Compliance and Investigations Newsletter No 17 – May 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

Municipal Government of São Paulo enters into first leniency agreement, which involves the reimbursement of more than BRL 10 million to the public treasury

The Municipal Government of São Paulo announced on May 05, 2023, that it has entered into its first leniency agreement, through the Municipal Office of the Comptroller-General (“CGM”), with the participation of the City Attorney’s Office.

The agreement was signed with the company Medartis Importação e Exportação Ltda. and provides for the payment of BRL 10,280,060.36, which corresponds to:

1. reimbursement for damage to the public treasury;
2. forfeiture of assets; and
3. the fine provided for in the Brazilian Clean Company Act.

The fined company is a subsidiary of the Swiss company Medartis AG, and acquired the Brazilian company Extera Importação e Exportação Ltda in 2017. As a result, Medartis Importação e Exportação Ltda. succeeded the acquired Brazilian company in its liability for the illicit acts committed prior to the acquisition.

Medartis Importação e Exportação Ltda. had sought the CGM in 2019 to voluntarily disclose new findings of an internal investigation, as well as to enter into a leniency agreement. The wrongful acts that were identified allegedly occurred between 2011 and 2017 and involved the offering of undue advantages to physicians working in municipal hospitals, in order to favor the use of products sold by Extera Importação e Exportação Ltda.

Municipal Government of São Paulo’s press release.

Ministry of Management and Innovation in Public Services launches ethics and diversity promotion program

On May 2, 2023, the Ministry of Management and Innovation in Public Services (MGI) launched Pró-Integridade (Pro-Integrity, in English), the institution’s integrity program, which aims to implement institutional practices and instruments aimed at preventing, detecting, and remediating acts against diversity and integrity, and consequently foster healthy work environments.

According to MGI’s Minister, Esther Dweck, Pro-Integrity will also provide employees, service users, third parties, and other stakeholders, with the security and confidentiality that are essential to the process of reporting misconduct.

Normative / MGI No. 1,878/2023, which established Pró-Integridade, also provides for the creation of MGI’s Integrity Committee (IC), whose responsibilities include advising, proposing, and mobilizing regarding integrity matters, as well as drafting and reviewing MGI’s Integrity Plan.

Access:

MGI’s press release

Normative / MGI No. 1,878/2023 in full.

European Commission presents set of measures to combat corruption in the EU

On May 03, 2023, the European Commission presented a set of measures to combat public and private corruption in member states.

Such measures aim to integrate and bolster policies and the legislation in order to prevent corruption.

The main elements of the measures include:

1. Creation of an EU network involving public authorities and the civil society to develop best practices and guidelines to the prevention of corruption, including the mapping of high corruption-risk areas in the European Union.
2. Bolstering rules against corruption, including campaigns to foster the culture of integrity, alignment of legal provisions that provide for corruption and its criminal sanctions, and implementation of effective investigation and prosecution tools.
3. Extension of the Common Foreign and Security Policy (CFSP) sanctions regime to include serious acts of corruption worldwide.

The proposed directive must be approved by the European Parliament and the Council before it can become EU law. 

Access the European Commission’s press release.

SEC issues largest-ever whistleblower award

The Securities and Exchange Commission (SEC) announced, on May 05, 2023, the largest-ever award to a whistleblower whose information and assistance led to the successful enforcement of SEC and related actions.

According to the SEC’s press release, the whistleblower will receive nearly USD 279 million for their assistance including multiple interviews and written reports, which were essential to expand the initial scope of the investigation and to ensure the success of the SEC actions.

Whistleblower awards can range from 10% to 30% of the collected money when monetary sanctions exceed USD 1 million. These payments are made out of an investor protection fund, established by the Congress, which is financed entirely through monetary sanctions paid to the SEC by securities law violators.

Access the SEC’s press release.