This article was republished with permission from FCPAméricas Blog, for which Matteson Ellis is founder, editor and regular contributor.
One of the most innovative features of Brazil’s new Anti-Bribery Law is Chapter 5, which establishes the possibility of leniency agreements for companies. This is a new concept in Brazil’s anti-corruption arena. Under the plain language of the law, by entering into such agreements and satisfying their conditions, companies can reduce the applicable fines by up to two-thirds and be exempted from judicial and administrative sanctions.
To qualify for leniency, the collaboration between Brazilian enforcement and the companies must result in the identification of those involved in the violation where applicable (Article 16(I)) and must produce information that proves the wrongful acts at issue in the investigation (Article 16(II)). The company must be the first to express to enforcement officials an interest in cooperating, cease its involvement in the investigated wrongdoing, admit its participation in the wrongdoing and fully cooperate with the investigation. Enforcement authorities establish conditions to settlements. Companies must still provide full restitution for damage caused (Article 16, paras 1-4).
Now that the law will soon come into force on January 29, 2014, companies operating in Brazil are beginning to ask questions about the leniency process. Here are three main challenges they see:
Multiple authorities. The law provides several authorities in Brazil with jurisdiction to enforce its provisions. It also gives the “highest authority of each public body or entity” the ability to enter into leniency agreements. This raises various questions related to bribery violations that touch multiple jurisdictions. Will companies have to enter into different leniency agreements for each jurisdiction? If a company settles with the Office of the Federal Comptroller General (CGU), will other jurisdictions honor the settlement? How will companies effectively manage the risk that one authority might choose to settle while another will not?
Lack of immunity for other violations. While a leniency agreement might settle bribery charges, it might not reach other types of violations that could be implicated and that do not include settlement mechanisms. Individuals at the company could still be liable. There could be civil suits. This creates a disincentive for companies to want to participate. Luiz Navarro, a lawyer at Veirano Advogados who previously worked for CGU and helped develop the anti-bribery legislation, warns: “A company’s decision to settle an agreement will have to take into consideration not only the lack of immunity for other violations, but also the fact that it has to admit participation in the wrongdoing, providing gunpowder for prosecutors to press criminal charges against individuals.”
The effect of global investigations. The choice of whether or not to seek a settlement in Brazil could influence or be influenced by similar considerations in other countries. Today, anti-corruption authorities are cooperating with much vigor. Recently, FCPA officials described this high level of cooperation. Reports indicate that Brazilian authorities have issued a mutual legal assistance request to U.S. authorities in the Embraer investigation. Given such cooperation, will companies be forced into negotiating settlements in Brazil even when they do not wish to do so? By not pursuing leniency agreements, do they run the risk that Brazilian authorities will find evidence elsewhere? If a company settles with an authority in one country, will it complicate the ability to negotiate favorable terms with another?
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