WHITE COLLAR CRIME
THE SUPREME FEDERAL COURT REVOKED A JUSTICE’S MONOCRATIC DECISION THAT AUTHORIZED FEDERAL REVENUE OFFICE TO SHARE BANKING DATA WITH PUBLIC PROSECUTOR’S OFFICE WITHOUT PREVIOUS JUDICIAL AUTHORIZATION
The Supreme Federal Court (“STF”), in the trial of an appeal filed by KLA, revoked Justice Fachin’s decision that had condoned the sharing of banking information obtained by the Federal Revenue’s Office (“RF”) with the Federal Public Prosecutor’s Office (“MPF”) without previous judicial authorization.
The STF accepted KLA’s arguments in the sense that the Court should await the judgment of a similar case that will be judged by the plenary and will become a precedent.
Filipe Magliarelli, partner of corporate crimes defense at KLA, believes that this decision is very important because it represents a possible change in Court’s rulings, which thus far had upheld the possibility of the RF sharing banking information with the MPF without judicial authorization.
THE SUPREME FEDERAL COURT GRANTED ACCESS TO ORIGINAL DOCUMENTS OBTAINED THROUGH THE INTERCEPTION OF PHONE MESSAGES
The Second Section of the Supreme Federal Court granted to a businessman access to messages exchanged on his cellphone. Such messages were obtained through a police interception and used by the Public Prosecutor’s Office to indict him. According to the defendant, the Federal Police had edited the header of the messages in order to include the name of the supposed people involved in the place of the numbers that were originally informed by the phone company. This aimed to facilitate the understanding of the evidence.
According to the Court, the uncertainty regarding the trustworthiness of the evidence presented by the Public Prosecutor is enough to grant access to the original data used in the indictment.
The defendant had his request of access to intercepted messages denied by the trial court. He appealed underpinning that the Supreme Court’s Binding Precedent nº 14 ensures that the attorney has, on the defendant’s behalf , the right to access all the evidence gathered in a police investigation.
ACCORDING TO THE SUPERIOR COURT OF JUSTICE, THE PRE-TRIAL DETENTION CANNOT BE BASED EXCLUSIVELY ON A WITNESS STATEMENT PROVIDED BY A DEFENDANT WHO TURNED STATE’S EVIDENCE
The Superior Court of Justice (“STJ”) revoked a pre-trial detention based exclusively on information obtained from witness statement provided by a defendant who turned state’s evidence. According to Court , the information obtained from such witness statement can result in new investigations, but cannot lead directly to pre-trial detentions.
This case decision was rendered in a writ of Habeas Corpus filed in favor of the former Brazilian president, Michel Temer. His pre-trial detention was based solely on witness statements obtained by witness statements in plea bargain agreements. The Court revoked the former president’s arrest warrant, established that he cannot contact suspects, and determined the seizure of his passport.
THE JUSTICE GILMAR MENDES, OF THE SUPREME FEDERAL COURT, DEFENDS THE POSSIBILITY OF THIRD PARTIES QUESTIONING PLEA BARGAIN AGREEMENTS
In one of the last trial session of the Second Section of the Supreme Federal Court, Justice Gilmar Mendes questioned the present precedents of STF regarding the impossibility of third parties questioning plea bargain agreements.
According to Justice Mendes, third parties, especially those mentioned in witness statements provided by defendants who turned state’s evidence, should be able to question the illegalities of the plea agreement before the Court.
These considerations were made during the trial of two writs of Habeas Corpus filed to review amendments in plea bargain agreements made with Public Prosecutor’s Office of Paraná. After Justice Mendes’ reflections, Justice Fachin decided to take time to analyze the case in depth. The trial will be resumed on June 11th.
SUPERIOR COURT OF JUSTICE CONSOLIDATED ITS JURISPRUDENCE TO THE EFFECT THAT ADMINISTRATIVE RESPONSIBILITY FROM ENVIRONMENTAL MATTERS DEMANDS PROOF OF THE SUBJECTIVE INTENT
The Superior Court of Justice has consolidated its jurisprudence to the effect that administrative responsibility arising from environmental matters demands proof of the subjective intent.
Therefore, an administrative condemnation for environmental damage requires the proof that the conduct has been committed by the violator, and the causal relation between the conduct and the environment damage.
ABOUT THE CASE. The Superior Court of Justice, under the decision given through the case “EREsp 131805”, cancelled the Notice of Infraction issued by Municipality of Guapimirim against the petrol company Ipiranga, for the spill of diesel oil in the Guanabara Bay (Rio de Janeiro) on a railway accident in 2005, with the derailment of wagons of the Ferrovia Centro Atlântica. The Notice of Infraction was declared null and the environmental fine was canceled by lower court judge, however, the Court of State of Rio de Janeiro reversed the sentence and condemned Ipiranga to pay the fine.
Initially, the decision was upheld by STJ, considering that Ipiranga as the owner of the cargo was responsible for the damage, regardless of the existence of fault. This decision was amended by the STJ due the lack of evidence of Ipiranga’s fault, in line with the existing case-law of STJ. The entry of judgment is still pending of publishment.
LEGAL CERTAINTY. The consolidation of STJ’s jurisprudence provides legal certainty for several sectors, including for M&A transactions involving potentially polluting activities.
Although the discussion on the applicability of a statute of limitation for claims involving civil liability arising from environmental damages is pending, at least there will be some comfort to provide that the target will only be held administratively liable if it has participated at least with fault in the polluting event.
PROVISIONAL MEASURE NO. 869/2018 IS APPROVED BY THE NATIONAL CONGRESS
Brazilian Senate has approved, on May 29th, 2019, Provisional Measure n. 869/2018 (“MP), which amends Law n. 13.709/2018, the general data protection law (“LGPD). We highlight below the main modifications to the original text of the law:
1. The National Data Protection Authority (“ANPD”) will be created as an authority connected to the President on a transitional basis and, after 2 (two) years, may be converted into an indirect federal public administration entity, subject to an autarchic system.
2. Regarding health sensitive data processing, the MP established the following modifications:
(i) increase of the grounds for data processing related to health care, including the possibility of processing of health personal data by health services;
(ii) possibility of health data sharing with the purpose of obtaining economic advantages in the hypothesis relating to the rendering of health services or pharmaceutical assistance, including auxiliary services of diagnosis and therapy, to the best interest of the data subject to allow the data portability and financial and administrative transactions resulting from such services; and
(iii) prohibition of health data processing by health insurance companies or health support companies with the purpose of contracting or excluding beneficiaries.
3. Flexibilization of public or publicly accessible data processing regulations, allowing such data to be processed for purposes other than those originally established, considering the specific and legitimate purposes of the new processing, as well as the rights of the data subjects.
4. The obligation of the person responsible for the data processing to inform the processing agents with whom personal data was shared, about the correction, elimination, anonymization or data block, may be waived when the communication is, demonstrably, impossible or involves incommensurate efforts.
5. The Data Protection Officer needs to have legal and regulatory knowledge and, also, be capable of providing specialized data protection services. ANPD will regulate the hypotheses where the Processor shall indicate a Data Protection Officer and the occasions where will be possible the indication of one single DPO for companies of the same economic group.
6. Possibility of partial suspension of the functioning of data bases object of a breach or the suspension of data processing activity related to the breach for a maximum period of 6 (six) months, renewable for an equal period. Also, partial or total prohibition related to performance of data processing activities. These penalties are applied only after the adoption of milder penalties.
7. The data subject needs to evidence that he/she presented claims that were not resolved by the Controller for ANPD to be able to analyze the petitions of such data subjects.
FEDERAL SUPREME COURT DECIDES THAT THE STATE IT IS NOT OBLIGED TO PROVIDE DRUGS NOT REGISTERED IN ANVISA, OTHER THAN EXCEPTIONAL CASES
The Federal Supreme Court (“STF”), analyzing the Theme No. 500 of general repercussion, partially granted the “RE (Appeal to STF) 657718/MG”, about the State obligation in providing drugs not registered in ANVISA.
It was decided that, as a rule, the Government should not supply nonregistered drugs through judicial decision, once the registration is aimed to protect public health, attestation of efficacy, safety and quality of the products, and, also, as price setter.
The judiciary branch can´t obligate the Government to provide experimental drugs which do not have scientific proof on the efficacy and security. In contrast, the ones that already have scientific proof of such, have an exceptional aspect and may be provided in case of default from ANVISA in analyzing the registration requirement; such analysis takes ninety days as of the request filing, as set forth by Law No. 13411/2016.
For the Government to be compelled to supply the nonregistered drugs that have scientific proof on the efficacy and security, one must comply with three minimum requirements, which are: (i) existence of request for the registration of the drug in Brazil; (ii) register of the drug in renowned regulatory agencies abroad; and (iii) inexistence of therapeutic substitute registered in ANVISA.
Also, it was decided that filing lawsuit, in order to request drugs supply, in such cases, must be before the Federal Government.
In addition, in cases of rare and very rare diseases, the State may be obliged to provide the drug regardless of the registry, provided that the other two requirements are fulfilled, once the laboratories usually don´t have commercial interests to register these drugs.
Finally, it is important to emphasize that, as this is a trial of an appeal in General Repercussion, such decision must be considered in every lawsuit that addresses the same subject in Brazil.
Corporate and M&A
PROVISIONAL MEASURE OF ECONOMIC FREEDOM: MAIN CORPORATE CHANGES
The Provisional Measure 881 (PM 881) was issued by the Federal Government on April 30, 2019, establishing the Declaration of the Economic Freedom Rights and other relevant matters. Through the referred PM, the Federal Administration seeks not only to establish and emphasize the concept of freedom in the performance of economic activity, but also to minimize Government intervention on such activity, diminishing bureaucracy over the business activity, especially those considered as of low risk.
In this sense, Article 3 of the PM 881 lists 10 rights of all natural or legal persons, essential to the Brazilian economic development and growth, from which we outline the following:
• Exemption from authorization of the competent public agencies for the exercise of “low risk” activities, defined by the recent Resolution 51, of June 11, 2019, which indicates the applicable areas and contains a list with the description of the referred activities (including their respective tax codes). The resolution also segregates the economic activities in general in three categories: (i) low risk or “low risk A”, which are exempted from obtaining any public authorization for their full and continuous operation and functioning; (ii) medium risk or “low risk B”, which may be rendered upon the issuance of temporary licenses, permits and similar; and (iii) high risk, defined by other resolutions of the corresponding competent public agencies;
• Provision of egalitarian treatment by public entities for the authorization of economic activities, resulting in bound decision to previous and similar cases by the Administration;
• Impossibility to argue the violation of applicable legislation in commercial contracts, except to preserve rights protected by the Public Administration or third parties, preventing the parties that agree against the applicable legislation, to benefit from non-complying with the agreement;
• Definition of maximum terms for the analysis of requests by the Public Administration, as well as the definition of tacit approval of said requests after such terms, in addition to the possibility of presentation of documents by microfilm or digital media.
For the implementation of the concepts of PM 881 without contradictions to existing laws, some provisions of the Civil Code (Law 10,406 of January 10, 2002) were amended, such as articles 421, 423, 480-A and 480-B, which, in accordance to Article 3 of the PM 881, reinforce the autonomy of the contracting parties, while (i) creating limitations for public interference in private contractual relations; (ii) promoting a new method for settlement of disputes between contracting parties, through the favorable interpretation to the party who did not write a clause in dispute (sole paragraph of Article 423); (iii) allowing the parties to establish “objective parameters for the interpretation of requirements for the revision or termination of contracts”; and (iv) stipulating the presumption of symmetry between contracting parties.
Among other amendments to the Civil Code, it should also be noted that (i) the reinforcement of the existing limitation to the disregard of the legal personality of shareholders and administrators who have benefited from any abuse, directly or indirectly, pursuant to the amendment of the caput of Article 50, (ii) the possibility for incorporating limited liability companies with only one partner; (iii) the reinforcement of the protection of personal assets of the holders of Individually-Owned Limited Liability Companies (EIRELI), expressly limiting the commingling of assets to cases of fraud; and (iv) the introduction of the concept of investment funds as a particular form of condominium, destined to the application in financial assets, and the creation of investment funds with limited liability of each condominium.
As for the corporations, PM 881 also amended the Brazilian Corporation Law (Law 6,404 of December 15, 1976), modifying Article 85 and including Article 294-A to address (i) the dismissal of list or bulletin in the subscription of publicly-held companies’ shares and (ii) the exemption, by the Securities and Exchange Commission (Comissão de Valores Mobiliários – CVM) of certain requirements set forth in the referred law for the operation of small and medium-sized corporations, to simplify their access to the capital market.
The PM is being analyzed by the National Congress and its progress can be accessed in the Congress´ website (https://www.congressonacional.leg.br/materias/medidas-provisorias/-/mpv/136531).