Decree of 11 July 2022 No. 11.129 regulating Law of 1 August 2013 No. 12.846 “On Clean Company” (Decreto № 11.129, de 11 de julho de 2022 Regulamenta a Lei nº 12.846, de 1º de agosto de 2013, que dispõe sobre a responsabilização administrativa e civil de pessoas jurídicas pela prática de atos contra a administração pública, nacional ou estrangeira) revokes Decree of 18 March 2015 No. 8.420 “On Features of Enforcement of the Law “On Clean Company” in Terms of Administrative Liability Proceedings against Legal Persons for Harmful Acts against the Population, Domestic or Foreign Administration, and Other Measures” (Decreto № 8.420, de 18 de Março de 2015, Regulamenta a Lei no12.846, de 1ode Agosto de 2013, que dispõe sobre a responsabilização administrativa de pessoas jurídicas pela prática de atos contra a administração pública, nacional ou estrangeira e dá outras providências), and makes the following amendments:
1. Preliminary investigation
In Brazil, preliminary investigation is a preparatory administrative procedure aimed at collecting information necessary for establishing the facts of commission of harmful acts if the prosecution lacks sufficient evidence to launch a disciplinary investigation, administrative proceedings or prosecution.
The Decree grants the powers to conduct preliminary investigation to the internal affairs units (pela corregedoria da entidade) of public bodies that have suffered damage as a result of harmful acts of an organisation, other units having the necessary functions or a commission established for the purpose of conducting such investigation and consisting of two or more members from among the employees of the body. The term for the conclusion of investigations should not exceed 180 days (previously, the maximum term of 60 days was set by the law) unless the abovementioned bodies file a motivated request for an extension.
The units authorised to conduct preliminary investigations (commissions) are entitled to:
- ask for the preventive elimination of the results of an harmful act;
- contact experts from other public bodies and entities or public sector organisations that have the necessary technical and practical knowledge and expertise in the area of investigation for their assistance in addressing the case;
- ask the judicial authorities to take judicial action necessary for the investigation, including search and seizure both on Brazil’s territory and abroad;
- request bank data about the movement of public funds even if confidential, tax information about the legal person subject to the investigation and the documents and/or information about natural and legal persons or non-governmental international organisations necessary for considering the case.
After the preliminary investigation is concluded based on the information gathered, the body against whom the act was committed or – in the case of a body of the direct federal public administration – the minister of State decides to launch administrative liability proceeding (Processo Administrativo de Responsabilização – PAR).
2. Leniency agreement
The Decree adds the following conditions that should be met by a legal person that wishes to conclude a leniency agreement to the relevant list:
- full compensation of the uncontroversial amount of the damage, i.e. the amount of damage recognised by the legal person;
- forfeiture, in favour of the damaged entity or the Federal Union, of the amounts corresponding to the undue asset increase or illicit enrichment obtained either directly or indirectly with the violation, under the conditions and in the amounts defined in the course of the negotiations of the agreement.
From now on, the agreement will include, among other things, the provisions concerning:
- payment of the penalty and uncontroversial amount of the damages;
- possibility of using such amount to compensate amounts established in other liability proceedings, when related to the same facts included in the scope of the agreement.
Additionally, the information and documents obtained as a result of the leniency agreements may now be shared with other authorities, upon commitment not to use them to sanction the legal entity with regard to the same facts that were the object of the leniency agreement, or upon the approval of the legal entity itself.
3. Integrity programmes
The Decree expands the requirements to integrity programmes which - as per the Brazilian law - should be implemented by the organisations “interacting with the public administration bodies of all branches of power” and corporate winners of public procurement bids whose value exceeds 200 million BRL (roughly 40 million USD) and whose implementation can be considered as a mitigating factor if the organisation is under administrative liability proceedings. These programmes should now include, among other things, monitoring mechanisms regarding:
- due diligence of third parties (suppliers, intermediary agents, brokers, consultants, commercial representatives, partners etc.);
- hiring politically exposed persons, their close relatives and legal persons related to them;
- granting donations and sponsorships (under the previous requirements, monitoring was to be conducted only with respect to political donations).
The Decree changes the sanctions imposed on legal persons for corruption and other related offences, establishing the following types of penalties:
- publication of information regarding sanctions 1) in the media covering a wide area in the region where the offence was committed, the legal person undertakes its activities or, where possible, in a nation-wide newspaper, 2) in the form of notification published in a newspaper or elsewhere in the area where the legal person undertakes its activities for at least 30 days, and 3) on the home page of the website of the legal person for at least 30 days;
- in cases of violation of bidding rules and public contracting: a restriction to the right to participate in public bids or to execute agreements with the public administration.
Additionally, the methods for calculating fines have been improved with respect to the mitigating and aggravating factors (for instance, the legal persons that have implemented integrity programmes can be sanctioned with a fine reduced by 5%, whereas previously it could be reduced by 4%), and new methodologies for estimating the maximum and minimum penalties have been introduced:
- the minimum penalty is the largest of the following values: the undue advantage if it can be measured, or 0.1% of gross revenue generated by the legal person in the financial year preceding the initiation of the PAR, or 6,000 BRL (roughly 1,200 USD) if the organisation has not earned such revenue;
- the maximum penalty is the smallest of the following values: three times the amount of the undue advantage if it can be measured, or 20% of gross revenue generated by the legal person in the financial year preceding the initiation of the PAR, or 60 million BRL (roughly 12 million USD) if the organisation has not earned such revenue.
The definition of “undue advantage” has been improved and now corresponds to the monetary equivalent of the product of the illicit act obtained or intended by the legal entity as a direct or indirect result of the harmful act.
The Decree also changes the provisions regulating the inclusion of information about organisations in the National Registry of Ineligible and Suspended Companies (Cadastro Nacional de Empresas Inidôneas e Suspensas) and in the in the National Register of Punished Companies (Cadastro Nacional de Empresas Punidas):
- the scope of information incorporated in the registries is expanded and includes, in particular, the scope of the sanction and failure to comply with the leniency agreements;
- the list of requirements allowing organisations to apply for exclusion from the register is expanded and now includes the requirement to publish the information regarding sanctions imposed on the organisation.
5. Prerogatives of the Office of the Comptroller General of the Union
Finally, the Decree expands the prerogatives of the Office of the Comptroller General of the Union (Controladoria-Geral da União – CGU) by granting it the right to:
- initiate, conduct investigations and rule in PARs in the cases regarding actions against foreign public bodies (where employees of agencies and entities of the direct and indirect federal public administration must inform the CGU of evidence of such damaging acts identified in the course of their duties);
- monitor the implementation and improvement of corporate integrity programmes;
- negotiate, execute and monitor leniency agreements related to harmful acts against federal executive bodies and foreign public bodies.