Compliance in Brazil: the outlook for 2024

The year 2023 marked a milestone for promoting a corporate integrity culture in Brazil, especially as the Brazilian Anti-Corruption Law (Law No. 12,846/2013) passed its tenth year. This law’s impact has been shown by the increase of enforcement actions initiated by competent authorities, at least in the administrative sphere. According to publicly accessible data from the Office of the Comptroller General (CGU), 278 administrative enforcement proceedings (referred to as ‘PARs’ in Brazil) were initiated to pursue violations of the Anti-Corruption Law within the scope of the federal Executive branch.

In 2023, the CGU initiated the highest number of PARs (72), followed by Petróleo Brasileiro S.A. (Petrobras), the Brazilian Federal Revenue Service (RFB), and Brazil’s federal environmental agency (IBAMA) – which respectively initiated 60, 44 and 23 federal-level PARs to enforce the Anti-Corruption Law at the federal level.

Since 2013, in addition to initiating and concluding these proceedings, the CGU has used negotiated instruments provided for in the Anti-Corruption Law extensively. In 2023, the CGU and the Brazilian Office of the Attorney General (AGU) entered into two leniency agreements, received eleven proposals for negotiating new corporate resolutions, and recovered BRL 1.3 billion through negotiated resolutions. This amount encompasses both the resolutions reached last year and those executed previously that are still being monitored.

As the authorities ramp up their efforts, certain compliance issues are gaining increased prominence both in Brazil and worldwide. The main trends and challenges for 2024 are highlighted below:

• Expanded concept of ‘corporate integrity’: During a Pro-Ethics award event in November 2023, the CGU announced its plan to broaden the scope of corporate integrity in Brazil to go beyond preventing and combating corruption. At the event, the Minister of the CGU announced  plans to restructure its private integrity agenda to encourage companies to adopt measures related to social responsibility, governance, human rights, and environmental stewardship, providing companies with an opportunity to incorporate ESG aspects into their agendas. Many companies will need to undergo institutional and cultural transformation to achieve this goal. This will require careful consideration during periodic reviews of compliance policies and procedures, training programs, and internal investigations.
• Rigor in evidence production: In September 2023, the Federal Supreme Court (STF) ruled that evidence derived from a leniency agreement stemming from Operation Car Wash (Operação Lava Jato) was legally inadmissible, stating the evidence lacked technical integrity due to inadequate data collection and preservation procedures. The STF’s decision serves as a crucial reminder that companies need to remain vigilant when conducting forensic procedures in internal investigations. To prevent collected evidence from being subsequently annulled and to mitigate potential impacts on the agreement via which they were produced, companies must ensure they carry out stricter data collection, preservation, and handling procedures, as well as maintaining accurate chain of custody records.
• Integrity programs in large-scale public procurements: At the same Pro-Ethics award ceremony, the CGU announced it expects to approve a proposal to regulate Law No. 14,133/2021 (known as the Public Bidding and Contracts Law) in the first quarter of 2024. This legislation mandates that companies competing in bids for large-scale projects (those exceeding BRL 200 million) must establish corporate integrity programs. The forthcoming regulations are projected to be in line with the CGU’s existing rules on corporate integrity programs. However, additional provisions related to the execution of long-term contracts with Brazilian public entities may also be included in the regulations.
• Using new technology and AI: Compliance areas may encounter new challenges in 2024 as new technological tools become increasingly prevalent. This will be especially true if ongoing discussions on the regulation of artificial intelligence move forward in Brazil’s Congress, where the Senate is currently assessing a bill introduced by Senator Rodrigo Pacheco (PSD/Minas Gerais). AI tools are already aiding companies in identifying and preventing fraud and in conducting internal investigations – such as detecting irregular payment patterns to service providers, reimbursements of expenses, sorting potentially important documents for review, as well as analyzing people’s sentiment in written communication. Additional controls may be necessary to regulate the use of AI tools, particularly when they impact employee and third-party rights.
• New mechanisms for negotiated resolutions: In addition to the leniency agreement and the summary judgment mechanisms that were introduced by CGU Ordinance No. 19/2022, the CGU has also announced it is considering introducing cease-and-desist agreements. The potential for companies to resolve Anti-Corruption Law-related matters by entering into cease-and-desist agreements with the CGU is based on Article 49, Paragraph 1, III of Law No. 14,600/2023. On February 1, 2024, the CGU announced its intention to consider a study published by a research group comprised of its officials and representatives of the Fundação Getulio Vargas Law School in São Paulo. The group explored whether it would be feasible to negotiate resolutions without having to apply fines set out in the Anti-Corruption Law. These initiatives indicate a shift in the CGU’s policy toward seeking negotiated resolutions and may increase the number of cases brought to its attention.
• Relationships with sanctioned entities and individuals: In Brazil, international sanctions are governed by the Brazilian Sanctions Law (Law No. 13,810/2019), which incorporates sanctions on the United Nations Security Council Consolidated List into Brazil’s legal framework. Given the increasing number of armed international conflicts over the past two years, it is imperative to establish internal controls to mitigate risks concerning non-compliance with international sanctions. Apart from the UN’s sanctions list, companies with global operations or international dealings should be mindful of the potential ramifications of sanctions imposed by other countries and how they may affect their logistical and financial activities, particularly in terms of payments, imports, and exports.

For more information on these topics, please contact Mattos Filho’s Compliance & Corporate Ethics practice area.