Compliance and Investigations Newsletter No. 21 – September, 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

Brazilian Supreme Court suppresses evidence from Odebrecht’s leniency agreement

On September 06, 2023, Justice Dias Toffoli, of the Brazilian Supreme Court (“STF”), suppressed all evidence from the systems Drousys and My Web Day B obtained through Odebrecht’s leniency agreement.

The ruling was in the scope of the Claim 43007, filed by President Luiz Inácio Lula da Silva’s defense, but its repercussions are erga omnes (i.e.: binding upon everyone) in any scope or jurisdiction. According to Justice Toffoli, the STF had previously ruled for the non-admission of such evidence in certain cases, due to alleged contamination of this evidence by the 13^th Federal Court of Curitiba. Justice Toffoli also stated that no records were found to prove that Brazilian authorities requested international cooperation to properly receive the content of systems Drousys and My Web Day B.

On September 11, 2023, the National Association of Federal Prosecutors (“ANPR”) appealed against Justice Toffoli’s ruling, as did São Paulo’s Prosecutor’s Office (“MPSP”), on September 20, 2023.

Access the STF’s press release and ruling.

Access the news on the appeals filed by ANPR and MPSP.

MPF’s Institutional Board repeals previous ruling that deducted BRL 6.8 billion from J&F’s leniency agreement

The Institutional Board of the Federal Prosecutor´s Office (“MPF”) repealed, on September 13, 2023, the ruling from MPF’s 5^th Chamber of Corruption Fighting that had deducted BRL 6.8 billion from the fine provided for in J&F’s leniency agreement executed in 2017.

According to the MPF’s Institutional Board, the 5^th Chamber of Corruption Fighting is not the competent authority to grant such discount, thus infringing the jurisdiction prosecutor principle. This repeal had 17 votes in favor and 2 against.

Access the news on the MPF’s Institutional Board ruling.

STF recognizes widespread binding effect and will rule on the possibility of double accountability of electoral crime and administrative misconduct

The STF will evaluate the possibility of double accountability for electoral crimes and administrative misconduct, and will establish the jurisdiction responsible for the lawsuits in the event of both infringements.

The matter is within the scope of an interlocutory appeal filed before the STF, whose general repercussion (widespread binding effect) was recognized, on September 04, 2023, meaning all lawsuits within the scope of this matter are stayed until the STF publishes a final ruling.

In this case, the defendant is facing an administrative misconduct action before São Paulo’s State Court (“TJSP”) for having allegedly received political donations without proper accounting and reporting and, for that reason, the defendant requested the displacement of the lawsuit to the Electoral Court. The TJSP, however, denied the request upon the justification that administrative misconduct actions must be examined by state courts. The defendant, therefore, appealed to the STF to overturn the ruling, but the entity under discussion has not schedule a trial date yet.

Access STF’s press release.

CGU and AGU evaluate the possibility of regulating the payment of leniency agreement fines through tax credits

The Office of the Comptroller-General (“CGU”) and the Office of the General Counsel (“AGU”) are evaluating the possibility of publishing a regulation to allow companies to pay part of their leniency agreement fines through tax credits.

The initiative arose from the leniency agreement entered into between BRF S.A. and the CGU, on December 28, 2022, which provided for fine payment through BRF’s tax credits.

According to Brazilian media outlets, the potential regulation considers the spike on interest rates in Brazil since the execution of the agreements, which allegedly increased the fines in a considerable manner due to inflation adjustments.

Access the articles from Estadão and CNN on the matter.

Access the news on BRF’s leniency agreement payment.