The Federal Decree n. 8.420/2015, which regulates the application of the Brazilian Anti-Corruption Law (Law n. 12.846/2013), was published and entered into force on March 18th, 2015. Additionally after the publication of the mentioned Decree, the Corregedoria Geral da União – CGU (Department of General Internal Affairs of the Federal Government).
As determined by the above mentioned decree, the administrative strict liability of the company shall be determined by an Administrative Liability Procedure (“PAR”), which will be regulated by Articles 2 to 14 of the decree. It is important to emphasize that CGU ensured the confidentiality of the processes related to the Anti-Corruption Law, even if the processes numbers are published in the Official Gazette.
The Decree confers jurisdiction for investigation and administrative punishment to the body injured by the act of corruption. However, such jurisdiction is concurrent with the CGU in case the injured body is silent or in case it cannot do the investigations.
As to the penalties, the Decree provides for the application of fines and the extraordinary publication of the sanctioning administrative decision. The fines may reach up to 20% of the value of the gross revenues of the legal entity of the last financial year preceding the establishment of the PAR (and this penalty is payable within 30 days).
It should be noted that among the criteria for fine increase is the possible involvement of the company’s board, as well as the value of the contracts related to acts of corruption. Among the criteria for reduction of the fine is the possibility of compensation for damage, collaboration of the legal entity and spontaneous communication.
It is also worth noting the interpretation of the expression “gross revenue” used by the Decree, as provided for by the recent rules issued by CGU: gross revenue used to calculate the Income Tax (IRPJ) or the National Simple, according to the size of the company, excluded PIS, COFINS, ICMS, ISS and IPI.
With respect to the extraordinary publication of the sanctioning administrative decision, the law states that this publication will be done (i) in wide circulated mode of communication in the area of practice of the offense and where the company operates; (ii) in an announcement to be posted in the company’s establishment itself; and (iii) on its website for 30 days.
The new decree also provides for the Leniency Agreement, which shall be entered into with the companies responsible for the harmful practice and administrative wrongdoing, aiming at the exemption or reduction of sanctions in return for effective collaboration with the investigations and administrative proceedings, provided that this collaboration in fact results in the identification of all those involved in the wrongdoings and in the quickly obtainment of information and documents proving the offense under investigation. It shall also be highlighted that the new rules issued by CGY establishes that it will be elaborated a memorandum of understanding prior to the leniency agreement, in order to increase the chances of effective enforcement of the leniency agreement.
Still on the leniency agreement, it is important to emphasize that despite the fact that the decree provides that the first company to look for the CGU will be the one that will benefit from the agreement, as reported by the Executive Secretary of the CGU, it will still be possible close the leniency agreement with other companies that seek CGU (after the first company) – which will be a decision at the sole discretion of CGU, based on the relevance of the facts.
Additionally, the decree provides for the mandatory establishment of an Integrity Program to be structured according to the risks and activity of each company, which is a set of mechanisms and procedures designed to prevent and remedy irregularities and illegal acts. This is basically a compliance program that needs to be in fact applied and effective, aiming at the protection of the company from illegal acts against public administration. Moreover, it is noteworthy that the rules recently issued by CGU make it clear that if a company creates a compliance program only after initiated the investigation into the alleged act of corruption, such compliance program may not be used for fine reduction purposes.
Finally, the new decree provides for the National Register of Disreputable and Suspended Companies (“CEIS”), as well as the National Register of Punished Companies (“CNEP”). The CEIS contains information relating to administrative penalties imposed restricting the companies’ right to participate in bidding and to contract with the government. The CNEP, in turn, will contain information on the penalties imposed as a result of the Brazilian Anti-Corruption Law (Law no. 12,846 / 2013) and information on the noncompliance with the leniency agreement, based on the same law.
Source: Kincaid Mendes Vianna Advogados - www.kincaid.com.br