Corporate Investigations and White-Collar Crime Newsletter – October 2024

The Corporate Investigations and White-Collar Crime Newsletter aims to provide information on the main news media, trends, cases  and legislation related to compliance and white-collar crime matters, in Brazil and abroad. This material is for informational purposes and should not be used for decision making. Specific legal advice can be provided by our lawyers. 

Enjoy reading!

Corporate investigations and White-Collar Crime Teams

CGU publishes “Integrity Program Guidelines for Private Companies – Volume II”

On October 15, 2024, the Brazilian Office of the Comptroller-General (“CGU”) published the second volume of “Integrity Program Guidelines for Private Companies”, which supplements the first volume released in 2015.

The CGU announced the new guide during Business Integrity Day, as shown in our Client Alert of August 29, 2024.

The new guide displays the positioning of the CGU regarding the concept of “integrity program” based on the following:

• Legislative updates such as Decree No. 11,129/2022 and Law No. 14,133/2021 (“New Bidding Law”);
• Market practices; and
• The experience of the CGU adjudicating administrative liability proceedings (PAR) and assessing integrity programs.

The guide lists numerous potential benefits, in addition to those provided by law, for companies that effectively implement such practices: “(i) image and reputation gain; (ii) increase in business opportunities; (iii) decrease in operational costs and risk of internal fraud; (iv) attraction and retention of employees who value ethics and integrity; and (v) decrease in the risk of fraud and corruption, as well as in the impact of such events should they occur, including potentially lower fines.”

Regarding standards of conduct, the new guide emphasizes the importance of creating a code of conduct, internal policies, and specific policies for bids and public contracts aligned with the New Bidding Law, if applicable.

The guide also innovates by highlighting the importance of developing policies regarding moral and sexual harassment, discrimination, human rights, work, environmental protection, and the investigation of complaints.

A survey conducted by Demarest’s Compliance and Investigations team concluded that the average score of integrity programs evaluated by the CGU in Brazil by July 02, 2024 (excluding those without a score) was 2.169 out of 5.

In this regard, the guide emphasizes that simply implementing minimum requirements does not make the integrity program effective. The integrity program must impact the company’s daily business, reflecting an internal ethics and integrity culture.

For more information, please access the Integrity Program Guidelines for Private Companies – Volume II.

G20 event in Brazil highlights the correlation between corruption and environmental sustainability

On October 23, 2024, during a side event of the G20 Anticorruption Working Group meetings, experts, global leaders, and civil society representatives emphasized the importance of combating financial crimes to preserve the environment.

The event discussed the correlation between corruption and environmental crimes — such as wildlife trafficking and illegal deforestation and mining — highlighting that corruption favors activities that harm the environment.

Another prominent topic in this year’s meetings was the concept of “green corruption.” Experts argued that environmental protection and anticorruption policies must be protected against maladministration, particularly in emergencies such as natural disasters and extreme weather events.

For more information, please access the G20 article.

Brazilian Network for the Promotion of Private Integrity seeks to standardize Anticorruption Act

On October 30, 2024, the CGU held the 4th Meeting of the Brazilian Network for the Promotion of Private Integrity, seeking to bolster and standardize the enforcement of Brazil’s Anticorruption Act.

The event brought together nearly 60 participants, including representatives from 17 states and 8 cities, as well as authorities and experts committed to promoting integrity and ethics in the public and private sectors.

One of the main topics discussed at the meeting was the “Brazil Pact for Business Integrity” (Pacto Brasil pela Integridade Empresarial, in Brazilian Portuguese), which aims to standardize the enforcement of the Anticorruption Act in Brazil and has already delivered promising results. The goal is now to expand the integrity network and increase the efficiency of the fight against corruption.

CGU Minister Vinicius Marques de Carvalho emphasized the crucial partnership among government levels to establish a national control and integrity agenda. Marcelo Pontes Vianna, Secretary of Private Integrity at the CGU, highlighted that Brazil has become an international reference in the fight against corruption and the fostering of sustainable economic development. According to Vianna, this strategy must result from a dialog between society and the business sector rather than solely from government decisions.

This meeting has reinforced the CGU’s commitment to promoting integrity and building a more just and transparent business and public management environment for all.

For more information, please access the CGU article.

US Department of Justice investigates the acquisition of Gripen fighters by Brazil

On October 10, 2024, Swedish aircraft manufacturer Saab disclosed that it was served with a notice by the US Department of Justice (“DOJ”) to provide information regarding a contract signed in 2014 with the Brazilian government to purchase 36 Gripen military fighter aircraft.

The investigation focuses on a tender completed in 2014, which resulted in Latin America’s largest military acquisition, involving an investment of USD 4.5 billion.

The DOJ’s investigation has questioned potential irregularities in the tender procedure and the role played by companies involved in the process.

For more information, please access the CNN Brazil article.

STF discusses limits for lifting the confidentiality of internet search histories

The Brazilian Federal Supreme Court (“STF”) is currently discussing the limits for lifting the confidentiality of internet search histories (disclosure orders) within the scope of Matter No. 1,148 – Extraordinary Appeal 1301250.

The case that originated the discussion involves a decision that lifted the search history confidentiality of individuals who researched former councilwoman Marielle Franco in the four days prior to her murder in 2018. Given that Google would have had to provide these users’ data, the corporation appealed against this decision, claiming that it would violate the privacy and intimacy of people who are not under investigation in the Marielle case.

In her vote, retired Minister Rosa Weber, then rapporteur of the appeal, argued that lifting the confidentiality of an indefinite number of people is unconstitutional, as it violates the right to privacy and the protection of personal data.

Minister Alexandre de Moraes challenged this opinion, with the support of Minister Cristiano Zanin, arguing that the orders to disclose in the Marielle case did not target an indefinite number of people but rather a specific group of users who performed specific searches in a given period.

Due to Minister André Mendonça’s request for examination of the records on October 16, 2024, there is still no date for resuming the trial. However, given its “general repercussion” status, the decision will set a binding precedent for lower courts.

Fine for tax evasion, fraud, or collusion must be limited to 100% of the tax debt

On October 03, 2024, the STF unanimously ruled on Matter 863, establishing the precedent that tax fines resulting from tax evasion, fraud, or collusion cannot exceed the tax debt until a specific federal law provides for this matter.

Among other issues, the measure seeks to among states and municipalities, which involves reducing fines to attract business.

The thesis originated from a decision regarding Extraordinary Appeal 736090: “Until there is a supplementary federal law to provide for this matter, the aggravated penalty for tax evasion, fraud, or collusion must not exceed 100% (one hundred percent) of the tax debt. Recidivism may increase the penalty to a maximum of 150% of the tax debt (…)”.

According to the decision, the amount would be sufficient to punish the offense without being deemed ‘confiscatory’.

It is also worth noting that the decision was modulated so that it would only be effective after Law No. 14,689/23 was published, maintaining the levels currently set by the federative entities up to the limits of the thesis, with the exception of these effects:

• Lawsuits and administrative proceedings pending completion up to the publication of Law 14,689/2023; and
• Taxable events that occurred up to the publication of Law 14,689/2023 and which have not involved the payment of fines encompassed by this matter.

Given its “general repercussion” status, the decision will set a binding precedent for lower courts.

New law renders feminicide an “autonomous crime” in Brazilian Penal Code

On October 9, 2024, the President of Brazil sanctioned Law No. 14,994/24, which rendered feminicide an “autonomous crime” in the Brazilian Penal Code (article 121-A) and included it in the list of heinous crimes.

This normative amendment establishes prison sentences of 20 to 40 years for homicide related to domestic or gender violence. This represents an increase in the sentencing, given that feminicide cases were previously tried as first-degree murder, with sentences of 12 to 30 years of imprisonment.

True to its name, the “Antifeminicide Package” also increased penalties for other crimes when related to gender or domestic violence, such as battery (two to five years of imprisonment), threat (double the penalty), and (double the penalties within this context).

It is worth noting that Law No. 14,994/24 added other effects to convictions against crimes committed within the context of domestic and gender violence, such as:

• Loss of position, public office, or elective mandate;
• Ban from being appointed, designated, or certified for any position, public office, or elective mandate; and
• Inability to exercise parental power, guardianship, or conservatorship (new wording of article 92, item II, paragraph 2 of the Penal Code).

Finally, according to the new wording of Article 394-A of the Code of Criminal Procedure, the procedures for evaluating these crimes will be fast-tracked in all instances.

STJ decides that trial court judges can set a timeframe for Maria da Penha protective measures

On October 03, 2024, the Fifth Panel of the Superior Court of Justice (“STJ”) ruled on Special Appeal 2,066,642 and unanimously decided that trial court judges can set a specific timeframe for the duration of emergency protective measures under Law No. 11,340/2006, commonly known as “Maria da Penha Law.”

The discussion originated from an appeal filed by the Public Prosecutor’s Office before the STJ to dispute the timeframe set for protective measures by a trial court judge, claiming that the law does not support such decision. The prosecution argued that a protective measure cannot be revoked unless there is a change in the circumstances that justified it in the first place.

The STJ, however, ruled that the judge can, in fact, set a timeframe for the duration of protective measures. Rapporteur Judge Ribeiro Dantas emphasized that the court order must be duly justified according to the circumstances of the case and must provide for a periodic review, which had not been the standard practice thus far. Dantas, however, added that both parties must have the opportunity to make their respective statements before any decision is issued on the matter.