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- 30 August 2024
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Brazilian General Comptroller’s Office (CGU) announces Several Regulatory Developments and Guidelines on its Business Integrity Day
On August 29, the main authority on Compliance, the Brazilian Federal Comptroller General Office (CGU) held the second edition of seminar “Business Integrity Day”. On the occasion, a series of initiatives and deliveries of the agency were presented, among them:
- Normative Ordinance No. 155 regarding a new collaboration institute under the Anti-Corruption Law No. 12,846/13: the Commitment Term, which replaces the Early Judgment as of today;
- Launch of the Brazil Pact Panel for Business Integrity and its regulation, the Normative Ordinance 160 published today (see below);
- Update of the “Integrity Program: Guidelines for Private Companies” (to be released soon).
The Secretary of Integrity, Marcelo Pontes, also anticipated that new versions of the “Manual for the Evaluation of Integrity Programs in PAR and Leniency” and the “Guide to Integrity Programs: Sustainable Practices for Private Companies” will soon be launched.
In terms of results, CGU reported that they are about to surpass its annual record for opening administrative accountability proceedings (PARs), with 112 opened in 2024. In addition, Marcelo Pontes pointed out that SIPRI was responsible, in the last 20 months, for (i) 31.6% of the total number of PARs in the last 11 years (1,768) and 44.3% of the total fines imposed since 2013, which demonstrates the CGU’s appetite and commitment to the enforcement of the Anti-Corruption Law.
Another point that is highly reinforced involves the willingness and transparency of the companies involved in PARs and great interest in the negotiation route, either by leniency or by early judgment.
Regarding this last institute, CGU revoked Normative Ordinance No. 19/2022, which gave rise to the Term of Commitment. The new figure represents an answer to the society appeal for improvements to reflect the reality of companies which are unable to effectively collaborate with the authorities and, even more, of those that were not actually involved in illicit acts – for example, companies which acquired corrupted assets in good faith. See more ahead.
Other news announced were related to CGU’s guidance documents:
- the “Integrity Program: Guidelines for Private Companies” guide (to be released soon);
- the “Manual for the Evaluation of Integrity Programs in PAR and Leniency”; and
- the “Guide to Integrity Programs: Sustainable Practices for Private Companies”.
The last document is associated with the new version of the Pro-Ethics Company Seal, whose regulation will come out this semester. Together, both initiatives corroborate CGU’s view on the ESG practices as mandatory for a “Pro-Ethics Company”. By the end of 2023, the Office had already announced this intention and is now close to publish the criteria on the environmental, social and governance fronts expected for candidates for both the Seal – and for companies subject to the Public Procurement and Procurement Law (a review in this regard is also expected).
The event brought many insights that demonstrate how much Brazil has advanced in terms of Compliance and the increasing attention to ESG – a great opportunity for internal improvements in companies and leadership.
See below the main points of the new CGU Ordinances:
CGU’s New Term of Commitment for the Anti-Corruption Law
Normative Ordinance No. 155, of August 21, 2024, establishes guidelines for the execution of settlement agreements under the Anti-Corruption Law No. 12,846/2013. The new CGU rule replaces the institute of Early Judgment, following the same line of adequate and proportional accountability of legal entities involved in harmful practices against the public administration.
According to the Ordinance, in order for a Commitment Term to be signed, the company must admit its responsibility for the harmful acts investigated and commit to repair the damage caused, in addition to complying with other conditions, such as cease any involvement in the illegal practice and the payment of fines.
The big change, however, is the new possibility of CGU requiring from the company a commitment with the adoption, implementation or improvement of an integrity program, as a condition for signing the Commitment Term. The financial penalty will therefore be reduced according to the time of the request for the agreement:
| Mitigating factors of Decree 11,129/22 (art. 23) | Before the Opening of the PAR | Until the deadline for submission of the Written Defense | Until the deadline for submission of Final Arguments | Before the Decision (and the start for reconsideration) |
| II. a) Proof of the spontaneous return by the company of the advantage obtained and the compensation of the damages resulting from the harmful act; or b) Absence or lack of proof of advantage obtained and damages resulting from the harmful act |
1% | |||
| III. Level of collaboration of the company with the investigation or investigation of the harmful act | 1,5% | 1% | 0,5% | |
| IV. Voluntary admission by the Company of strict liability for the harmful act | 2% | 1,5% | 1% | 0,5% |
| Total Automatic Reduction | 4,5% | 4% | 3% | 2% |
As in the old Early Judgment, the competence to enter into the Commitment Term is exclusive to the CGU and cannot be signed when the leniency agreement is applicable (i.e. when the authority understands that there is information and evidence to be provided). Leniency agreement may be converted into a Commitment Term, if applicable.
Another gain of this new settlement format is the fine as a sole sanction, that is, suppressing the reputational sanction of publication of the conviction decision. Another benefit, when applicable, is the mitigation of the restrictive sanctions of bidding and contracting with the government, by reducing the time or softening the type of the sanction to be applied, according to the peculiarities of the specific case and observing the proportionality of the penalty.
In cases of non-compliance with the term of commitment, the company will lose the agreed benefits and will be prevented from entering into new terms for a period of three years. Failure to comply would also lead to the early payment of unpaid installments and the application of other sanctions provided for in the legislation. The CGU would register such occurrences in the National Registry of Punished Companies (CNEP), reinforcing the commitment to transparency and integrity in the Brazilian business environment.
CGU publishes regulation with official rules of the Brazil Pact for Business Integrity
The new Normative Ordinance No. 160, of August 28, 2024, regulates the initiative of the CGU called “Brazil Pact for Business Integrity”. This pact invites companies and private entities operating in Brazil to voluntarily make a public commitment to business integrity. The initiative is open to organizations of any size or sector, as well as private non-business institutions that have the capacity to implement integrity measures.
Among the main objectives of the Brazil Pact is the promotion of an organizational culture focused against corruption and in favor of socially relevant issues. The idea is to make companies aware of the importance of adopting concrete actions that can transform the corporate environment, contributing to a more transparent and ethical relationship with the public sector and society. Companies can even use the logo in their advertising as an adherent.
The management of the Brazil Pact is in charge of the Secretariat of Private Integrity (SIPRI). Adherence to the Pact is voluntary and will be formalized through the signing of a Term of Adhesion by the main executive leadership of the company or private entity, in addition to requiring the completion of a self-assessment form regarding Compliance practices.
The CGU announced that the Brazil Pact will also be a requirement for registration in the Pro-Ethics Company Award and, it is hoped, for certain bids.
See here for more details.
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