Brazil: Law Enforcement And The Hurdles To The Brazilian Anticorruption Leniency Program

Last Updated: 4 May 2017
Article by Rafael Zabaglia


In March 2017 the Brazilian federal government auctioned off concessions to operate four airports. All winners – in fact, all bidders – were foreign investors. Local construction conglomerates who had been historically very active in bids for large infrastructure projects were nowhere to be found this time.

All of those conglomerates are deeply implicated in the so-called "Operation Car Wash" - a probe on illicit payments, bribes and kickbacks in contracts with the federal government and with government-controlled oil & gas conglomerate Petrobras.

Without prejudice to business reasons each of those conglomerates may have had to skip this recent auction, "Operation Car Wash" is not in itself a reasonable explanation for their absence from the auction process – at least not when it comes to Odebrecht and a few other conglomerates who had already settled with the Office of the Federal Public Prosecutor ("Ministério Público Federal" – the MPF) several months ago in order to clean their slate and resume business with the federal government.

Despite their settlements, Odebrecht and those other conglomerates still run the risk of paying additional damages to, or even being prohibited from contracting with, that very federal government further down the road.

The core problem is that several public authorities are legally vested with the power (and the duty) to punish wrongdoers but are not legally required to coordinate their actions.

Law enforcement agents in corruption probes and their powers and duties

An intricate set of rules applies to the internal and external oversight, control, review and enforcement as regards management and execution of the federal budgets, federal procurement, and lawfulness of contracts between the federal government and the private sector1.

Pursuant to the Constitution and to statute, no less than four different authorities have investigatory and punitive roles in connection with "Operation Car Wash" and similar probes, roughly as follows:

  1. The MPF represents the public interest (the people) in court and in that capacity it may file civil and criminal lawsuits. The MPF is fully independent from the Executive branch.
  2. The Federal Accountability Court ("Tribunal de Contas da União" – the TCU) is an administrative tribunal for oversight and audit of the contracts and budgets of the federal government and its owned and controlled businesses. It is also independent from the Executive branch as its members are appointed by Congress.
  3. The Office of the Federal Attorney General ("Advocacia-Geral da União" – the AGU) represents the federal government in court and in that capacity it may file civil lawsuits. The Attorney General is a cabinet member.
  4. The Office of the Federal Comptroller General ("Ministério da Transparência, Fiscalização e Controladoria-Geral da União" – the CGU) is the Ministry in charge of preventing and punishing corruption internally. The Comptroller General is also a cabinet member.

In summary, the way those authorities interpret their own powers and duties is that the MPF may press criminal charges, both the MPF and AGU may pursue civil claims, including collective lawsuits ("ações civis públicas"), malfeasance/improbity suits ("ações de improbidade administrativa") and suits for damages, and both the CGU and TCU may impose administrative penalties such as fines and a temporary ban on wrongdoers from bidding for and entering into contracts with the federal government.

This institutional design has proven deeply troubling when it comes to leniency agreements between the federal government and entities implicated in corruption probes.

Leniency agreements and their legal and political background

The landmark statute on corrupt acts and corporate compliance is Law No. 12,846 dated 8.1.2013 (the Anticorruption Act, or the Act). Pursuant to its article 1, the Act "addresses strict administrative and civil liability of legal entities for the practice of acts against the national or foreign public sector." The Anticorruption Act does not regulate criminal liability and does not apply to individuals.

Article 16, § 10, of the Act vests the CGU with standing to enter into anticorruption/compliance leniency agreements with wrongdoers at the federal level. However, the Act lacks any language to the effect that the CGU determination is binding upon the AGU, TCU and MPF so as to block any further prosecution, or even to the effect that they must be consulted and sign off on the relevant draft agreements2.

In addition, several companies have reached out to the CGU to negotiate leniency agreements but according to media reports the MPF has recently asked that the CGU freeze the talks to prevent interference with ongoing criminal investigations. As a result, despite being the only authority expressly empowered to strike a deal with wrongdoers under the Anticorruption Act, the CGU is yet to finalize its first deal3.

Meanwhile, the MPF itself has gained ground and settled a number of claims with entities and individuals investigated in "Operation Car Wash". It has named those settlements "leniency agreements", and the media has referred to them as such, despite the fact that article 16, § 10, of the Act has not expressly vested the MPF with standing to sign those agreements alongside the CGU4.

The MPF has affirmed its jurisdiction to cut these deals based on interpretation of an array of different rules that allow the MPF to: (a) file civil collective lawsuits under the Act seeking the imposition of civil and administrative penalties upon wrongdoers (articles 19 to 21 of the Act); (b) settle any civil collective suits to which it is a claimant (article 5, § 6, of Law 7,347/1985); and (c) enter into plea bargains with individuals who collaborate with law enforcement officials in the context of certain high-profile criminal charges (article 1, § 5, of Law No. 9,613 dated 3.3.1998, articles 13 to 15 of Law No. 9,807 dated 7.13.1999, articles 4 to 7 of Law No. 12,850 dated 8.2.2013, article 26 of the 2000 United Nations Convention against Transnational Organized Crime – Palermo Convention, and article 37 of the 2003 United Nations Convention against Corruption – Merida Convention).

Each of the AGU and TCU, in turn, has stated that: (a) its jurisdiction has grounds on the Constitution, and as such it may not be disallowed by the initiatives of the MPF (or even the CGU) from enforcing the law against wrongdoers; (b) the amounts settled by the MPF are mere estimates whereas the government and Petrobras must be reimbursed in full for their losses; and (c) the MPF does not have the power to waive administrative penalties such as temporary ban from the federal procurement process.

The TCU took concrete action and issued Ruling ("instrução normativa") No. 74 dated 2.11.2015, pursuant to which it affirmed its own jurisdiction to review and green-light ex ante facto each step of the anticorruption leniency program under the Act, from the wrongdoer's initial offer to settle to the final report on the results of leniency following complete performance of the settlement. Pursuant to Ruling No. 74/2015, other authorities involved in the negotiations of a leniency agreement are required to timely forward all drafts, final agreements, reports and any supporting documentation to the TCU, subject to a fine5.

This convoluted picture is in stark contrast with the United States anticorruption leniency program. The United States is an important jurisdiction for comparison because, as is widely commented, its law enforcement authorities have successfully shifted the paradigm for resolution of corruption probes from prosecution towards leniency and compliance over the course of the past fifteen years.

The Foreign Corrupt Practices Act (15 U.S.C. § 78dd-1 et seq. – the FCPA) is the foundational statute on prevention and punishment of corruption in the U.S., and is subject to dual enforcement: roughly speaking, the Securities and Exchange Commission (SEC) is responsible for civil enforcement against issuers of securities and their agents, while the Department of Justice (DOJ) is responsible for criminal enforcement in general and civil enforcement against wrongdoers other than issuers and their agents.

While the FCPA does not mandate that the DOJ and SEC work together and while they may adopt different strategies from time to time, the DOJ and SEC seek to coordinate their FCPA-related enforcement and settlement efforts whenever applicable. For instance, each has a dedicated FCPA unit and those units issued a joint guide to the FCPA in 2012 – which mitigates wrongdoers' uncertainty upon negotiating deferred-prosecution agreements with the DOJ and SEC6.

In other words, three key characteristics of the anticorruption leniency program in the U.S. are (a) existence of two main law enforcement authorities, (b) fairly clear allocation of responsibilities between them, and (c) voluntary cooperation between them as a standard. None of those characteristics is present in Brazil.

Coordination attempts

The relevant Brazilian actors have realized that the country's dysfunctional legal framework is far from ideal and must be redesigned. Efforts have been made with lackluster results so far. Initially, former President Dilma Rousseff issued Executive Order ("medida provisória") No. 703 dated 12.18.2015 to amend the Anticorruption Act with a view to encourage involvement of the MPF, CGU and AGU in the negotiation and validation of leniency agreements.

The mechanism had some flaws (for instance, involvement of the MPF was not mandatory) and at any rate the Executive Order expired on 5.29.2016 as Congress failed to review it within 120 days, as required under article 62, §§ 3, 4 and 7, of the Constitution.

Then, the CGU and AGU issued Joint Directive ("portaria interministerial") No. 2,278 dated 12.15.2016, with guidelines for cooperation between those two authorities in the process of drafting and negotiating leniency agreements under the Act, as follows: (a) the CGU will inform the AGU about any new leniency agreement offer; (b) a joint workgroup will be formed with two or more CGU servants and one or more AGU attorneys; (c) the workgroup and the wrongdoer will sign a memorandum of understanding and then engage in negotiations of the terms and conditions of the leniency agreements; (d) the AGU members will appraise the pros and cons of the proposed terms and conditions vis-à-vis the prospects of judicial action against the wrongdoer; (e) the workgroup will issue a report to the CGU and AGU; (f) both the Comptroller General and Attorney General will decide whether to sign the leniency agreement; and (g) the CGU will monitor the performance of the agreement.

Joint Directive No 2,278/2016 is currently in force, but no case has been settled thereunder yet, and it does not contemplate any participation of the MPF and TCU in the process.

More recently, news emerged that the TCU and MPF have been trying to coordinate their own efforts informally. Upon ruling on the fraudulent bidding process for construction of thermoelectric power station Angra 3 on 3.22.2017, the TCU (a) prohibited some construction conglomerates who have not settled with the MPF (like Queiroz Galvão and Techint) from bidding for and entering into contracts with the federal government for five years but (b) decided that it would not impose the same penalty upon Odebrecht, Camargo Corrêa (CC) and Andrade Gutierrez (AG) for the time being. The TCU took into consideration their previous leniency agreements with the MPF (and which reportedly did not involve Angra 3) as a sign that Odebrecht, CC and AG are willing to collaborate with law enforcement. It granted them additional 60 days to amend the existing leniency agreements in a way that settles the Angra 3 claim and provides for their collaboration with the TCU as well.

This coordination may prove ineffective eventually and still needs to be battle-tested. The CGU and AGU have been alienated from the process so their reaction to any TCU settlement is uncertain. In addition, the TCU could in principle reject any amendment to the MPF settlement after all and as result still prohibit any of Odebrecht, CC and AG from participating in the federal procurement process for five years regardless of the negotiation efforts with the other authorities.


Thanks to a very defective and illogical constitutional and legal structure, there is a hodgepodge of overlapping jurisdictions to take action in corruption probes and at the same time there is no rule to coordinate those actions.

Incentives continue to be misaligned, and each of the MPF, TCU, CGU and AGU is seemingly competing for the right to settle and to punish wrongdoers. 

All authorities purport to defend and safeguard the public interest, but their conflicting actions may end up having the opposite result and cause large construction conglomerates – which employ thousands of workers and pay hundreds of millions of reais in taxes every year – to go bankrupt. The risk is real: all this uncertainty surrounding the Brazilian anticorruption leniency program already hurts their credit ratings and in practice prevents them from getting financings, and may soon also block their access to the federal procurement process, which is a vital source of revenue for them.

The underlying problem extends well beyond, though. It may discourage any entities investigated in any other probes from settling – be it with the MPF or the other relevant authorities. This will serve no one, and certainly not the public interest in the first place.


1. To name a few: articles 71 to 74, 129 and 131 of the Constitution; Law No. 7,347 dated 7.24.1985; Law No. 8,429 dated 6.2.1992; Law No. 8,443 dated 7.16.1992; Law No. 8,666 dated 6.21.1993; and Law No. 10,683 dated 5.28.2003.

2. The legal framework for leniency agreements related to cartels and other competition-related wrongdoings is different, leaner and clearer under Law No. 12,529 dated 11.30.2011 (the Competition Act). The Competition Act has express language to the effect that (a) the Administrative Council for Economic Defense ("Conselho Administrativo de Defesa Econômica" – CADE) is the authority with the power to adjudicate on antitrust matters at the administrative level, (b) a legal entity may enter into a leniency agreement with the CADE, and (c) a deal with the CADE will statutorily halt any official criminal and administrative charges.

3. In 2016, the CGU entered into a leniency agreement with SBM Offshore in the context of "Operation Car Wash". Parties accorded that the agreement would only be enforceable upon validation by the MPF. The MPF has not validated it on the grounds that more investigation must be carried out.

4. MPF settlements must be homologated in court, so the Judiciary may theoretically also interfere with the content and scope of the bargains.


The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions