Compliance and Investigations Newsletter – No 25

The Compliance and Investigations Newsletter aims to provide information on the main media news, trends, cases and legislation concerning compliance 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!

Compliance and Investigations Team

US enacts law that criminalizes bribe requests by foreign public officials

On December 22, 2023, the US enacted the National Defense Authorization Act (“NDAA”), which establishes national defense budget and policies for the 2024 fiscal year.

Among the several NDAA provisions, Section 5101 amended the federal domestic bribery law to explicitly criminalize the act of a foreign public official directly or indirectly requesting or receiving bribes from individuals or legal entities that are subject to the Foreign Corrupt Practices Act (“FCPA”). This is the first time the US has criminalized the “demanding side” of bribery.

The new legal provision named Foreign Extortion Prevention Act (“FEPA”) brings a broader definition of “public official” than the FCPA, including:

• any public official or person selected to be a public official; and
• senior political figures, any legal entity formed by or in the interest of such individual, and family members or notoriously close associates.

The FEPA provides for a fine of up to USD 250,000 or three times the amount of the benefit received or requested by the foreign public official, in addition to 15 years in prison.

For more information, access FEPA (Section 5101 of NDAA).

CGE/SP regulates guidelines for fine calculation and requests for summary judgment of PARs

On January 2, 2024, Resolution No. 25 of the Comptroller-General of the State of São Paulo (“CGE/SP”) was published in the Official Gazette of São Paulo, providing for:

• the calculation of fines resulting from the administrative liability of legal entities; and
• the procedure for summary judgment of administrative liability proceedings (“PAR”).

Resolution CGE/SP No. 25/2023 provides for measures to assess the calculation basis for fines, the applicable aggravating and mitigating factors, as well as the maximum and minimum fine amounts, as defined at the federal level by Decree No. 11.129/2022. However, the state regulation reduced the aggravating factor for interrupting the supply of public services from 4% to 3% and increased the aggravating factor for recidivism from 3% to 4%.

The regulation of summary judgment allows companies involved in potential violations of the Brazilian Clean Company Act at the state level to resolve their situation definitively, thus avoiding the opening of a PAR or ending an ongoing PAR. The benefits of requesting summary judgment are greater in proportion to how soon the request is made, including the degree of fine reduction.

Resolution CGE/SP No. 25/2023 is very similar to Normative Ordinance No. 19/2022 of the Brazilian Office of the Comptroller-General (“CGU”), which regulates the summary judgment at the federal level. However, CGE/SP adopted the original fine reduction levels from the CGU regulation, which have recently been amended by CGU Normative Ordinance No. 54/2023.

Access the full Resolution CGE/SP No. 25/2023.

Justice Toffoli suspends fine in Novonor’s leniency agreement

A decision by Federal Supreme Court (STF) Justice Dias Toffoli, which suspended payment of a fine imposed in the J&F leniency agreement, led construction company Novonor (formerly Odebrecht) to request a similar measure on January 09, 2024.

Toffoli’s first ruling from December 2023 suspended the payment of J&F’s BRL 10.3 billion fine and allowed the company to reevaluate the annexes of its leniency agreement directly with the Office of the Comptroller-General (CGU).

On January 31, 2024, Toffoli ruled in favor of Novonor’s request, recognizing that there is “reasonable doubt” as to whether the company voluntarily adhered to the leniency agreement. With this, Novonor’s payment of the fine (estimated to reach a corrected amount of BRL 6.8 billion) was suspended while the company analyzes documents from “Operation Spoofing”, which contains conversations between prosecutors from Operation Car Wash” (“Lava-Jato”).

For more information, access the Estadão article.

Brazil drops ten positions in Transparency International’s corruption perception index

On January 30, 2024, the NGO Transparency International published its Corruption Perceptions Index 2023, which suggests a weakening of anticorruption efforts in Brazil.

In a scale of 0 (highest corruption scenario) to 100 (highest integrity scenario), Brazil scored 36 points – 2 fewer points compared to the previous year, which caused Brazil to drop 10 positions in the world ranking and depart from the global average of 43 points.

The report released by Transparency International describes the main factors that led the Brazilian score to drop last year. The report states that the Bolsonaro government dismantled measures to battle corruption and the current Lula government has failed to effectively reinstate anticorruption mechanisms.

As such, the report recommends a series of measures for the Federal Government, the Brazilian Congress the Public Prosecutor’s Office, and the Justice System, such as increasing budgetary transparency, mitigating political influence in state-owned companies, and reestablishing the political independence of the Attorney General’s Office.

For more information, access the result of the Corruption Perception Index 2023 and the Brazil Retrospective 2023 report.