Corporate Investigations and White Collar-Crime Newsletter – November 2024

The Corporate Investigations and White Collar-Crime newsletter aims to provide information on the main media news, trends, cases and legislation concerning compliance and white-collar crime matters, in Brazil and abroad. This newsletter is for informative purposes only, and should not be used for decision making. Specific legal counseling may be provided by our legal team.

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Corporate Investigations and White Collar-Crime

CGU publishes guidelines on ESG for private companies

On November 25, 2024, the Brazilian Office of the Comptroller-General (“CGU”) published the guide “Integrity Program: Sustainable Practices for Private Companies,” selected as a Highlight Action of the National Strategy to Combat Corruption and Money Laundering – ENCCLA 2024.

The document presents guidelines for companies to adapt their compliance programs and implement policies and internal controls that prevent, control, and respond to acts associated with violations, crimes, and environmental harm. These guidelines are divided into elements deemed essential for any compliance program:

• Top management and leadership commitment;
• Internal body responsible for the program;
• Risk management – not only integrity risks but also socio-environmental risks;
• Code of ethics, policies, and procedures;
• Training and communication about the program;
• Accounting, financial controls and internal audit;
• Due diligence for hiring and supervising third parties and for mergers and acquisitions;
• Hotlines, remediation and disciplinary measures;
• Monitoring the compliance program; and
• Transparency and socio-environmental responsibility.

According to the CGU, the new guide should be read as a complement to the guide “Compliance Program: Guidelines for Private Companies (volumes I and II),” reflecting the authorities’ growing concern with ESG (Environmental, Social, and Governance) practices.

For more information, please access: Iniciativa coordenada pela CGU é eleita como Ação Destaque da ENCCLA 2024 (in Portuguese only).

United Kingdom publishes guidelines on the new crime of “failure to prevent fraud”

On November 6, 2024, the United Kingdom published guidelines on the new crime that aims to hold large companies liable for corporate fraud when they fail to implement reasonable prevention procedures.

The offense – known as “Failure to Prevent Fraud Offence” – was introduced by the Economic Crime and Corporate Transparency Act 2023, which will come into force in September 2025.

The guide provides a detailed explanation of the constitutive elements of the crime, and practical examples of situations that may constitute it. The document also indicates the six principles to be observed when implementing a reasonably effective corporate fraud prevention program:

• Top management commitment;
• Risk management;
• Policies and internal controls that are proportional to identified risks;
• Due diligence;
• Training and communication;
• Monitoring and review.

For each of these principles, guidelines were presented to help companies implement or improve their internal procedures and controls.

For more information, please access: Economic Crime and Corporate Transparency Act 2023.

CGU and AGU sign leniency agreement with US company

On November 14, 2024, the CGU and the Federal Office of the Attorney-General (“AGU”) signed a leniency agreement with US company Freepoint Commodities LLC, which specializes in the trading of commodities such as oil and derivatives.

Under the agreement, the company will pay more than BRL 130 million in administrative fines and compensation for damage caused to the treasury.

This agreement is the result of joint efforts by Brazilian and US authorities, who also signed agreements with Freepoint. The harmful acts allegedly occurred between 2012 and 2018 and involved the payment of bribes to Petrobras public officials in exchange for privileged information and advantages in operations with the state-owned company.

During the negotiations, the CGU evaluated Freepoint’s compliance program, and the company committed to improving its governance and compliance policies if it resumes operations in Brazil.

For more information, please access: CGU e AGU assinam acordo de leniência com a empresa Freepoint Commodities LLC (in Portuguese only).

CGE, AGE and MPMG sign a leniency agreement with SAP Brasil

On December 3, 2024, the State Office of the Comptroller-General of Minas Gerais (“CGE-MG”) and the State Office of the Attorney-General of Minas Gerais (“AGE-MG”) announced the signing of a leniency agreement with SAP Brasil, with the intervention of the Minas Gerais’ State Public Prosecutor’s Office (“MPMG”).

The company will pay more than BRL 66 million in administrative fines, compensation for damage to the government, and collective moral damages – resulting from a damage repair agreement signed with the MPMG.

Negotiations began in 2023, following the initiation of an administrative liability proceeding to investigate harmful acts allegedly committed within the scope of Electronic Auction No. 06/2014, aimed at the contracting of an integrated human resources management system by the State Planning and Management Department (“SEPLAG-MG”). At the time, the company declared that it had found evidence of harmful acts being carried out in collusion with other companies and public officials.

According to the MPMG, SAP Brasil’s collaboration will enable a more in-depth investigation into the illegal acts in order to hold those involved accountable.

For more information, please access: MPMG, CGE e AGE celebram acordo de leniência com a SAP Brasil Ltda (in Portuguese only).

Federal Senate starts “CPI das Bets” in Brazil

On November 12, 2024, the Brazilian Federal Senate installed the Parliamentary Committee of Investigation for betting operators (“CPI das Bets”, in Portuguese) to investigate “the increasing influence of online betting games on the finances of Brazilian families”, and potential connections of betting operators and payment intermediaries with organized crime, money laundering, and illegal transfer of funds abroad.

The rapporteur of the case is Senator Soraya Thronicke, who counted on the support of 30 other senators to create the CPI. According to the rapporteur, the investigation will also address the influence of Brazilian public figures on the operation of betting systems, in addition to the Executive Branch’s lack of initiative to regulate the matter. Interest in the topic can also be attributed to public hearings held by the Federal Supreme Court in regard to regulating betting operators’ activities in Brazil.

Since the CPI was created, betting operators and government authorities have already deposed. In addition, several documents have been requested, such as the Financial Intelligence Report of the Council for Financial Activities Control (COAF), copies of police investigations and contracts, proofs of payment, among others.

The Federal Senate had already started a CPI in April, 2024, which has since investigated game and sports betting manipulation. The “CPI das Bets” is advancing simultaneously with this investigation and may influence the applicable legislation and even lead to the implementation of specific procedures.

The CPI will have 130 days to complete the investigation.

Sources: Senate starts “CPI das Bets” Soraya Thronicke is the rapporteur – Congress in Focus

CPI das Bets will start in the Federal Senate on Tuesday — Senate News

Samarco and other companies acquitted from charges relating to dam collapse in the city of Mariana

On November 14, 2024, the temporary federal judge of the Federal Regional Court of the 6th Region (TRF6) ruled on charges against companies Samarco, Vale and BHP in the case of the collapsed dam in the city of Mariana, state of Minas Gerais.

The judge decided to acquit all companies and executives involved of all charges. According to the judge:

“To impose a central role on criminal law in the management of extreme risks is not always useful, adequate and rational (…) Having read and studied the thousands of pages that compose the present criminal action, I made the only possible decision in the face of the evidence produced, with the conviction that the exercise of punitive power in a democratic state ruled by law is subsidiary, fragmentary, and cannot be used as an instrument to remedy the inefficiency of other social control structures.”

According to her decision, the evidence produced in the evidentiary stage did not prove which individual actions contributed directly and decisively to the “Fundão” dam collapse in Mariana, and no parties can be punished without reasonable doubt. As such, she acknowledged the need to compensate the victims, which is in progress at the civil level. The acquittals can be attributed either to lack of or insufficient proof of fact or to the lawfulness of the conduct (or proof that the defendants did not contribute to the criminal offenses).

For more information, please access the full decision.

Superior Court of Justice confirms that courts cannot aggravate a sentence resulting from a collaboration agreement

On October 25, 2024, the Fifth Panel of the Superior Court of Justice (STJ) reaffirmed case law stating that sentences established through a cooperation agreement must be served according to the terms of such agreement, rather than the Sentence Execution Act (LEP).

In other words, courts cannot impose more severe conditions than those provided in a cooperation agreement, such as changing the enforcement regime or imposing a new sentence to restrict rights.

According to the rapporteur of the case, Justice Joel Ilan Paciornik, the sentence resulting from the cooperation agreement “does not constitute ‘reprimand’ in the strict sense of the word, because it does not result from a conviction issued by the Judicial Branch, but rather from an agreement between the Public Prosecution Office and the agent, within the hypotheses provided for in our legal system.”

Therefore, the sentence must follow only the terms of the agreement. If the parties fail to comply with the cooperation agreement, it will be revoked, and the Public Prosecution Office will charge such parties for the crime, at which time new conditions can be established by the prosecution.

The case under discussion is the conviction of a man to seven years in prison for taking bribes and concealing goods, as he failed to fulfill the services he should render to the community. Within this context, the judge considered the Sentence Execution Act to order house arrest at night during resting time and days off, among other things.

Source: Cooperation agreement sentence cannot be aggravated in execution

Federal Supreme Court decides that states and municipalities can define which activities require environmental licensing

On November 12, 2024, the First Panel of the Federal Supreme Court (STF) decided unanimously that states and municipalities can publish regulations to supplement the list of activities that require environmental licensing. 

Rapporteur Justice Cristiano Zanin ruled on the Extraordinary Interlocutory Appeal No. 1514669 to establish that generic or incomplete rules that define a crime, named “incomplete penal statute” (such as article 60 of the Environmental Crimes Act) can be supplemented by state or municipal law, given that the Federal Government, states and municipalities have common competence in protecting the environment. Therefore, the Public Prosecution Office may charge someone for conduct that is prohibited by a state resolution even if the federal resolution does not prohibit such conduct.

As such, the STF ruled on the case that initiated the discussion to establish that since a State Environmental Council (CONSEMA-RS) resolution included mechanical workshops among activities that require licensing, workshop owners who do not hold such license may be charged with a crime.

Source: States and municipalities can define activities that require environmental licensing – Federal Supreme Court

Superior Court of Justice establishes theses on applying non-prosecution agreement retroactively

On October 28, 2024, the Third District of the Superior Court of Justice (STJ) ruled on Matter 1,098 of repetitive appeals to establish four theses regarding the application of the non-prosecution agreement in cases processed prior to the Anti-Crime Package (Law No. 13,964/2019), which introduced the non-prosecution agreement.

Previously, the non-prosecution agreement could be applied to facts prior to Law No. 13,964/2019 when the complaint had not yet been received. Now, the four theses simplify this application:

• The first thesis defined that the non-prosecution agreement is a criminal proceeding legal transaction established by a regulation that, on the one hand, is procedural regarding the possibility of settlement between parties to avoid prosecution and, on the other hand, relates to the very existence of the crime as it provides for suspending penalties against those that fulfill their duties within the agreement.
• The second thesis states that, given the hybrid nature of the regulation, the principle of applying a beneficial criminal law retroactively must be applied to authorize the application of the non-prosecution agreement even without a confession from the defendant thus far in the proceedings in progress when the Anti-Crime Package entered into force.
• The third thesis concerns criminal proceedings that were in progress on September 18, 2024, when the STF ruled on Habeas Corpus no. 185,913 and created the possibility of applying the non-prosecution agreement retroactively. In such cases, if the agreement is applicable, the Public Prosecution Office must offer it at the first opportunity within the records.
• Finally, the fourth thesis establishes that, in investigations or criminal proceedings initiated as of September 18, 2024, the execution of the non-prosecution agreement before a complaint is received will be allowed, without prejudice to the possibility of proposing the agreement during the criminal proceeding, if that is the case.

Source: STJ establishes theses on the application of non-prosecution agreements