Compliance and Investigations Newsletter – February 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 lawyers.

Enjoy reading!

Compliance and Investigations Team

STF suspends BRL 8.5 billion fine imposed on Novonor (former Odebrecht) concerning the leniency agreement signed with the Federal Prosecutor’s Office

On January 31, 2024, Justice Dias Toffoli, of the Brazilian Federal Supreme Court (“STF”), accepted Novonor’s (former Odebrecht) request and suspended the BRL 8.5 billion fine imposed on the company, regarding the leniency agreement signed with the Brazilian Federal Prosecutor’s Office (“MPF”) within the scope of Operation Car Wash. According to the decision, the fine must be suspended until Novonor can have full access to the information obtained from Operation Spoofing. In addition, this decision authorized Novonor to file for the review of the terms of its leniency agreement before the General Counsel for the Federal Government (“PGR”), the Brazilian Office of the Comptroller’s General (“CGU”), and the Brazilian Office of the Attorney General (“AGU”).                                            

On February 08, 2024, however, Justice Dias Toffoli issued a decision, in response to a request for clarification from the Federal Government, establishing that the suspension of the fines imposed on Novonor (and also on J&F), regarding the leniency agreement signed with the MPF, does not encompass the agreements signed with the CGU and the AGU.

Nevertheless, according to news published on February 20, 2024, Novonor filed an appeal to the STF requesting that the suspension of the fine, as established by Justice Dias Toffoli, also be applied to the leniency agreement signed with the CGU and the AGU.

For more information, access Justice Dias Toffoli’s ruling, STF press release, Dias Toffoli’s clarification, and Valor Econômico article.

Normative instruction establishes rules for TCU within the scope of leniency agreements

On February 21, 2024, the Brazilian Federal Audit Court (“TCU”) unanimously approved a normative instruction establishing rules on how the TCU and the Brazilian Office of the Comptroller’s General (“CGU”) must determine the amounts under leniency agreements signed with companies involved in embezzlement of public funds. This normative instruction is a result of the technical cooperation agreement signed in 2020, between the TCU, the CGU, the Brazilian Office of the Attorney General (“AGU”), and the Ministry of Justice and Public Security, under the coordination of the Brazilian Supreme Court.

According to this normative instruction, the TCU must receive all information regarding the leniency agreements, including details of the irregularities and compensation amounts. Based on this, the TCU will initiate internal proceedings to assess whether any confessed illicit conduct was already part of its own inspections. During the proceeding, the TCU can also submit information to the CGU that can be included in the negotiations, such as changes in the amounts involved. According to the new rules, the TCU will act as soon as it receives information from the CGU/AGU, from the beginning until the end of the negotiation phase, and after the leniency agreement has been signed. The normative instruction will only apply to future leniency agreements.

For more information, access the TCU press release.

STF Justice André Mendonça authorizes companies to renegotiate leniency agreements under Operation Car Wash and suspends fines for 60 days

On February 26, 2024, Brazilian Supreme Court (“STF”) Justice André Mendonça authorized the renegotiation of the amounts under leniency agreements signed by companies investigated by Operation Car Wash. Justice Mendonça established a period of 60 days for the parties to reach a consensus on the matter. During this period, the enforcement of measures against companies’ delay in meeting the agreed obligations will be suspended.

The renegotiation will be supervised by the General Counsel for the Federal Government (“PGR”) and will encompass the agreements signed until August 2020 by the Car Wash task force, before the signing of the Technical Cooperation Agreement entered into by the Brazilian Office of the Comptroller’s General (“CGU”), the Brazilian Office of the Attorney General (“AGU”), the Federal Audit Court (“TCU”) and the Ministry of Justice, under the STF’s coordination.

This decision was the result of a conciliation hearing held with representatives of several companies and public entities responsible for entering into leniency agreements. The hearing took place in the context of the Action Against the Violation of a Constitutional Fundamental Right (“ADPF”) proposed by PCdoB, Psol and Solidariedade political parties, which requested the suspension of all the leniency agreements signed before the 2020 Technical Cooperation Agreement. The political parties argue that the companies were coerced into signing the agreements and, therefore, requested that the STF assess the possibility of reviewing the agreements.

For more information, access the Conjur and G1 articles.

PGR discusses proposal for leniency agreements

According to news published on February 26, 2024, the General Counsel for the Federal Government (“PGR”) is considering the drafting of a proposal for participating in negotiations of leniency agreements jointly with the Brazilian Office of the Comptroller’s General (“CGU”), the Brazilian Office of the Attorney General (“AGU”), and the Brazilian Federal Audit Court (“TCU”). This proposal seeks to lay “the foundations and ties for the negotiation, without delving into the economic part of the agreement”, so that the calculation of the payment amounts under the leniency agreements is carried out by the CGU.

The proposal is expected to provide greater legal certainty as regards the terms agreed upon with the companies and, in the PGR’s view, it would also prevent potential challenges in court involving the signed agreements (as has been the case recently). This initiative arises as a response to the technical cooperation agreement signed in 2020 by the CGU, the AGU and the TCU, under the STF’s coordination, but with no intervention by the MPF.

For more information, access the Valor Econômico article.