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Leniency Agreements under Brazil’s Anti-Bribery Law: Saving this mechanism from death on arrival
8.17.2014
Today`s guest post is from Luis Carlos Torres and Andrea Vainer, partners at the law firm Torres | Falavigna Advogados in São Paulo, Brazil
Law 12.846/13, also known as the Brazilian Anti-Bribery Law, was widely heralded by the government as a milestone in the fight against corruption in Brazil. Among its many peculiarities, one in particular motivated this article: the leniency agreement.
The law provides that the highest authority of each public agency or entity may enter into leniency agreements with legal entities responsible for potential violations of the law, provided that this agreement results in identification of the others involved in the violation and in the swift obtaining of information and documents.
In order for such agreements to be executed, the legal entity is required to admit its participation in the illegal activity and to fully and permanently cooperate with the investigation and the administrative proceeding.
Under the new legislation, execution of a leniency agreement would reduce the applicable fine by up to two-thirds (2/3), and exempt the legal entity from the penalties of extraordinary publication of the conviction and prohibition from receiving government incentives for a period of one to five years. And nothing else …
It is assumed that a law establishing the existence of a leniency agreement will also regulate the criminal repercussions of entering into the agreement. This is the case, for example, of Law No. 12.529/11, also known as CADE Law. Executing an agreement in this context prevents bringing complaints against the leniency beneficiary. Once the requirements are fulfilled, such agreements also automatically extinguish the possibility of punishing individuals for crimes against the economic system and/or related crimes, including formation of a criminal conspiracy.
In this context, the company will potentially deliver an enormous amount of evidence that could be used by prosecutors to charge the company’s employees or legal representatives. Obviously, in order for legal entities to be incentivized to present themselves to the Authorities, there must be a way of protecting the individuals involved instead of creating greater risk exposure for them through the collaboration.
However, there is light at the end of the tunnel.
Law 12.850 of August 2nd, 2013 defined “Criminal Organization”, established activities regarding such organizations as crimes, and defined investigatory tools to be used to detect such organizations. Among the investigative mechanisms established by Law 12.850 is “rewarded cooperation”.
According to the new law, the judge may grant judicial forgiveness, reducing prison sentences by two-thirds (2/3) or replacing imprisonment with restrictions on the rights of those who voluntarily and effectively cooperate with investigations and criminal proceedings. Such judicial forgiveness is allowed so long as that collaboration resulted in one or more of the following outcomes:
- the identification of co-authors and other participants in the criminal organization and the criminal offenses committed by them;
- the revelation of the hierarchical structure and division of labor within the criminal organization;
- the prevention of criminal offenses arising from the activities of the criminal organization;
- the full or partial recovery of the product or benefit of criminal offenses committed by the criminal organization; and/or
- the identification of any victim of the crime, without any physical harm.
In fact, the Prosecution Office may even decide not to file a complaint against the cooperator if he is not the leader of the criminal organization and if he is the first to provide effective collaboration under this article.
As is evident, most of the requirements for rewarded cooperation are very similar to the requirements for the execution of leniency agreements. This allows for the possibility of complete harmony between these two mechanisms.
So, there is still hope for a Leniency Agreement under Law 12.846. For cases where operation of a Criminal Organization has been found – and experience shows us that there will be more than a few such cases – it is enough for the civil and administrative authorities involved in the case to work together with criminal authorities, establishing a in parallel a leniency agreement that serves the purposes envisaged by Law 12.846, and a Rewarded Cooperation agreement that protects the interests of the cooperator before the criminal courts.
It is a fact that classifying a company as a criminal organization, or classifying its managers as members of a criminal organization, would be quite problematic.
But it is also true that there are not many alternatives. Either use the mechanism of Rewarded Cooperation under the Criminal Organization Law, despite its potential implications, or the Anti-Bribery Law’s Leniency Agreement will be dead on arrival.
The opinions expressed in this post are those of the author in his or her individual capacity, and do not necessarily represent the views of anyone else, including the entities with which the author is affiliated, the author`s employers, other contributors, FCPAméricas, or its advertisers. The information in the FCPAméricas blog is intended for public discussion and educational purposes only. It is not intended to provide legal advice to its readers and does not create an attorney-client relationship. It does not seek to describe or convey the quality of legal services. FCPAméricas encourages readers to seek qualified legal counsel regarding anti-corruption laws or any other legal issue. FCPAméricas gives permission to link, post, distribute, or reference this article for any lawful purpose, provided attribution is made to the author and to FCPAméricas LLC.
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