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Anti-Bribery in Brazil: 2017 Developments

Author: Carlos Ayres

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Much has been happening in Brazil in the anti-bribery arena. Several developments have been noteworthy. This post highlights five that took place in 2017.

Guideline on Leniency Agreements. On August 24, 2017, the 5th Chamber of Federal Prosecutors, the body of the Brazilian Federal Prosecution Service dedicated to supporting integration and coordination in the fight against corruption and responsible for ratifying leniency agreements signed by federal prosecutors, issued guideline 07/2017 on leniency agreements for Brazilian Federal Prosecutors. The guidelines formalize in a written document certain practices that Federal Prosecutors have been adopting in settlement negotiations and agreements they sign in bribery-related cases. The guidelines are a welcome development as they provide helpful information for companies and lawyers negotiating their first settlements with the Federal Prosecutors.  Further details about the guidelines can be obtained here.

Commercial Bribery. ENCCLA – Brazil’s National Strategy Against Corruption and Money Laundering – is a forum in the Brazilian government that brings together a broad range of agencies involved in the prevention and combat of money laundering and corruption. Members of ENCCLA include the Federal Police, Federal Prosecutors, Office of the Comptroller General (CGU), the Brazilian Securities and Exchange Commission (CVM), among around 70 others. Every year, ENCCCLA selects a few actions to be carried out in the next year. ENCCLA’s Action 5 for 2018 is to “elaborate proposals of measures to fight private corruption”. This proposal was originally suggested to ENCCLA by the Anti-corruption and Compliance Committee of the Brazilian Institute of Business Law (IBRADEMP) and will be coordinated by the Federal Prosecutors Office in collaboration with other authorities such as CGU and CVM. As a result of Action 5, we should expect one or more draft bills criminalizing private corruption, as well as holding companies liable for it.

Use of Monitors. Until the recent past, there were no cases in which a monitor was imposed as part of a bribery-related settlement with Brazilian authorities. The first cases in which Brazilian anti-bribery authorities imposed a monitor were in Braskem and Odebrecht, in which the DOJ and the SEC in the United States were also involved. Embraer has also been appointed a monitor but that was pursuant to their settlement in the United States. The leniency agreement signed with J&F Investimentos S.A. (the holding company controlled by the Batista brothers) on June 5, 2017 sets forth that J&F agrees to hire a monitor (referred to as an “independent auditor”) to verify the fulfillment of the obligations assumed by J&F in the leniency agreement. This was the first time that a monitor was imposed by Brazilian anti-bribery authorities in a Brazilian matter (not as part of a global settlement). It is still too early to tell if the use of monitors will be a trend in Brazil, but Federal Prosecutors have mentioned that they like the concept of monitors.

Compliance as a requirement of public procurement. The state of Rio de Janeiro passed a law in October 2017 requiring companies to have compliance programs in place when they participate in public procurement in contracts with more than 180 days of execution and above certain value thresholds. Failing to comply may subject companies to a fine. The Federal District has passed similar legislation recently. At the federal level, ENCCLA finalized a draft bill to be presented to Congress (they have also prepared a decree to regulate it) requiring the RFPs of public procurements related to the purchase of goods and services, concessions, and leasing above R$ 30 million (around USD$10 million) to require a certified compliance program as a condition of participation. The decree sets forth that the criteria for the accreditation and certification of the compliance programs will later be determined by regulation.

New money-laundering-related rules. In September 2017, the Federal Police found and apprehended R$ 51 million in cash (around US$ 16 million) in an apartment that was related to a politician under investigation for involvement in criminal conduct. In November 20, 2017 the Brazilian IRS issued Ruling 1761, requiring companies and individuals to report cash payments received of R$ 30 thousand (around US$ 9.3 thousand) and above. The number of suspicious activity reports received by Brazil’s Finance Intelligence Agency (COAF) has also been increasing over the last years: 1,144,389 in 2014; 1,382,198 in 2015; 1,492,690 in 2016; and 1,502,591 in 2017.

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.

© 2018 FCPAméricas, LLC

Carlos Henrique da Silva Ayres

Post authored by Carlos Henrique da Silva Ayres, FCPAméricas Contributor

Categories: Anti-Money Laundering, Brazil, Enforcement, English, Monitors, Procurement

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