wednesday, 11 october of 2017

Brazilian anti-corruption law and new trends for government criminal investigations after the "Car Wash" probe

Luis Carlos Dias Torres and Andrea Vainer

In the past few years, Brazil has been going through a massive Federal Police operation called the "Car Wash" probe.

The corruption scheme that was revealed by the Car Wash Task Force was so great that it caused substantial repercussions outside the courtroom. The Brazilian population and the media vigorously turned their attention to this case and started pressing Authorities for harsher and stricter punishments. Anti-corruption became the big crusade in Brazil.

Investigations were initiated in March, 2014, to verify potential corruption and money laundering misconduct related to state-owned oil company Petrobras. The development of the investigations soon revealed a much broader scheme, causing the operation to spread to many other companies and sectors of the Brazilian economy.

What has been happening as a result of the Car Wash probe is unprecedented in Brazilian history. Many high-level entrepreneurs and politicians have been arrested and convicted of serious corruption-related offences, including officials of the Federal Government and members of Congress.

"Car Wash" is a leading case in Brazil, and it certainly changed the way Authorities investigate corruption-related offences. This article aims to discuss the new trends in government investigations generated from this case, but it is important to make some brief clarifications about Brazilian anti-corruption legislation before doing so.

The Brazilian Criminal Code, article 333

The Brazilian Criminal Code, article 333, provides for the crime of active corruption, which refers to the conduct of offering or promising an undue advantage to a public official, in order to get him/her to practise, omit or delay an official act, ie act outside the law.

The Code sets the punishment for this offence at two to twelve years of imprisonment, in addition to a fine to be defined by the court.
It is also a crime for a public servant to engage in corruption. The Criminal Code, article 317, defines passive corruption as the conduct of requesting or receiving, for oneself or another, directly or indirectly, an undue advantage, or accepting a promise of said advantage. The penalty is the same as that provided for active corruption.

Only individuals may be held criminally accountable for the crime of corruption in Brazil. Legal entities may be subjected to severe administrative and civil liability, even though they are not subjected to criminal liability for corruption.

Law 12.846/13 (the Brazilian Clean Company Act)

Regarding this topic, it is crucial to mention Law 12.846/13, sanctioned in the beginning of August 2013.

This law created civil and administrative liability for legal entities who promise, offer or give, directly or indirectly, any undue advantage to a public official or third person related to him/her.

Although this law – also known as the Brazilian Clean Company Act – does not create criminal liability for companies that engage in corruption, it imposes substantial administrative and civil penalties for legal entities that perpetrate the above-mentioned misconduct.

Plea Agreements

The first tool to be mentioned in the discussion of the new investigative trends regarding anti-corruption is the plea agreement.

Several Brazilian lawyers consider that plea agreements played a substantial role in the development of the Car Wash probe, being the most important resource for the Prosecution.

Plea agreements are not new in the Brazilian legal environment, but they gained a lot strength under Law 12.850/13 (which was enacted months before the initiation of the Car Wash Probe).

According to this law, a plea agreement is a contract entered into between suspects/defendants and the accusation, granting benefits to whoever effectively and voluntarily collaborates with the clarification of the facts. This instrument is only applicable for individuals; companies cannot enter into plea agreements.

As a benefit generated by the agreement, the Judge may pardon or reduce the penalty of the defendants/suspects who voluntarily provide information that may produce one or more of the following results:

  • identification of other perpetrators;
  • exposure of the structure of a criminal organisation;
  • prevention of crimes that result from the activities of a criminal organisation;
  • recovery, in whole or in part, of the product or financial gains originated from the criminal activity; and
  • location of a possible victim, with his/her physical integrity preserved.


Corruption is considered especially sensitive to plea agreements, since it is a very complex offence to investigate because corrupt payments are sometimes the product of a very refined money-laundering scheme, and because sometimes perpetrators are clever enough to leave no traces of the criminal offences. Traditional investigative measures – ie wiretapping of phone calls and e-mails, search and seizure, breach of bank confidentiality – are efficient, but sometimes it is hard to know what to look for and how far the scheme goes without inside information about the criminal organisation.

Public Prosecutors acknowledged the value of these agreements for the accusation, and they will certainly continue to make use of this resource in future cases.

Of course, it is important to consider that these instruments might also be valuable for suspects/defendants as well, and they shall be considered in their interest, depending on the case at stake.

Leniency Agreements

Along with the wide use of plea agreements, it is important to mention the leniency agreements applicable to companies.

The law permits two possible types of leniency: anti-corruption leniency and antitrust leniency.

Although they carry a similar name, they are completely different types of agreements, with different requirements and legal frameworks. The antitrust leniency programme is very strong and has been used for decades by the Authorities in cartel cases, while the anti-corruption leniency is a new facility, provided by Law 12.846/13, described above.

The two types of leniency have one thing in common: if a company committed a violation and wishes to be eligible for leniency, it is required to fully and permanently co-operate with the investigation, which provides an incredible source of information to the Authorities.

A leniency antitrust agreement can be very valuable for a corruption investigation as well. Construction companies involved in the Car Wash probe have celebrated leniency antitrust agreements in which they revealed not only information about antitrust violations, but also about corruption. Of course, many of these agreements became a great source of information to the Federal Prosecutors.

One important difference between the two types of leniency is that, under Law n. 12.846/2013, leniency does not create immunity for the implicated individuals as the antitrust agreements do. The opposite actually happens with anti-corruption agreements: by fully co-operating with the government, the company usually delivers materials that may be used as evidence against certain individuals for future charges.

In this legal context, the Car Wash probe affected the way Brazilian companies handle suspicions of corruption and misconduct. Major companies in Brazil are now investing a great amount of resources in conducting detailed internal investigations, aiming to co-operate with the government if something unlawful is identified.

Pre-Arrest Trials

Besides these relevant instruments of investigation, the Car Wash probe reveals that criminal authorities have adopted a new pattern to approach suspects of corruption violations: pre-trial arrests.

Since the beginning of the Car Wash probe, the headlines have been full of reports of arrests of prominent Brazilian figures. The most important executives of the major Brazilian construction companies were arrested. Federal Government employees were arrested. Although not arrested, the former president of Brazil, Luis Inácio Lula da Silva, was forcefully brought in for questioning by the Federal Police.

The truth is that it became quite common for suspects to be incarcerated during the investigation phase. Critics argue that the Public Prosecutor’s Office and the Federal Police have been using these arrests to pressure defendants into entering into plea agreements. Some say that the Authorities are responding to social/media pressure and elevating the restrictions and severity of responses to suspicions of corruption, regardless of what the law provides.

Regardless of the reasons for Prosecutors and Judges making such wide use of pretrial detentions, they have definitely become a trend for current and future corruption investigations.

Severity of Punishments

Another relevant characteristic of the Car Wash probe is the severity of the punishments imposed on the defendants after a criminal law suit reaches a verdict.
It is common for defendants who have not entered into agreements to face penalties for corruption and money laundering that add up to more than 30 years of imprisonment.

Many corruption defendants on trial during the Car Wash probe received higher penalties than those applied to serious violent offences such as murder and homicide.

Experience shows that this trend has spread among Brazilian Courts, especially in first degree of jurisdiction, causing verdicts across the country to be substantially more severe for cases involving white-collar criminal offences.

Defence lawyers argue that these trends are too strict and violate basic guarantees provided by the constitution and criminal law. Attorneys consider that courts have shifted to pro-prosecution behaviour, sometimes neglecting the basic principles of criminal law, such as the presumption of innocence. This is a very complex discussion and is not the point of this article, which aims merely to describe the trends resulting from this massive anti-corruption probe.

Regardless of the accuracy or legality of any these measures, it is a fact that plea agreements, leniency agreements, pretrial arrests and harsher penalties are a tendency for future corruption cases, and will likely be used by the government for many years to come.


*Luis Carlos Dias Torres is a criminal lawyer at Torres | Falavigna Advogados.

*Andrea Vainer is a criminal lawyer at Torres | Falavigna Advogados.

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