Brazil: Anti-corruption leniency agreements

Author: | Published: 21 Mar 2016
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Souza Cescon Barrieu & Flesch

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de-Souza de-Abreu
Luis Antonio S de Souza Fabíola C L Cammarota de Abreu

Brazil's 2013 Anti-corruption Law created the possibility of entering into leniency agreements in administrative proceedings that investigate unlawful acts against the public administration, whether Brazilian or foreign. These agreements were inspired by the success of the leniency programme in Brazilian antitrust practice.

Although the creation of a leniency programme in procedures regarding unlawful acts against the public administration was well received by the legal community, some points were criticised. The lack of legal certainty regarding the authorities in charge of negotiating and executing the agreement raised concerns. There was also a lack of incentives to enter into the agreement: although the law provided for a reduction in penalties that it created, it was silent about penalties under other laws. These points meant the legal community was sceptical about whether the law would be successful.

Thus, the changes introduced by Provisional Measure 703 try to address the main criticisms of the Anti-corruption Law. Among the changes, four are particularly important:

First, it is now possible to negotiate leniency agreements with multiple authorities at the same time. This means the agreement can be comprehensive as to the penalties it affects (both administrative and civil, and from multiple laws).

Second, as a condition of entering into leniency agreements, companies must create or improve their compliance programmes, in line with international best practice.

Third, leniency agreements are no longer limited to the holder of the marker (or whistle-blower). Other companies can also benefit from leniency agreements. However, the first mover is entitled to receive preferential treatment. This may include a full waiver of penalties.

Finally, the Provisional Measure acknowledged that the Anti-corruption Law provides for the strict liability of the legal entities. As a result, admission of guilt is no longer a requirement for the execution of a leniency agreement. This amendment may improve the chances of a successful negotiation of a leniency agreement, to the extent that individuals can contribute information and depositions, without having to admit any wrongdoing.

Irrespective of any considerations of the convenience or otherwise of amending the Anti-corruption Law in Brazil's current political climate, the changes are positive from the companies' perspective. Although more improvements could be made, the changes increase legal certainty and create more incentives to enter into leniency agreements, in line with international best practice.

Congress must review the Provisional Measure and convert it into law by May 15 2016. Its approval would build on recent efforts to fight corruption in the country, which is a very urgent matter.

Luis Antonio S de Souza and Fabíola C L Cammarota de Abreu