On July 12, 2022, the Brazilian Government published Federal Decree No. 11,129/2022, which amends the regulation of the Brazilian Clean Companies Act (“BCCA”), Brazil’s 2013 Anticorruption Law. The new regulation came into effect earlier this week, on July 18, 2022, and replaces Decree No. 8,420/2015, which previously regulated the application of the BCCA.
Overall, the new decree resembles past regulation in form and substance, however, it provides additional guidance on the expectations of the Controladoria Geral da União (“CGU”), which oversees compliance with the BCCA, in assessing integrity programs and the range and application of administrative fines for violations of the law. The new decree also clarifies and details procedural mechanisms for the conduct of investigations and negotiation of leniency agreements by the CGU and Brazilian public prosecutors (Advocacia Geral da União – “AGU”).
Among its responsibilities, the CGU evaluates the compliance and integrity programs of corporations under investigation and/or seeking a resolution following potential violation of the BCCA. Decree No. 11,129/2022 Art. 57 adds certain new elements to the list of factors to be considered by CGU when evaluating the strength of a compliance program, specifically by expanding that list to include:
- processes for identifying politically exposed persons (“PEPs”) and their family members, brokers and consultants as part of third party due diligence;
- processes for third party due diligence specific to sponsorships and donations;
- mechanisms and protocols for the assessment of whistleblower complaints beyond the existence of a whistleblower channel itself.
With respect to administrative fine calculation, Decree 11,219/2022 resets ranges for increases in fines for certain aggravating factors, as summarized below (Art. 22):
- Up to 4% of revenues where the violation took place at the same time as other wrongful acts;
- Up to 3% of revenues where members of Executive Management and/or Board of Directors had knowledge of the violation;
- Up to 3% of revenues in cases of recidivist behavior. In this particular instance, the administrative fine was not increased, rather it was reduced from a maximum upper-bound fine range of 5% of revenues (Art. 22(V)) under Decree No. 8,420/2015.
In terms of mitigating factors (Art. 23), the decree adjusts fine ranges as well to:
- Up to 2% reduction of revenues for voluntary disclosure of violations of the BCCA;
- Up to 5% reduction of revenues for demonstration of an effective compliance and integrity program.
It should be noted that Decree 11,129/2022 clarifies that the “revenue” baseline for each of the fine calculations is the gross revenue of all legal entities within the same economic group that was involved in the illegal acts constituting the violation of the BCCA (Art. 20).
Finally, certain definitional clarifications and procedural mechanisms are useful for practitioners coordinating investigations across Brazil and the United States (and elsewhere), where such terms already have a legal significance for the calculation of fines and disgorgement, and may be relevant to the settlement of resolutions. For example, Article 26 offers alternative methods for calculating the “advantage received or intended to be received” (“vantagem auferida ou pretendida”) as either:
- the total value of the benefit gained from the illicit activity minus the costs that can be proven were properly attributable to the contract;
- the total value of costs avoided, including in terms of tax and regulatory compliance; or
- the value of the additional profit gained due to a governmental act or omission that would not occur without the improper activity.
This article in particular covers the definition of the value or benefit obtained, which is of course also crucial in the calculation and determination of fines under U.S. law. Practitioners working on corporate anticorruption investigations involving both jurisdictions should be aware of the similarities and differences between Art. 26’s definition of “advantage” on the one hand, and, on the other hand, of “pecuniary gain” and “pecuniary loss” as defined by the U.S. Sentencing Guidelines.
The decree also sets forth time limits for the CGU’s analysis of 180 days (Art. 5) and allows the signature of a memorandum of understanding for the leniency agreement to serve as a tolling of the statute of limitations (Art. 39). Practitioners should be mindful of these modifications and timelines in the context of cross-jurisdictional investigations and resolutions, where coordination of discussions with multiple authorities is critical.
 The process-oriented changes, which relate primarily to the types of evidentiary materials the CGU may consult in its preliminary investigative stage (Art. 3) are not discussed in detail in this blog post.
 See, e.g,, U.S. Sentencing Guidelines §§ 2C1.1; 8A1.1; 8C2.4.