Published on May 21, 2018, in the Federal Official Gazette, Normative Instruction 2/2018 regulates the methodology for calculating the administrative fine, provided for by Law 12.846/2013 (Brazilian Clean Company Act), which rules leniency agreements negotiated with offending companies.
The leniency agreement guidelines of the Office of the Comptroller General (“CGU”) and Federal Attorney General’s Office (“AGU”) are the first to be published by a Brazilian enforcement agency to standardize the procedures followed by members of the CGU and AGU, as well as to give more precise indications of the financial impact of an investigation. Additionally, the normative instruction guarantees more transparency in applying the fine for illicit acts, according to the mitigating and aggravating criteria set forth in Decree 8,420/2015.
The Clean Company Act sets fixes the penalty for the practice of undue acts between 0.1 to 20% of the gross revenues of the year prior to the initiation of the administrative process. Therefore, Normative Instruction 2/2018 encourages the adoption of compliance programs, and sets forth the requirements of an effective program. The regulating norm establishes that companies may have 4% of penalty reduction, once proven the existence of a robust compliance program. Furthermore, the self-reporting misconduct can reduce the total penalty by up to 2%.
The Brazilian enforcement structure is divided in two fronts of action. The CGU is the entity responsible for administrative sanctions under the Clean Company Act, while the AGU acts in the interest of the Brazilian government in enforcement actions. In collaboration, the two agencies have already signed four leniency agreements, as follows: Bilfinger, UTC Engenharia and the advertising agencies MullenLowe and FCB Brasil, the last two resulting from investigations of Operation Car Wash. Thus far, nine other leniency agreements are in progress and may be concluded by the end of the year.