Legislation and institutions focused on the enforcement of anticorruption policies have been improving considerably over the past decade in Latin America with substantive impact on the business environment in the region. Although legislative initiatives vary from country to country, there is an increasing tendency to submit private-sector legal entities to more rigid liability standards. In this environment, sanctions may be applied irrespective of guilt and may result of the application of criteria such as lack of due care and/or the fact that the entity in question benefitted from the relevant illegal acts. Legislation has also been strengthening the investigative tools and powers of authorities.
In the private sector these changes have triggered a general movement towards best practices in businesses, with the adoption of more strict and effective compliance programs, improvement in governance structures and a broad use of sophisticate internal investigation tools.
Brazil is to a large extent leading this process due primarily to the impact of Operação Lava Jato (“OLJ”). So far, the successes of OLJ have chiefly been the result of the use of novel methods to obtain evidence. Plea bargain and leniency agreements have had a central role in the operation since its inception. However, the extent of the effects of the leniency agreements entered to date in Brazil is still a matter of debate. In principle, they cover sanctions under the Public Probity Law; but other authorities have openly disputed whether they have any effect in relation to the administrative sanctions of the Clean Company Act and public bid laws.
Deficiencies in the drafting of the Clean Company Act (enacted in 2013) and lack of cooperation among authorities have created a challenging legal environment in Brazil with a high level of uncertainty. At the Federal level, the authority in charge of negotiating leniency agreements is the Controladoria Geral da União (“CGU”). Within the OLJ, the Federal Prosecutors Office (“MPF”) has executed several leniency agreements with corporations, including joint agreements with other authorities, under which companies agreed to make monetary payments to cooperate fully with investigations and to improve their compliance mechanisms.
There is a general perception that more recently CGU and MPF have managed to improve their cooperation on leniency matters, which should reduce the level of the uncertainties. But the role of the Court of Accounts remains unclear and leniency agreements executed by CGU contain provisions indicating that they do not exclude the possibility of the Court of Accounts demanding additional payments regarding damages arising from the illegal practices. On the other hand, decisions of the Court of Accounts already acknowledged that companies that executed leniency agreements should not suffer additional sanctions.
The significant impact of OLJ and of the enforcement of anticorruption laws on businesses and politics in Brazil is expected to continue and increase. Fighting corruption was a major topic on the presidential election in 2018 and was presented as a priority by President-elect Jair Bolsonaro. The choices he made in selecting the future members of his government confirm this.
The Ministerof Justice will be former judge Sergio Moro who was a central figure in OLJ and has outstanding experience in fighting corruption and organized crime. The Federal Police, which in practice launches anticorruption investigations on the criminal level, is under the authority of the Ministry of Justice and top investigators that worked in OLJ have been appointedby Mr. Moro to occupy key positions.
The CGU will continue to be led by its current head, Wagner Rosário, who is seen as an experienced enforcer from within the CGU structure and responsible for recent developments, such as the leniency agreement with Odebrecht and improvements in the relation with the MPF. One of his deputies, André Mendonça, will be the head of the AGU, the body of attorneys of the Federal Government, which also has been active in the negotiation of leniency agreements with CGU and the filing of claims to recover damages from companies involved in corrupt practices.
The experience of enforcers in fighting corruption is also expected to have an impact on other areas of criminal law. Brazil has serious problems with violent criminal organizations involved mainly with drug trafficking. The knowledge enforcers have acquired in dismantling corruption schemes through investigation of money laundering may also prove effective in fighting these other crimes.
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