In 2013, Brazil’s Congress passed Law 12,846 of 2013, better known as the Anti-Corruption Law, the main legislative milestone in the fight against corruption-related crimes in the country. From its enactment until November 2023, 25 leniency agreements were signed, another 21 negotiations were under way and 38 attempts did not result in an agreement. Of the successful agreements, around a third involved companies implicated in Operation Car Wash.

The above figures, taken from the Office of the Comptroller General, underpin a study completed in February 2024, titled “Study on the Possibility of Collaboration Without a Fine in Brazil,” carried out by the FGV Law Compliance Study Group, the non-degree and short-course graduate program at Fundação Getulio Vargas’ Sao Paulo Law School. The study group includes several representatives of the Office of the Comptroller General.

“Despite the enormous progress made, the aforementioned figures seem to suggest that there is resistance to organizations voluntarily reporting harmful acts of the kind mentioned in Law 12,846 of 2013 to the authorities. This is because the incentives that currently exist tend to discourage organizations from doing so,” says the report, coordinated by Carlos Henrique da Silva Ayres, a professor at FGV LAW and one of its course coordinators.

Structured in four chapters, the document compares Brazilian legislation to the regulations in place in the United States, the United Kingdom, Spain and Italy. It also provides an in-depth analysis of the application of Law 12,846 and new legislative instruments that may be applied in cases of crimes involving corruption. At the end, it sets out some suggestions for improving the system.

“Through this study, our group wanted to point out ways in which the voluntary collaboration of the actors involved can be increasingly encouraged, thereby improving the culture of responsibility in the face of crime and also speeding up the resolution of cases, including by reconciling existing interpretations with out-of-court conflict resolution mechanisms, stimulated by the recently approved Code of Civil Procedure and other instruments,” Ayres says.

Brazilian legislation

One reason why there aren’t more leniency agreements, especially those resulting from voluntary reporting, is an apparent conflict in the interpretation of the rules. Some argue that fines are the main penalty, while public disclosure is a secondary one.

According to the report, “We must assume that this interpretation is the result of a reading of Article 6, paragraph 1, based on the guidelines of Article 16, paragraph 2. Although this interpretation is one of the ways of making the two provisions compatible, it ends up greatly restricting the scope of the text of Article 6, paragraph 1 of Law 12,846 of 2013.”

The study continues, “This interpretation seems to be based on the premise that Article 6 defines a general rule, while Article 16 deals with a specific rule for leniency agreements, which would end up delimiting the criteria for the isolated application of fines. In this way, there seems to be a conflict between the rules, to be resolved by the criterion of specialty, in view of the inapplicability of the hierarchical and chronological criteria.”

However, the researchers argue that this interpretative criterion does not prove sufficient to resolve this conflict of rules. First, because, according to the literal wording of the supposed general rule of Article 6, paragraph 1 of Law 12,846 of 2013, it would be possible to apply the penalty of public disclosure alone, without also imposing a fine. Likewise, the Office of the Comptroller General itself, since the publication of Regulatory Ordinance 19 of 2022, has recognized cases of inapplicability of public disclosure other than that dealt with in Article 16, paragraph 2 of Law 12,846 of 2013.

According to the researchers, recognizing the applicability of penalties according to the specific characteristics of each case, under the terms of Article 6, paragraph 1, of Law 12,846 of 2013, makes it possible to establish a public anti-corruption policy based on the functions of each penalty. Thus, Article 16, paragraph 2 of Law 12,846 of 2013 should not be considered a special rule of the general rule of Article 6, paragraph 1 of Law 12,846 of 2013, and much less should it sustain the ancillary nature of the public disclosure penalty. Therefore, an interpretation is proposed according to which the two regulatory provisions coexist without conflict, as they have different scopes of validity or incidence.

Finally, the study group concluded that it is possible to apply collaboration without a fine in Brazil, which could encourage voluntary reporting of harmful acts to the authorities in certain situations.

This would be an exceptional measure, capable of benefiting organizations in specific contexts where their conduct before and after the harmful act is highly positive, based on an assessment of the authorizing factors.

For more information about the study, click here.