Compliance and Investigations Newsletter No. 14 – February 2023

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

CGU publishes Normative Ordinance establishing changes in administrative liability proceedings, preliminary investigations, and early judgements

On February 14, 2023, the Brazilian Office of the Comptroller General (“CGU“) published Normative Ordinance No. 54 (“Normative Ordinance”), which amended several previous CGU ordinances regarding Administrative Liability Proceedings (“PAR”), Preliminary Investigations (“IP”), and Early Judgements of PAR, in addition to granting powers to CGU’s Secretary for Private Integrity.

Among the amendments provided by Normative Ordinance No. 54, we highlight the changes in the reduction factors applicable to the calculation of fines in cases of Early Judgements, as well as the newly granted powers to the Secretary for Private Integrity to:

i) open and call up IPs and PARs;

ii) dismiss charges or IPs, in case there is no cause to believe that an offense has been committed, nor there is evidence of involvement; and

iii) carry out all acts related to the negotiation, execution, and monitoring of Leniency Agreements.

The Normative Ordinance also grants the Secretary for Private Integrity the powers to handle the requests for the rehabilitation of legal entities previously declared unfit by the government to participate in public bids, as provided by article 87, item IV and paragraph 3 of Law No. 8,666/1993 (“Brazilian Procurement Law “). As a requirement for rehabilitation, the legal entity must necessarily adopt measures that evidence the elimination of all reasons for the application of penalties, which include the implementation of a Compliance Program, in accordance with the standards established in Article 57 of Federal Decree No. 11,129/2022.

The Secretariat for Private Integrity was established after a recent CGU restructuring and intends to concentrate all aspects related to the pursuit of integrity within the private sector, through its three divisions:

i) the Leniency Agreements Board;

ii) the Accountability of Private Entities Board; and

iii) the Private Integrity Programs and Evaluation Board.

Click here to access the entire Normative Ordinance and here to learn more about CGU’s restructuring.

CGU imposes sanctions on four companies for violations of the Brazilian Clean Company Act

On February 10, 2023, the Brazilian Office of the Comptroller General (“CGU“) imposed several sanctions to four companies that committed harmful acts in violation of the Brazilian Clean Company Act. The fines, which were established in four separate Administrative Liability Proceedings (“PAR”), amount to approximately BRL 30 million.

One of the sanctioned companies was held liable by CGU for the alleged violation of the Brazilian Clean Company Act due to supposed misuse of public funds provided by the Rouanet Law.

In this case, in addition to the sanctioned company, a fifth company was subject to an Early Judgement of its PAR and charged with a fine of BRL 22,423,482.15.

For more information, see CGU article.

American Oil and Gas Trader and Brazilian Intermediary Charged in the U.S. with paying bribes for obtaining and retaining business with Petrobras

On February 17, 2023, the United States Department of Justice (“DOJ“) announces the indictment of a U.S. citizen oil and gas trader and a Brazilian Intermediary for conspiracy, multiple counts of violation of the Foreign Corrupt Practices Act (“FCPA“), and money laundering, in connection with an alleged scheme to pay bribes to Brazilian officials associated with Petrobras to obtain and retain business with the Brazilian state-owned company.

The bribery scheme allegedly occurred between mid-2010 and 2018, and the corrupt payments were supposedly disguised as consulting fees and commissions.

For more information, see the DOJ press release.

US Authorities continue investigations into off-system business communications 

Months after charging fines totaling more than USD 2 billion on 16 financial institutions for violations of record-keeping obligations, US authorities such as the Securities and Exchange Commission (“SEC“) and the Commodities Futures Trading Commission (“CFTC“) continue to investigate the use of private communication channels (such as WhatsApp), by employees of regulated companies, to exchange messages and discuss business-related issues.

 The use of these unofficial off-system communication tools limits the companies’ ability to monitor and retain information, in violation of the applicable record-keeping requirements.

 In addition to banks, current investigations are said to be investigating other financial institutions such as asset managers, for example.

 For more information, see the Banking Dive and Reuters Legal articles.