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.
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Compliance and Investigations Team
Hypera S.A. signs BRL 110 million leniency agreement with CGU and AGU
The Brazilian Office of the Comptroller General (CGU) and the Office of the General Counsel for the Federal Government (AGU) announced, on May 31, that they entered into a leniency agreement with companies from the Hypera business group. Such agreement started being negotiated in 2020, due to the now confessed violations to Laws No. 12,846/2013 (Brazilian Clean Company Act) and No. 8,429/1992 ( Brazilian Administrative Misconduct Act), occurred between 2010 and 2015.
The companies from Hypera business group that signed the leniency agreement agreed to pay the amount of BRL 110,882,122.19, which includes fines, reimbursement for damages caused to third parties and the disgorgement for contracts executed with offer of improper payments, as well as the obligation to update and enhance their compliance programs.
For more information, access the CGU release here.
Brazil falls 4 positions on Capacity to Combat Corruption Index
Brazil fell from the 6th to the 10th position in the 2022 Capacity to Combat Corruption Index (“CCC”). Although the index has not yet been published in full, early information is that Brazil registered a fall of 6% in the index score over the last year, with a cumulative decrease of 22% since the first edition, released in 2019.
The CCC Index variable that evaluates independency and the efficiency of anticorruption agencies dropped almost 19% due to the transfer of the Brazilian Federal Police members that were conducting investigations potentially unfavorable to the Federal Government and, also, to the appointment of individuals allegedly allied to the Federal Government to key positions at the Federal Prosecution Office. On the other hand, the report considered as positive the maintenance of independence of the Brazilian Federal Supreme Court (“STF”) and of the Superior Electoral Court (“TSE”), despite the high political polarization in the country.
The ranking is produced by the America´s Society/Council of the Americas (“AS/COA”) along with Control Risks, a specialist global risk consultancy, and encompasses 15 countries, that together represent 92% of Latin America´s Gross Domestic product (“GDP”). The index evaluates the countries´ abilities to detect, punish and prevent corruption.
For more information, access Valor Econômico´s article here.
Contractors involved in the “Car Wash” Operation seek to renegotiate their leniency agreements due to financial struggles.
Some contractors involved in the “Car Wash” Operation seek to renegotiate their obligations agreed under leniency agreements signed with Brazilian authorities.
According to the article published in the Brazilian newspaper Estadão, some contractors claim to be facing difficulties on contracting with the Government which, along with the financial crisis that arose from the pandemic, resulted in non-planned low cash flows. Such contractors sustain that there was a great decline in major public constructions in Brazil, resulting in the substantial decrease of public and private investments in the infrastructure sector, which was worth BRL 188.5 billion in 2014 but dropped to BRL 124.8 billion in 2020.
According to the article, the leniency agreements would not have resulted in the operational stability they expected and further claim that there is a harmful mismatch between the entities such as the Brazilian Federal Audit Court (“TCU”), the Office of the Federal Controller General and the Federal Prosecution Office (“MPF”).
Some of the contractors mentioned in the article had allegedly been renegotiating the payment method and seeking to extend payment deadlines, while others had been trying to reduce the amount to be paid. The negotiations had allegedly been happening directly with the CGU, which has confirmed the existence of requests from contractors related to the financial obligations agreed on and, subsequently, stated that changing the previously settled amounts was not possible.
For more information, access the Estadão Article here.
Superior Court of Justice will examine if Petrobras can ask for compensation for pain and suffering from contractors involved in the “Car Wash” Operation
Due to amendments introduced by Law No. 14,230/2021 on the Brazilian Administrative Misconduct Act (Law No. 8,429/1992), the Superior Court of Justice (“STJ”) decided, on June 14, 2022, to examine Petrobrás’ request to include on the claims of administrative misconduct compensation for pain and suffering, allegedly suffered by Petrobras due to illegal practices carried out by certain contractors within the context of the “Car Wash” Operation. This discussion takes place within the scope of Special Appeal (REsp) 1,890,353.
Some contractors stated in the records that, since they have signed a leniency agreement, they should not be subject to any additional claim of such nature. Petrobras, in turn, argues that the execution of leniency agreements by some contractors does not hinder its claim to be compensated for collective pain and suffering due to the alleged effect on its image.
For more information, access the Conjur article here.