On July 11, 2022, Decree No. 11,129 (“Decree”) was published in the Official Gazette, regulating the Anticorruption Law in place of Decree No. 8,420/2015 (revoked on this occasion), which will come into force on July 18, 2022.

The new Decree brings novelties about the Administrative Accountability Process, leniency agreements, in the use and evaluation of integrity programs (compliance), in the parameters for the imposition of fines to violating companies and updates in the competence of the National Registry of Disqualified and Suspended Companies (“CEIS”) and the National Registry of Punished Companies (“CNEP”). This newsletter aims to point out the main changes brought by the Decree.

1. Preliminary Investigation and Administrative Accountability Process (“PAR”)

The Decree details the Preliminary Investigation stage, which corresponds to the first step in the investigation of illicit acts committed against the national or foreign public administration.

According to the Decree, the Preliminary Investigation (i) will be conducted by a team composed of the entity’s internal affairs department and the competent unit, (ii) may result in the precautionary suspension of the effects of the investigated act, (iii) may include the performance of technical and operational specialists, (iv) may request banking information on the movement of public resources (confidential); will allow the sharing of information with the control agencies such as banking and tax information, and (vi) may include judicial measures to assist the investigation, such as the search and seizure.

Provisions on the initiation of the PAR were essentially maintained by the Decree, whose conclusion period should not exceed 180 (one hundred and eighty) days.

2. Administrative Penalties

The Decree changed the criteria for calculating fines. The fine may be increased in the following cases: (i) up to 4% in case of concurrence of the harmful acts; (ii) up to 3% for tolerance or knowledge of persons of the directive or managerial body of the legal entity; (iii) up to 4% in case of interruption in the supply of public or essential goods and services, or in case of non-compliance with regulatory requirements; (iv) up to 1% for the economic situation of the violator that presents general solvency and general liquidity indexes higher than one and net profits in the last fiscal year prior to the initiation of the PAR; and (v) up to 3% in case of recurrence of the damaging act, in less than five years.

In the case of contracts, agreements, arrangements, adjustments and other similar instruments maintained or intended with the body or with the aggrieved entities, in the years of the commission of the aggrieved act, the following percentages will be considered: (i) 1% in the case of the sum of the instruments totaling a value greater than R$ 500 thousand; (ii) 2% (two percent), in case the sum of the instruments totals more than R$ 1,5 million; (iii) 3% in case the sum of the instruments totals more than R$ 10 milion; (iv) 4% in case the sum of the instruments totals more than R$ 50 million; or (vi) 5% (in case the sum of the instruments totals more than R$ 250 million.

The mitigating factors of the fines, in its turn, were altered by the Decree. From the result of the sum of the aggravating factors of the fine, the amounts corresponding to the following percentages of the calculation basis will be subtracted: (i) up to 0.5% in the case of no consummation of the violation; (ii) up to 1% in the case of (a) proof of spontaneous return by the legal entity of the advantage gained and of the reimbursement of the damages resulting from the harmful act; or (b) inexistence or lack of proof of the advantage gained and of the damages resulting from the harmful act; (iii) up to 1.5% for the degree of collaboration of the legal entity with the investigation or verification of the wrongful act, regardless of the leniency agreement; (iv) up to 2% in case of voluntary admission by the legal entity of objective liability for the wrongful act; and (v) up to 5% in case of evidence that the legal entity has and applies an integrity program, according to the parameters established in Chapter V of the Decree.

The calculation of penalties will be based on three possible methodologies: (i) total amount of reverend obtained by the public agreement, less the licit costs, in case of illicit acts with the purpose to obtain agreements; (ii) total amount of expenses or costs avoided, including tax and regulatory costs, which would have been borne by the entity if the illicit act was not practiced; (iii) total profit obtained by the entity, which would not have been obtained without the practice of the illicit act.

The other administrative sanctions (publication of the decision, restriction on the right to bid or contract with the public administration) were essentially maintained by the new Decree.

3. Leniency Agreement

The Decree established objectives to be achieved by the leniency agreements, such as fostering the culture of integrity in the private sector, in addition to the ability to investigate and recover assets by the public administration.

In addition, the Decree reiterated and created new requirements for the execution of agreements, such as: (i) identify the other parties involved in wrongful acts; (ii) be the first person to express interest in cooperating; (iii) admit objective liability for wrongful acts; (iv) fully repair the uncontroversial portion of the damage caused; and (v) transfer to the injured party or the Federal Government the amounts corresponding to the undue asset increase or illicit enrichment.

The initial milestone for the negotiation conclusion deadline is now the signing of the memorandum of understanding.

Although confidential, the documents and information in the agreement may be shared among the competent authorities, subject to an undertaking not to sanction the legal entity with respect to the same facts that are the subject matter of the leniency agreement, or with the agreement of the legal entity itself.

The Decree reiterated the benefits to be granted by the agreement, such as (i) exemption from the extraordinary publication of the administrative decision imposing sanctions; (ii) exemption from the prohibition to receive incentives, subsidies, grants, donations or loans from public agencies or entities and public financial institutions or institutions controlled by the Public Power; and (iii) reduction of the final amount of the applicable fine.

The Office of the Federal Attorney General ("AGU") will take part in the negotiations and execution of the agreement, together with the Office of the Comptroller General (“CGU”), by means of a Joint Act between CGU and AGU.

4. Integrity Program

The Decree further details the objectives of an Integrity Program, to be evaluated by the public administration, such as: (i) the commitment of top management and allocation of adequate resources; (ii) the creation of standards of conduct, code of ethics, integrity policies and procedures, applicable to all employees and administrators, regardless of the position or function exercised, as well as to third parties and service providers; (iii) the performance of periodic training and communication actions; (iv) adequate risk management, including periodic analysis and reassessment; (v) specific procedures to prevent fraud and illicit acts in bidding processes, administrative contracts or any interaction with the public sector; and (vi) the existence of channels for whistleblowing, open and widely disseminated to employees and third parties, and mechanisms for handling complaints and protecting whistleblowers in good faith.

5. CEIS AND CNEP

The Decree provides for the possibility of exclusion from the registries in CEIS and CNEP of a condemnatory decision, which will be the responsibility of the sanctioning agency or entity.

It is important to emphasize that the provisions of the new Decree will apply to proceedings in progress, which do not yet provide for a fine.

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