise in investor relations (if the company is listed) or a public relations firm that specialises in crisis management. It is also recommended that companies put in place internal procedures for handling these kinds of situations.

72How is publicity managed when there are ongoing related proceedings?

Companies should always be aware of the pros and cons of disclosing, or not disclosing, relevant information in relation to an ongoing investigation. Furthermore, it is advisable that the attorneys responsible for the case always be involved in the decision-making process to avoid a higher degree of risk regarding the individual’s or company’s liability.

Duty to the market

73Is disclosure to the market in circumstances where a settlement has been agreed but not yet made public mandatory?

This should be assessed on a case-by-case basis, but is mainly dependent on whether the matter involves a publicly traded company, in which case, the company has a duty to disclose material information regarding the its business and finances, as they relate to the settlement.

Anticipated developments

74Do you expect to see any key regulatory or legislative changes emerge in the next year or so designed to address corporate misconduct?

The data privacy law is due to enter into force and will restrict access to certain information. This may have a great effect on internal investigations and on the sharing of information with the authorities. Further, several bills of law are in Congress, which may have a great effect on anti-corruption measures. One of the proposals is to impose limits on certain investigation measures and to make any wrongdoing or misconduct by a member of the judicial or police authorities a criminal offence. Finally, a new anti-corruption project put forward by Minister of Justice Sérgio Moro is under discussion in Congress.


Footnotes

1 Heloísa Barroso Uelze, Felipe Noronha Ferenzini and João Augusto Gameiro are partners at Trench Rossi Watanabe. The authors wish to acknowledge the assistance of senior associate Silvia Helena Cavalcante de Almeida and associate Bianca Bonugli de Lima Amancio, Marcelo Ramos Leite, Natalie Ribeiro Pletsch, Tiago Caruso Torres and Gustavo Lima Kroger.

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