Brazilian authorities have allayed lingering confusion about whether individuals can be included in corporate leniency deals in a move welcomed by practitioners.
A review body within the Federal Prosecution Service
(MPF) recently published a technical note that confirms how the agency will approach leniency agreements with individuals.
The MPF’s Fifth Chamber – the branch responsible for coordinating anti-corruption practices within the MPF and ratifying leniency agreements – clarified in the note that individuals can adhere to a company’s leniency deal as an added participant in negotiations.
Luis Wielewicki at Sampaio Ferraz Advogados in São Paulo said: “It’s like an annex. An individual will be linked to the corporate leniency agreement, which is a standard that’s different to any other jurisdiction I know.”
The note adds that companies accused of misconduct should set up a procedure for employees to apply for leniency with the MPF under the company’s deal within a specified time period.
Authorities will establish the degree of credit an individual can receive on a case-by-case basis, depending on the extent and value of their cooperation.
Rogério Taffarello at Mattos Filho Veiga Filho Marrey Jr e Quiroga in São Paul said that in recent years federal prosecutors have stopped engaging as much with individuals in some important cases because they had trouble obtaining judicial approval for leniency deals since the process was not set out in law.
“The MPF and the Fifth Chamber saw in the systemic interpretation of the practice a clear need to reestablish it so as to provide more incentive and legal certainty to corporate settlements where individuals may adhere and cooperate with the government,” Taffarello said.
Lawyers said the move by the MPF, while appearing superficial, is very important. “There was until now no clear indication that the practice should be and would be accepted by the MPF as a rule,” said Wielewicki. “It’s very important for the future of leniency agreements as a whole and brings new comfort to discussions [with prosecutors],” he added.
Brazil’s landmark anti-bribery legislation, the 2014 Clean Companies Act, contains no provision for individuals to enter into leniency agreements or receive credit for cooperating in criminal cases. Lawyers said this has created doubt about whether the MPF would incorporate an individual in negotiations.
“Prosecutors immediately verified that it would be extremely hard to ensure companies would be willing to cooperate and settle, when there would not exist guarantees that individuals could also be included in agreements,” Carlo Verona at Demarest Advogados in São Paulo said.
The Anti-Crime Package – a bundle of legislative reforms introduced in January 2020 by Brazil’s former justice minister (https://globalinvestigationsreview.com/short- cut/2020/april/24#1226095) Sérgio Moro – partially resolved the lack of formal legislation for individual settlements.
The package created a provision of the Administrative Improbity Act that allowed authorities to o”er settlements to individuals and companies in civil cases related to administrative misconduct.
Practitioners said the formal integration of these provisions and a clear statement from the MPF on individuals in corporate settlements has been a long time coming, following years of discussion.
In 2014, the MPF launched Operation Car Wash, a sweeping investigation into bribes paid to officials at state- controlled oil company Petrobras. Spearheaded by Moro, a federal judge at the time, the probe triggered widespread debate about the role and importance of leniency arrangements.
The largest Operation Car Wash case centred on Brazilian construction company Odebrecht. The company entered into a record trilateral settlement in 2016, agreeing to pay $2.6 billion to settle bribery allegations with US, Swiss and Brazilian authorities (https://globalinvestigationsreview.com/article/1158724/the-odebrecht-fact- sheet).
Over 70 Odebrecht executives, including former CEO Marcelo Odebrecht, signed plea bargains with Brazilian prosecutors as part of this case, providing prosecutors with extensive information about how the company conducted the scheme in exchange for leniency. Marcelo Odebrecht is currently serving the remainder of his 10- year sentence under house arrest (https://globalinvestigationsreview.com/short-cut/2017/december/20#1151918) in São Paulo. A court in Brazil sentenced him to 19 years in jail in 2016.
Verona said the case is an example of the importance of bringing individuals into corporate resolutions: “If the majority of the facts and evidence are with several employees of a company, why would they cooperate, confess and provide evidence of wrongdoings if they could be criminally prosecuted later on. They simply would not.”
News, Anti-bribery & corruption