Compliance and Investigations Newsletter – April 2024

The Compliance and Investigations Newsletter aims to provide information on the main media news, trends, cases and legislation concerning compliance matters, in Brazil and abroad. This material is for informational purposes and should not be used for decision making. Specific legal advice can be provided by our legal team.

Enjoy reading!

Compliance and Investigations Team

G20 discusses anticorruption practices in connection with social and environmental development

Between April 24 and 26, 2024, the Anti-corruption Working Group of the Group of 20 (“G20”) held a series of technical meetings aimed at sharing experiences and establishing best practices for advancing the fight against corruption, reducing inequality and fostering sustainable development.

Brazil, represented by the Brazilian Office for the Comptroller-General (“CGU”), the Office of the General Counsel for the Federal Government (“AGU”) and the Ministry of Foreign Affairs (“Itamaraty”), focused on highlighting the importance of implementing public policies aimed at fostering business integrity, reinforcing the notion that corruption must be combatted beyond the public sector in order to effectively prevent abuses of power in the private sector.

Moreover, Brazil emphasized that integrity is essential in both public and private organizations, as to ensure efficiency of public services and foster sustainable development. On this note, the fight against corruption was stressed as one of Brazil’s priorities before the G20, which can only be truly effective through the joint efforts of the public and private sectors.

As such, the G20 directed its efforts into this matter and determined the expected results from the Anti-corruption Working Group, including the development of a document containing the high-level principles implemented to combat corruption and the submission of reports by all member states regarding the status of their commitments regarding this topic.

For more information, click here.

UN and OECD launch guide for state measures to strengthen business integrity

On March 26, 2024, the United Nations (“UN”) and the Organization for Economic Co-operation and Development (“OECD”) published the “Resource Guide on State Measures for Strengthening Business Integrity”.

The guide is a result of Resolution 10/12 published by the United Nations Convention against Corruption (“UNCAC”), named “Providing incentives for the private sector to implement integrity measures and combat corruption”, presented by Brazil, via the delegation presided by the CGU and approved at the 10^th Conference of the States Parties to the UNCAC.

The guide is already available for access in English and seeks to provide to the UN and OECD member states a framework for identifying and implementing an appropriate mix of sanctions and incentives for encouraging business integrity and combatting corruption, based on the experiences and strategies adopted worldwide to address these matters.

Click here to access the Resource Guide on State Measures for Strengthening Business Integrity.

CTFC discusses bill that allows states, municipalities, and the Federal District to require the implementation of integrity programs by companies that win public biddings.

On April 23, 2024, the Brazilian Senate´s Committee on Transparency, Governance, Oversight and Control, and Consumer Protection (“CTFC”) discussed Bill No. 4,687/2023 (“Bill”), proposed to amend Law No. 14,133/2021 (“Public Procurement Law”) to allow for other members of the Brazilian Federation, besides the federal government, to require the existence or implementation of integrity programs for companies that win public biddings.

The Bill was first presented at the end of 2023 in order to fill a gap left by the Public Procurement Law. On this note, article 25, paragraph 4 of the Law requires that, for contracts pertaining to large amounts, that is, those whose amount equal or surpass BRL 200 million, the invitation to bid must provide the need for the winning company to implement an integrity program within 6 months. The Bill, however, recognizes that, although high for public biddings held by the federal government, the amount provided for in the Public Procurement Law is excessive for biddings held by states, municipalities, and the Federal District, thus, having little effect when it comes to disseminating a culture of compliance in interactions between the public and private sectors.

Thus, the Bill proposes the creation of paragraph 10 to article 25 of the Public Procurement Law, stating that the states, municipalities, and the Federal District may each create, through their own laws, the need for implementation of an integrity program by the winning bidder, even in cases where the amount is lower than BRL 200 million.

Click here to access Bill No. 4,687/2023, and to verify its status, click here.

CGU sentences and rejects reconsideration requests from companies involved in cartel of VALEC´s public biddings.

On April 10, 2024, the CGU announced the decision to sentence SPA Engenharia, Indústria e Comércio Ltda. (“SPA”) and reject the reconsideration requests filed by EGESA Engenharia S.A. (“EGESA”) and CMT Engenharia EIRELI (“CMT”), all of which involved in a cartelization scheme aimed at rigging public biddings of the now extinct public-owned company VALEC Engenharia, Construções e Ferrovias S.A. (“VALEC”)

SPA was judged under Administrative Liability Proceeding (“PAR”) No. 00190.107410/2018-28, for illegally winning a bid for the construction of the railway Ferrovia Norte-Sul as well as for having paid over BRL 9 million in bribes to public employees. Thus, the company was disbarred from bidding and contracting with all public entities. The effects of this decision remain suspended until the deadline for filing a motion for reconsideration has passed.

EGESA was disbarred on PAR No. 00190.104463/2020-10 for bid rigging. CMT, in turn, was disbarred on PAR No. 00190.104461/2020-12 due to manipulating bidding prices and paying undue advantages to public employees, including the then CEO of VALEC. Both companies filed motions for reconsideration that were rejected by the CGU.

The actions for which SPA, EGESA and CMT were sentenced happened before the entry into force of Law No 12,846/2013 (“Brazilian Clean Companies Act”) and, thus, the CGU did not sanction the companies according to this law.

Click here for more information and, to access the CGU´s decisions, see PAR nº 00190.107410/2018-28; PAR nº 00190.104463/2020-10 and PAR nº 00190.104461/2020-12.