Amidst the celebrations of the 10-year anniversary of the Anti-Corruption Law (Law 12.846/13 – LAC), the Comptroller General’s Office (CGU) has organized and participated in several discussions on the balance of the law’s application so far and the next steps for its implementation.
In this brief article, we aim to clarify the initiatives already announced and discussed, as well as the highlights of the balance.
Review of the 10 years of the Anti-Corruption Law
Both business and government entities agree that the law has brought significant institutional advancements and that its first challenge – that of being enforced – has been so far fulfilled.
The numbers of punishments and the amounts of fines are impressive, and it is undeniable that LAC has encouraged private companies to adopt preventive programs. According to a survey conducted by Transparency International with executives of large companies, released on July 31 of this year, 95% of respondents stated that the law contributed to the adoption of compliance programs.
It is also consensus, nevertheless, that there are significant challenges to be faced. When “Lava Jato” began, the immaturity of LAC led to its application in complex cases before the necessary structure for it was in place. This brought asymmetries, especially in agency conflicts.
Moreover, there is little legal certainty regarding the interpretation of several provisions of the law. States and municipalities still struggle with the law’s regulation and enforcement, and the encouragement for integrity programs remains limited to large corporations and multinational corporations.
Key changes announced by CGU
- BNDES and CGU sign agreement on compliance requirements for borrowers with the bank.
BNDES will follow the example of the New Brazilian Public Procurement Law, which requires contractors in high-value bids to have integrity programs, and will require the bank's borrowers to have mature compliance initiatives.
The regulation that will govern this matter – a technical cooperation agreement between BNDES and CGU – has been announced, and the forthcoming text is expected to bring more details on practical implementation and the consequences for companies.
What is already clear is that the agreement will directly impact the bank's major financing operations. The statements of the president of BNDES at the signing of the agreement gave some clues about what will be in the text:
- BNDES will require a compliance program for any financing above R$300 million;
- This program should include not only anti-corruption controls, but also comprehensive measures of governance, transparency and, most importantly, promotion of human rights and sustainability;
- A mere self-declaration of conformity will not suffice. That is, there will be oversight to ensure compliance with the measures;
- The bank will act within its collegiates to advocate for similar norms to be adopted by private banks as well.
When the regulation is formally published, Legal Intelligence will provide further details. For now, it is already possible to point out that the cooperation agreement between CGU and BNDES serves as a warning to companies that do not yet have integrity initiatives, encouraging them to align with best market practices. This also demonstrates that there is still room for development and maturation of the Brazilian market on this topic. In recent years, there has been an increase in the number of laws that require companies to adopt compliance programs.
The provision will come into force already for the new PAC (Growth Acceleration Program) and is inspired by the French anti-corruption legislation, Sapin II, which includes regulatory agency audits of the compliance program of large companies in the country and establishes sanctions not only for acts of integrity breaches, but also for weaknesses in preventive programs.
On the other hand, oversight raises concern. It will be necessary to observe whether the text and the actions of regulatory bodies will allow for a substantial evaluation of these programs, that is, an assessment that goes beyond a checklist of formal measures. At the same time, the regulation cannot be so overly open-ended to the extent that it grants auditors excessive discretion, leading to legal uncertainty and opacity of the procedure.
- Pro-ethics seal will to encompass broader themes related to human rights
CGU has signed a cooperation agreement with the Ministry of Human Rights for the new Pro-ethics seal, historically awarded to companies with good anti-corruption compliance programs. Now, the seal will also cover topics related to the implementation of good practices in human rights, such as confronting conditions akin to slavery.
While this measure strengthens the human rights agenda, there is concern that CGU may further deepen a trend to broaden the application of the LAC to acts unrelated to corruption.
- Innovations in agreements in the context of accountability processes
The leniency agreement is one of LAC institutes that has faced criticism in its application. It was designed for cases in which a company would proactively disclose unknown issues to the authorities. However, this institute has been used in situations where a company seeks to reach a settlement without presenting new evidence or relevant information.
The CGU now seeks to distinguish two types of agreement:
- Leniency, in which the company has new information to provide, thereby gaining more benefits; and
- Term of commitment, which applies when the company does not have new elements of collaboration but wishes to waive its rights of defense to expedite the process.
The innovation is precisely regarding the term of commitment, a new legal figure that CGU has put up for consultation and that is expected to guide the cases of early judgment.
In addition, CGU announced the publication of a guide with guidelines for the negotiation of leniency agreements, something very similar to what CADE already does in competition matters. A public panel has also been created to ensure transparency to the fulfillment of agreements already signed with companies.