Brazilian Evolution in the Anti-corruption Arena


In summary

This chapter goes through the interplay of the different authorities and the current anti-corruption enforcement scene in Brazil. While analysing the application of different anti-corruption laws, this chapter also considers the impacts of the overlapping of jurisdictions and laws in companies that choose to cooperate and sign leniency agreements stemming from corruption violations. The precedents arising from settlements have been key for understanding the application of fines, penalties and compliance obligations arising therewith. Thus, this chapter also focuses on this aspect of leniency agreements.


Discussion points

  • The Brazilian Clean Companies Act (BCCA) has become the central piece in the anti-corruption framework
  • To date, the Office of the Comptroller General (CGU) has opened 785 administrative proceedings and fined 106 companies under the BCCA, resulting in total fines of approximately 22.3 million reais
  • The Federal Prosecution Office (MPF) applied civil fines in leniency agreements totalling 13.1 billion reais
  • The MPF signed its first leniency agreement in 2014, while the CGU signed its first leniency agreement in 2017
  • All leniency agreements signed by the CGU provide for compliance obligations to the companies

Referenced in this article

  • Federal Law No. 12,846/2013 (Brazilian Clean Companies Act)
  • Federal Law No. 8,429/1992 (Improbity Law)
  • Federal Prosecution Office
  • Office of the Comptroller General

Introduction

In the past years, Brazil has enacted a range of legislation within the anti-corruption arena, shifting the legal framework towards a more negotiated justice. Starting with additional incentive for individuals to blow the whistle on co-participants of a criminal organisation[1] to establishing the provision of leniency agreements for legal entities,[2] the current landscape has been mainly built through negotiations with relevant authorities. And with these authorities providing significant transparency and publicity into the negotiated terms, precedents arising from negotiations have been key to understanding the application of fines, penalties and compliance obligations.

One of the many efforts to fight corruption in Brazil was the enactment of Law No. 12,846/2013, which came into force on 29 January 2014 and is commonly referred to as the Brazilian Clean Companies Act (BCCA).

Although having become the central piece in the anti-corruption framework, not many precedents are available for interpreting the BCCA provisions.

The BCCA and other laws coincided with Operation Car Wash, the precedent-setting investigation into corruption, cartel and money laundering involving Petrobras and other government­-owned or controlled companies, spreading throughout the country to investigate different sectors. In this regard, one of the aspects that allowed for the magnitude of Operation Car Wash was that every individual and company that wanted to settle had to present information on new violations. Seen as an investigative tool rather than a right for investigated parties, settlements were essential for moving the investigation forward.

The negotiated resolutions provide critical information to the authorities, precipitate the damages compensation and do not overload the judicial system. Considering the publicly available information and the lack of clear judicial precedents, this chapter will lean on precedents from leniency agreements to navigate the evolution of the Brazilian anti-corruption arena – especially because negotiated resolution is, in itself, part of the evolution.

Current scenario

The enforcement against violations related to the wide spectrum of corruption, including bid-rigging, defrauding contracts with the public administration and defrauding governmental inspections and investigations, may expose companies to multiple statutes that can be enforced by overlapping authorities, leading to multiple sanctions. The main Brazilian statutes that might be applicable to the referred conduct are the Improbity Law,[3] the BCCA and the Public Procurement Act (PPA).[4]

Brazilian-Evolution-in-the-Anti-corruption-Arena-1Sources: MPF and CGU official websites, accessed on 10 July 2020.
US$1 = 5.26 Brazilian reais*
US$100 = 526.20 Brazilian reais*
*As at 17 September 2020

On the federal level, the key authorities involved in enforcing these laws and negotiating leniency agreements are the Office of the Comptroller General (CGU), the Office of the Attorney General (AGU) and the Federal Prosecution Office (MPF).

Number of MPF’s leniency agreements per state

ome leniency agreements had the involvement of  offices from more than one state*Some leniency agreements had the involvement of MPF offices from more than one state.

In summary, the CGU is the competent authority to enforce the BCCA, concurrent with the affected government entities, and to enter into leniency agreements. The AGU, a regulatory agency that represents the Central Federal Office, has jurisdiction to enforce the Improbity Law and has been participating in the negotiation of leniency agreements at the same table as the CGU. The MPF is the competent authority to prosecute individuals and has concurrent jurisdiction to enforce the Improbity Law and the BCCA.

The CGU and AGU,[5] have jointly signed 11 leniency agreements to date,[6] in which the total amount due from the companies usually includes damages compensation, disgorgement and fines under the BCCA and the Improbity Law. The information made available about most of those leniency agreements indicates precisely what amount of the fines concern the BCCA or the Improbity Law.

In parallel, the MPF has signed 30 leniency agreements.[8] Most of these agreements have been made publicly available. However, information on the nature of fines and disgorgement are not so clearly defined. Considering that the MPF has independent offices in different jurisdictions within Brazil and the broad range of violations under the MPF jurisdiction, the level of standardisation is not as consistent as those found in agreements with the CGU and AGU. Another difference is the fact that agreements with the MPF allow for individuals to join in exchange for criminal immunity.[9]

Fines

Fines in the anti-corruption arena have been applied mainly based on two laws: the BCCA and the Improbity Law.[10]

In the context of leniency agreements, fines based on both the BCCA and the Improbity Law have been applied simultaneously – noting that the fine based on the BCCA is only applied for facts that took place after 2014 or if it refers to a continued offense.

The Brazilian Clean Company Act

In case of violations to its provisions, the BCCA sets forth a fine that can vary from 0.1 per cent to 20 per cent of the company’s gross annual revenue or, if it is not possible to measure the company’s revenue, from 6,000 reais to 60 million reais.[11]

The Federal Decree No. 8,420/2015[12] provides criteria composed of aggravating and mitigating elements that allows for a significant level of visibility when calculating the percentage of the fine.

One of the criteria to set the fine is the assessment of the company’s compliance programme. The CGU has published a manual to conduct such assessment in an attempt to standardise the fine application.[13] The assessment of the programme is made by a specialised unit within the CGU that is different from the unit that negotiates leniency agreements or conducts administrative proceedings.

To date,[14] the CGU has opened 785 administrative proceedings and fined 106 companies under the BCCA, which resulted in total fines of approximately 22.3 million reais.

Improbity Law

The Improbity Law provides for a civil fine of up to three times the amount of the additional property acquired by the company from the violation, damages compensation and disgorgement.[15]

Furthermore, in some Improbity Law lawsuits brought by the MPF in the context of Operation Car Wash, the MPF requested that defendants also pay an amount concerning non-material damages, due to the intangible harm caused to the society and the reputational harm suffered by the damaged entity. This was the case for lawsuits against Mendes Junior and Engevix. In the Queiroz Galvão case, the MPF also requested non-material damages due to the reputational harm suffered by Petrobras.

In this respect, the Federal Court of Paraná State convicted Mendes Júnior, on 10 October 2019, and set the non-material damage of 10 million reais, as well as a civil fine of 299 million reais and damages compensation of 74 million reais.[16] Engevix and Queiroz Galvão are still waiting for the court’s ruling.

Fines under leniency agreements

In nine out of the 11 leniency agreements signed by the CGU and AGU, the legal basis for the fines were clearly described and included amounts under the BCCA and the Improbity Law. In these cases, the total amount of fines applied under the BCCA amounted to approximately 976 million reais, while fines under the Improbity Law totalled 963 million reais. Odebrecht received a 442 million reais fine under the BCCA, while SBM Offshore received a 264 million reais fine under the Improbity Law, which were the highest amounts of their respective legal basis ever applied by CGU and AGU on leniency agreements.

CGU/AGU and MPF leniency agreements per year

 and  leniency agreements per year

The amount of fines in leniency agreements of SBM Offshore and Technip Brasil were based solely on the Improbity Law, which amounted to 264 million reais and 189 million reais respectively. The BCCA fine was not applicable to Technip Brasil, because the violations occurred before the BCCA entered into force.[17] The BCCA fine was also not applied to SBM Offshore.[18] On the other hand, the agreements with Mullen Lowe and Odebrecht only involved the application of the BCCA fine, 8 million reais and 126 million reais respectively, and did not provide for fines under the Improbity Law.

In the leniency agreements signed by the CGU and AGU with Andrade Gutierrez and UTC Engenharia, however, the legal basis for the amounts were not specified.[19] In the former, fines totalled 286 million reais, which was indicated as referring to both the BCCA and the Improbity Law. In the latter, a total amount of 575 million reais was indicated as covering fines under the BCCA and Improbity Law, damages compensation and disgorgement.

The most significative leniency agreement signed by the CGU and AGU in amounts was with Braskem in the amount of 2.9 billion reais, which included 126 million reais as BCCA fine, 249 million reais as Improbity Law fine, 1.26 billion reais for damages compensation and 1.24 billion reais of disgorgement.

To date,[20] the MPF has signed 30 leniency agreements that are all based, among other laws and international conventions,[21] on the BCCA. This is mainly because the Improbity Law did not provide for any kind of agreement or settlement until very recently.

The legal basis of the fines set by the MPF in leniency agreements varies from case to case. Most of the agreements laid down fines under the Improbity Law, such as Andrade Gutierrez, SBM Offshore, Braskem, Rolls-Royce, Keppel Fels, Ecorodovias and Rodonorte. On the other hand, the MPF set fines under the BCCA in some agreements, such as Getinge, Andrade Gutierrez and Braskem – in the latter two cases, fines were applied under both laws.

In other cases, such as Odebrecht, Camargo Correa and Carioca Engenharia, the MPF has only set an amount for damages compensation, as well as an amount regarding forfeiture of assets related to violations to the Federal Law No. 9,613/1998 (Anti-Money Laundering Law), but no fines.

The MPF signed its most significative leniency agreement in terms of amounts with J&F, which agreed to pay 10.3 billion reais, including a fine and damages compensation. It is not clear what law was applied based on publicly available data, nor what amount relates to fine or damages compensation.

In some of the leniency agreements signed by the MPF, such as with SOG Óleo e Gás, the fine is called a ‘civil fine’, without the proper definition of its legal basis. In some agreements the civil fine might refer to the fine under the Improbity Law or even under the BCCA. According to the MPF’s information, the sum of civil fines set in the 30 leniency agreements reaches nearly 13 billion reais, while the total amount of the agreements is about 22.5 billion reais.

Offset amounts

Considering that the CGU and AGU, and the MPF are the main authorities negotiating leniency agreements, several companies entered into agreements with both authorities to prevent sanctions arising from the BCCA and the Improbity Law over the same conducts.

In those cases, there are some examples where the amount paid to one authority offsets the payment to another.

Odebrecht entered into a leniency agreement with the MPF on December 2016 and agreed to pay 3.8 billion reais, including damages compensation and disgorgement under the Anti-Money Laundering Law. In July 2018, Odebrecht entered into an agreement with the CGU and agreed to pay 2.7 billion reais, including the BCCA fine, damages compensation and disgorgement. Odebrecht offset the amounts of both agreements, however the CGU and the MPF had discussions and issues regarding which entity should be compensated.[22]

Number of leniency agreements of each authority per sector

umber of leniency agreements of each authority per sector

In the SBM Offshore case, Petrobras was the only entity harmed and, therefore, the only one to be compensated. SBM Offshore entered into a leniency agreement with the CGU in July 2018 and agreed to pay 1.2 billion reais, including fine under the Improbity Law, damages compensation and disgorgement. SBM Offshore’s agreement with the MPF in August 2018 laid down the total amount of 1.4 billion reais, including a fine under the Improbity Law, damages compensation and disgorgement. The difference between both agreements only refers to the Improbity Law fine. In practice, the MPF agreement just resulted in an additional 200 million reais to Petrobras, considering the 1.2 billion reais already agreed with the CGU.

Braskem entered into a leniency agreement with the MPF and the United States Department of Justice (DOJ) in December 2016 and agreed to pay 3.1 billion reais, including a fine under the Improbity Law, damages compensation and disgorgement under the Anti-Money Laundering Law. In May 2019, Braskem entered into an agreement with the CGU and AGU and agreed to pay 2.8 billion reais, including fines under the BCCA and the Improbity Law, damages compensation and disgorgement. In practice, since Braskem had already paid several instalments to the MPF and the DOJ, the balance of Braskem debt with the CGU and AGU was just 410 million reais.[23]

The MPF and the CGU and AGU showed greater cooperation in the MullenLowe/FCB Brasil and Technip Brasil cases. In both cases the companies negotiated jointly with the MPF and the CGU and AGU, which agreed to set the same amount in their leniency agreements.

Penalties

Besides fines, penalties under the BCCA includes disgorgement (confiscation of profits resulting from wrongdoings), damages compensation, publication of extract of condemnatory decision, blacklisting and prohibition to receive incentives, subsidies, subventions, donations or loans from public entities.

Likewise, the Improbity Law provides for debarment, disgorgement, damages compensation and prohibition to receive incentives, subsidies, subventions, donations or loans from public entities, for one to five years.

The PPA provides for debarment, temporary suspension of the right to participate in public bids and enter into contracts with government entities for up to two years and damages compensation.

The Regional Federal Court of the Fourth Region (TRF4) ruled, in May 2020, that a lawsuit under the Improbity Law filed by the AGU should be dismissed if the defendant has entered into a leniency agreement with the AGU.[24] This specific case relates to UTC Engenharia, in which TRF4 held that the agreement already set an amount concerning fines and damages compensation, therefore the UTC Engenharia should not be subject to a lawsuit concerning the same facts.

TRF4 ruled, in February 2020, that the defendants of an improbity lawsuit filed by MPF should not be sanctioned if a leniency agreement is signed with the CGU and AGU.[25] This specific case relates to Odebrecht, however, unlike the TRF4 ruling; in this case the lawsuit will continue until a declaratory judgment. TRF4 held that all damages caused by Odebrecht’s conducts were already covered by the leniency agreement signed with the CGU and AGU.

On 10 March 2020, the MPF filed for a provisional measure against J&F to prevent the company from performing corporate spin-offs, changing its headquarters to overseas and taking the company public in foreign countries.[26] The MPF’s request has the purpose of ensuring J&F’s compliance to the terms of the leniency agreement. According to the MPF, J&F has not fulfilled its obligations concerning the execution of social projects and the reports related to the internal investigations conducted on the companies of J&F’s business group. The matter did not receive a final ruling yet.

Disgorgement and damages compensation

The amounts requested by the CGU concerning disgorgement and damages compensation in the scope of the administrative proceedings under the BCCA are not publicly available, unlike the information about the CGU leniency agreements.

In nine out of the 11 leniency agreements signed by the CGU and AGU, the amounts regarding disgorgement and compensation were singled. The total amount of disgorgements reached about 6.3 billion reais, while damages compensation totalled about 4.3 billion reais. Odebrecht faced the highest disgorgement amount with 1.3 billion reais, while the company facing the highest damages compensation amount was Braskem, which disbursed 1.26 billion reais.

Bilfinger’s leniency agreement with the CGU and AGU provides for an amount of about 9.5 million reais for both disgorgement and damages compensation. Furthermore, the 575 million reais laid down on UTC Engenharia’s leniency agreement covers both fines, disgorgement and damages compensation.

The CGU and AGU leniency agreements provide that amounts regarding disgorgement and damages compensation should be delivered to the entities damaged by the wrongdoings.

In SBM Offshore’s case, the CGU and AGU established the disgorgement at 667 million reais. The amount should be deducted from payments due by Petrobras to SBM Offsore, under an ongoing contract between them.[27]

The MPF also sets amounts due to disgorgement and damages compensation, but there are several differences from case to case. In the leniency agreements signed with Odebrecht, Carioca Engenharia and Camargo Correa, the MPF applied disgorgement under the Anti-Money Laundering Law,[28] as well as damages compensation. In these cases, the amount of damages was earmarked to the entities damaged by the wrongdoings.

In 2019, the MPF signed leniency agreements with Ecorodovias[29] and Rodonorte,[30] in which the MPF laid down an unprecedented method for compensating damages. Both are infrastructure companies that build and manage federal highways through concession agreements.

Ecorodovias agreed to pay 370 million reais of damages compensation, while Rodonorte agreed to pay 715 million reais. In these cases, instead of establishing an amount to be directed to the entities harmed, both companies had to compensate damages by supporting a 30 per cent reduction in all road tolls held by the companies and executing renovations on the roads that should have been already renovated based on the concession contract.

J&F signed a leniency agreement with the MPF in June 2016 and agreed to pay 10.3 billion reais of fines and damages compensation, in which the MPF laid down the entities that should be compensated. Among them, the agreement provided for 2.3 billion reais to be paid through social projects until 2041. In May 2020, the MPF amended the agreement establishing that J&F executes the social projects in 2020, to support efforts against covid-19.[31]

Besides the CGU, the AGU and the MPF, the Federal Accounting Court (TCU) has the constitutional duty to seek for damages compensation for the federal treasury.[32] To ensure the damages compensation, the TCU might freeze the assets of companies involved in wrongdoings. In 2017, as part of the Operation Car Wash, the TCU froze about 7.57 billion reais of assets from companies such as Odebrecht, UTC Engenharia, Queiroz Galvão, Galvão Engenharia, Iesa, Engevix and Promon, regardless of the leniency agreements signed by some of these companies with the MPF (Odebrecht and UTC Engenharia).[33]

In June 2020, the Brazilian Supreme Court (STF) began adjudicating a lawsuit concerning the possibility of the TCU to freeze companies’ assets. Thus far, only Supreme Court Justice Marco Aurélio de Mello stated his opinion that TCU has no jurisdiction to freeze assets of private companies hired by the government.[34]

Debarment

To date, the CGU has debarred 618 companies,[35] such as Mendes Júnior,[36] Queiroz Galvão[37] and Techint,[38] as a result of administrative proceedings in which the applicable law for penalties were the Improbity Law and the PPA, but followed procedural rules from the BCCA, which resulted in the prohibition of the companies to enter into contracts with the government for two years.

Under the Improbity Law, the MPF has filed for the debarment of several companies. The Federal Court of the State of Paraná (JFPR) convicted Mendes Júnior on 10 October 2019 under the Improbity Law and declared its debarment for 10 years.[39]

Signing a leniency agreement with the CGU and AGU or the MPF prevents these entities from debarring the companies. This is especially relevant for infrastructure and construction companies that aim at contracting with government entities.

The TCU also has jurisdiction to debar companies, but the TCU does not take part in leniency agreements. In March 2017, the TCU debarred Queiroz Galvão, EBE, Techint and UTC Engenharia. Moreover, the TCU postponed the decision concerning the debarment of Andrade Gutierrez due to the leniency agreement signed with the MPF, but set conditions for not imposing the debarment. [40]

The TCU’s decision raised an issue regarding the effectiveness and validity of leniency agreements, considering that UTC Engenharia had signed an agreement with the CGU and AGU and Andrade Gutierrez with the CGU and AGU, and also the MPF.

The matter concerning UTC Engenharia and Andrade Gutierrez, among other companies, was brought to the STF [41] in May 2020, to adjudicate regarding the possibility of the TCU declaring the debarment of companies that signed leniency agreements.

Andrade Gutierrez signed a leniency agreement with the MPF in January 2016 [42] and signed a leniency agreement with the CGU and AGU in December 2018. [43] UTC Engenharia signed a leniency agreement with the CGU and AGU in July 2017. [44]

Both companies filed for a writ of mandamus before the STF to prevent the debarment from TCU. To date, just two out of five Supreme Court Justices ruled over the matter. Justice Gilmar Mendes granted the writ of mandamus for both companies, holding that the leniency agreements already set the penalties concerning the wrongdoings and the companies along with the authorities signed the agreements in good faith, otherwise the leniency agreements would have no purpose. [45]

Justice Edson Fachin agreed with Justice Mendes’ construction concerning Andrade Gutierrez, which had signed a leniency agreement with the MPF before the debarment, so he granted the writ of mandamus. However, Justice Fachin held that UTC Engenharia should not receive the same benefit, since the company signed its leniency agreement only after the debarment and therefore it did not show good faith.

Compliance obligations

Having a compliance programme is neither mandatory nor an affirmative defence in case of anti-corruption violations in Brazil, but there are exceptions.

Some states, such as Amazonas, [46] Goiás, [47] Mato Grosso, [48] Rio de Janeiro, [49] Rio Grande do Sul [50] and the Federal District, [51] enacted local statutes that require companies to have a compliance programme in place to enter into a contract with the state government. Espírito Santo even established a code of conduct to which government suppliers must undertake. [52]

Leniency agreements with compliance obligations

ncludes publicly available agreements onlybrbeniency agreements with compliance obligationsb*Includes publicly available agreements only

Other states such as Bahia, São Paulo and Tocantins, and the municipality of Goiânia, have similar bills aiming at requiring compliance programmes for companies willing to sell to or supply to local governments. There is also an ongoing bill at the Federal House of Representatives [53] proposing similar requirements to contracts with the federal government, through amendments to the BCCA.

The Ministry of Agriculture, Livestock, and Supply (MAPA) issued an ordinance [54] requiring companies to demonstrate the existence of a compliance programme within nine months from the signing of a contract with MAPA.

The Brazilian Securities Commission [55] and the Central Bank [56] have also established rules requiring financial institutions and public traded companies to implement and maintain anti-money laundering mechanisms and to mitigate compliance risks.

Compliance obligations stemming from leniency agreements

Authorities often turn to leniency agreements as a tool to impose compliance obligations. Despite the increasing cooperation among enforcement authorities empowered to settle anti-corruption and antitrust matters, Brazil still lacks a full cross-jurisdictional guideline as to the obligations each authority may impose while negotiating a settlement, especially in terms of compliance and monitoring obligations [57].

There is no clear distinction as to which authority is entitled to impose what compliance obligation, such as improvement of compliance programme, monitorship and reporting. Thus, compliance obligations have been included in leniency agreements signed by the CGU, the AGU and the MPF. In fact, even the US Securities Exchange Commission and the DOJ have required the implementation or improvement of compliance programmes and independent monitorship to certain Brazilian companies.[58]

As a result of the overlapping jurisdictions and the incipient coordination among the authorities, the compliance obligations stemming from leniency agreements with Brazilian authorities have been going in different directions for the past years.

The agreement signed by the CGU and AGU with Camargo Correa, in July 2019,[59] provides for a report of an implementation plan of a compliance programme within the requirements set forth in Federal Decree No. 8,420/2015 and a two-year term for obtaining the ISO 37001 certification at the company.

The CGU and AGU stipulated similar compliance obligations to Braskem in May 2019.[60] The MPF signed a separate agreement with Braskem in December 2016, providing for the implementation of a compliance programme within the requirements set forth in Decree No. 8,420/2015,[61] but the agreement provided no requirement to obtain the ISO certificate.

In January 2017, the MPF requested Rolls-Royce to implement a compliance programme within the requirements set forth in Decree No. 8,420/2015,[62] while the DOJ and the UK Serious Fraud Office requested the company to implement a compliance programme and also to review its internal accounting controls[63].

A leniency agreement jointly signed by the MPF, the CGU and the AGU with Mullen Lowe and FCB Brasil in April 2018[64] stipulated specific recommendations to the companies’ compliance programmes and a two-year periodic report to the CGU regarding the development of the compliance programmes.

Despite of the inconsistencies, the compliance obligations imposed by leniency agreements on some of the biggest conglomerates in the country have contributed to the development and fast pace growth of compliance in Brazil.[65]

Number of agreements grouped by external monitorships and compliance obligations

ix agreements provide for both monitorship and compliances programme*Six agreements provide for both monitorship and compliances programme

Monitorship

Following the international benchmark, the MPF and the CGU began including monitorship provisions in leniency agreements to ensure integrity of the cooperating companies.

The CGU usually monitors the implementation and progress of compliance programmes directly, through periodic report and, usually, for a minimum two-year term. This was the case for Technip, SBM Offshore, Andrade Gutierrez and UTC Engenharia.

The MPF, on the other hand, follows monitorship requirements more similar to the structure adopted by the DOJ. That is, to require companies to hire external independent monitors and have them reporting the progress to the MPF — even though there is no formal reporting procedure. That was the case in two landmarked leniency agreements signed with two road concessionaires: Rodonorte, from the CCR Group, in June 2019, and Ecorodovias, in December 2019. In both cases, the companies agreed to hire a 32-month independent monitor supervised by the MPF.

The MPF has also imposed independent monitorship on Braskem and Odebrecht. In these cases, the MPF acted in cooperation with US authorities and each side provided for separate independent monitorship requirements.

The DOJ has also imposed independent monitorship on Brazilian companies without a cooperation with local authorities, which was the case for Embraer’s deferred prosecution agreement, in October 2016, in which Embraer agreed to a three-year monitor and retained an international law firm for this role.[66]

Conclusion

Brazil has certainly gone a long way in combating corruption over the years. Authorities had to overcome the challenges of undefined rules arising from newly created laws and lacking precedents.

Despite of the overlapping laws and jurisdictions, authorities’ attempts to coordinate the application of fines, penalties and compliance obligations have been evolving steadily. Moreover, the judiciary is intervening when such coordination is not effective or not taking place. Given its short implementation period, anti-corruption enforcement has remarkably improved in Brazil.

Some of these challenges will persist in the coming years and include settling overlapping jurisdictions that have resulted in uneven fines and penalties to companies.

The MPF and the CGU and AGU have been working to prevent the double jeopardy by offsetting the penalties and fines under settlements signed from one another. However, authorities are still to establish a consolidated method for calculating damages and disgorgement.[67]

There is also room for patterning compliance obligations. While it is hard to establish a pre-conceived model of compliance programme, the MPF and the CGU and AGU have mostly enforced compliance obligations under leniency agreements and have each done so under its own standards. Still, as international settlements increase, compliance obligations imposed by the authorities have been coming closer to a general international practice.


Notes

[1] Introduction of collaboration agreements by the Organized Crimes Act (Federal Law No. 12,850/2013).

[2] Introduction of leniency agreement for acts of corruption and fraud in public tenders among other violations by the Brazilian Clean Companies Act (Federal Law No. 12,846/2013).

[3] Federal Law No. 8,429/1992. Until January 2020, the Improbity Law did not provide for negotiated resolutions. However, a recent legislative amendment allowed for the execution of such settlement agreements for non-civil prosecution.

[4] Federal Law No. 8,666/1993.

[5] Since the first leniency agreements, CGU and AGU acted jointly. Furthermore, CGU and AGU have issued the Ordinances No. 2,278/2016 and No. 4/2019, establishing the procedure for negotiating leniency agreements and the duties of each authority.

[8] In the same period, the MPF has also signed cooperation agreements with 147 individuals, which resulted in the recovery of 614 million reais.

[10] Penalties may also arise from the PPA. However, leniency agreements under the BCCA may exempt company from penalties arising from the PPA, which has been the case for all 11 leniency agreements with the CGU and AGU. The application of the PPA in the anti-corruption arena was seen, however, in many administrative proceedings launched by the CGU against companies involved in Operation Car Wash that decided not to settle and to which the BCCA was not applicable.

[11] Federal Law No. 12,846/2013, Section 6, item I.

[12] Federal Decree No. 8,420/2015 was inspired in the US Sentencing Guidelines.

[15] Federal Law No. 8,429/1992, Section 12, item I.

[18] According to Section 1.2.1. of the Leniency Agreement, CGU’s investigation, concerning the facts that eventually took part of the agreement, began on 3 April 2014, less than three months after the BCCA went into force.

[19] The annexes of the leniency agreements that might contain the specific information concerning the amount were not made publicly available.

[21] These other legal bases underline the general principles under the Brazilian legal framework concerning the MPF’s ability to enter into agreements or settlements regarding violations of laws under the MPF’s enforcement jurisdiction.

[22] In April 2019, an 85 million reais instalment paid by Odebrecht under its agreement was withheld because the CGU and the MPF had not decided which entity should be the beneficiary of the amount. See: https://g1.globo.com/politica/noticia/2019/04/11/r-85-milhoes-pagos-pela-odebrecht-estao-parados-a-espera-de-acordo-para-destinacao-diz-mp.ghtml.

[28] Section 7, item I, §1st, Anti-Money Laundering Law.

[32] Section 71, item VIII, Federal Constitution.

[41] Supremo Tribunal Federal (STF) is the highest court for constitutional matters in Brazil.

[46] State Law No. 4,703/2018.

[47] State Law No.20,489/2019.

[48] State Decree No.522/2016.

[49] State Law No.7,537/2017.

[50] State Law No.15,228/2018.

[51] District Law No.6,112/2018.

[52] State Law No. 10,793/2017.

[53] Legislative Bill No. 7,149/2017.

[54] Ordinance No. 877/2018.

[55] Order No. 480.

[56] Resolution 4,595/2017.

[57] On 6 August 2020, the CGU, the AGU, the TCU and the Ministry of Justice and Public Security have signed, under the STF’s coordination, a technical cooperation agreement (TCA) aiming to improve coordination among authorities for negotiating and signing leniency agreements and to provide a more structured and predictable environment for self-reporting. The MPF has participated in the discussions for the TCA and is listed as a signatory. However, on 10 August 2020, the MPF’s internal division in charge of anti-corruption matters (5th Coordination and Review Chamber) issued a legal opinion stating that the signing of the TCA would inevitably suppress the MPF’s constitutional ability to fight corruption and, therefore, recommended against the MPF’s joining as a signatory. The MPF’s legal opinion is not binding and will be forwarded to the Prosecutor-General, who is responsible for reaching a final decision on whether the MPF will join the TCA. If the MPF joins the TCA, going forward, it will change significantly the leniency agreement landscape in Brazil.

[67] Still, the MPF and the CGU have worked out sophisticated alternatives for compensating damages and disgorgement, including the possibility of offsetting damages from discounts and deduction under contracts with the government.

Sources: MPF and CGU official websites, accessed on 10 July 2020.

Number of MPF’s leniency agreements per state

*Some leniency agreements had the involvement of MPF offices from more than one state.

CGU/AGU and MPF leniency agreements per year

Number of leniency agreements of each authority per sector

Leniency agreements with compliance obligations

*Includes publicly available agreements only

Number of agreements grouped by external monitorships
and compliance obligations

*Six agreements provide for both monitorship and compliances programme

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