Newsletter | OECD 2021 Recommendations and Corruption Enforcement in Brazil
On November 26, 2021, the OECD updated its guidelines on the global anti-corruption enforcement, introducing significant changes that should be carefully evaluated by companies involved in international business.
Some of the important updates of the OECD 2021 Recommendations include (i) new standards for internal controls and compliance programs; (ii) a shift in the enforcement regime to focus also on the bribes’ recipients (government officials); (iii) increase of cooperation between jurisdictions and, in particular, the sharing of financial information, including mutual assistance to ensure the tracking, identification and seizure of the proceeds of the crimes; (iv) guidance on data privacy, but with a clear statement that this should not be an excuse to hinder cross-border enforcement; and (v) enhancement of whistleblowers mechanisms and protections.
Most importantly, the OECD 2021 Recommendations introduce new guidance on the non-trial resolutions, with a particular concern in reducing piling-on proceedings and penalties based on the same facts.
From the Brazilian perspective, the OECD updates on the non-trial resolutions come in handy. One of the greatest challenges in the Brazilian anti-corruption enforcement regime – both domestic and multijurisdictional – has always been the risk of having multiple authorities piling-on proceedings and penalties. Based on the constitutional provision of authorities’ autonomy (established under art. 18 of the Brazilian Constitution), different Brazilian regulators have tried to grab its share in the corruption enforcement against the companies, eliminating, in many situations, the incentives for self-reporting. These guidelines serve, therefore, as an indication that not only international jurisdictions, but also domestic authorities, should coordinate their prosecution efforts to avoid piling-on of penalties.
It is no coincidence that, in 2018, the U.S. DoJ issued specific guidelines raising concerns about follow-on prosecutions based on the same facts. One the one hand, it is unquestionable that penalties must be sufficiently dissuasive; however, the piling-on often leads to an unnecessary punishment of the company that is, ultimately, cooperating with the investigations.
For the past years, the Brazilian authorities have been sharing the same concern. Despite not having written guidelines, after almost a decade of litigation and cooperation agreements under the Car Wash Operation, domestic regulators started accepting, in many situations, the compensation of amounts to be paid by wrongdoers (either legal entities or individuals) to the authorities with jurisdiction over the same facts. A decision issued by the Brazilian Supreme Court of Justice on March 30, 2021, reinforced this understanding, by ruling that the Federal Audit Court (Tribunal de Contas da União – TCU) must not issue disbarment decisions against companies that entered into plea bargain
agreements with other authorities. More recently, the new Administrative Misconduct Law (Federal Law nº 14,230/21) tried to shed some light in the risk of double jeopardy by expressly providing that companies subject to enforcement proceedings under the Brazilian Anti-corruption Law (Federal Law nº 12,846) would not be prosecuted, for the same facts, under the Administrative Misconduct Law.
Despite the notable improvement, not all the local authorities are used to non-trial resolutions under corruption investigations. Companies and individuals still face the risk of having follow-on procedures and piling-on penalties even after having settled with the main relevant authorities. In this sense, the OECD 2021 Recommendation not only recognizes the effort of those who worked hard to set some guidance on the cooperation among local and multijurisdictional authorities, but also increases its effectiveness by sending a clear message to OECD member countries and other signatories of the OECD Anti-Bribery Convention (including Brazil). It is worth remembering that OECD guidelines have always played an important role in expediting corruption enforcement in Brazil, from promoting the adoption of a strict liability regime against companies involved in misconducts to the update of several regulations on anti-money laundering activities.
The Recommendation could not be clearer: “[In multijurisdictional cases], when more than one member country has jurisdiction over an alleged offence described in the OECD Anti-Bribery Convention, (…) member countries should also pay due attention to the risk of prosecuting the same natural or legal person in different jurisdictions for the same criminal conduct”. In other words, the new Recommendation on non-trial resolutions sets an international standard for countries engaged in the adoption of leniency and other types of non-prosecution agreements. It brings transparent guidance and increases legal certainty to the application of these legal mechanisms by the signatories of OECD Convention.
Moreover, the OECD 2021 Recommendations provide additional guidance on authorities’ mutual assistance procedure during international cooperation, with clear measures to this end, such as bilateral arrangements, exchange of personnel and, more importantly, complementary forms of international exchange of information to speed up the investigations.
International cooperation is, more than never, a reality. If bribery schemes involve different countries and have international outreach, the only real possible enforcement is global. To this end, the driving force in enforcement actions must be cooperation among the authorities, through orchestrated activities and, necessarily, coordination on the incentives and benefits to those who cooperate with the investigations.
Policy on Coordination of Corporate Resolution Penalties. Updated DoJ guidelines are available at https://www.justice.gov/criminal-fraud/file/1292051/download
Claim n. 41,5577/SP, decided by the Brazilian Supreme Court of Justice (Second Panel).