There is a risk of politicization in the new Anti-Corruption Law

The so-called Anti-Corruption Law (Law No. 12,846/13), which has just entered into force, provides for sanctions to be applied both in the administrative and in the judicial sphere, whether by authorities of the Executive Branch or by authorities of the Judiciary, with potential economic, political and electoral impact, on the ground of seeking probity in the business community.

But the assertion that the Anti-Corruption Law would be an unprecedented tool for punishing legal entities in the field of Administrative Sanctioning Law is unfounded, because Law 8,429/92 (Administrative Improbity) already contemplated the possibility of convicting legal entities that benefited from unlawful acts against the Public Administration, even as participants or co-authors.

The so-called Anti-Corruption Law proves innovative, indeed, by broadening the sanctioning spectrum in the administrative sphere “stricto sensu,” widening the spaces for action of administrative authorities.

In the administrative sphere, fines may be imposed in the amount of 0.1% to 20% of the gross revenue of the fiscal year prior to the opening of the administrative proceeding.

Another consequence is the wide publicity of the conviction, with the company being required to pay for the publication of an excerpt of the judgment in widely circulated media in the city or state where the irregularity occurred.

As can be seen, immense powers are granted to administrative authorities, which, however, do not enjoy institutional autonomy, have no functional independence or constitutional guarantees that secure them immunity against political interference. Are there risks of politicization of administrative bodies in the handling of this Law? We believe so, especially given the profusion of indeterminate legal concepts in the structuring of the sanctioning offenses.

With regard to the judicial sphere, art. 19 provides that the Union, the States, the Federal District and the Municipalities, through their respective Public Law Offices or judicial representation bodies, or equivalents, as well as the Public Prosecution Service, may file an action seeking the application of sanctions to the infringing legal entities.

The application of the sanctions provided for in the new Law does not, in any case, exclude the obligation of full reparation of the damage caused, nor the incidence of other sanctions, such as those governed by the Administrative Improbity Law or by the criminal legislation applicable to the matter.

In view of the advent of the new legislation, companies may, in theory, be subject to a regime of strict liability (without verification of fault) for harmful acts committed by their employees (exclusively or not), under art. 2 of the Law, which makes it imperative to draw up a compliance program, with an independent committee to verify anti-corruption procedures and institutional integrity, so as to avoid any causal relationship with unlawful acts that may occur through isolated acts of those companies’ representatives.

One of the central points of any compliance program concerns the existence of an external body, endowed with institutional autonomy, to give opinions on procedures and conduct involving companies. And precisely this body may be a Committee, with recognized expertise in the matter, responsible for the opinions issued and the guidance given, including toward proposing mechanisms and procedures internal to corporations, with prerogatives of control over conduct.

Even if the constitutionality of any kind of strict liability is debated, and indeed such a provision is questionable, one notes the importance of companies articulating harmonious and coherent rules involving corporate probity, denoting observance of objective duties of care in relation to a series of conduct and prevention of problems related to the violation of principles of public administration.

This new context must be viewed with great prudence, since the highest authority of each public body or entity may enter into a leniency agreement (plea deal) with the legal entities responsible for the acts provided for in this Law, if they effectively cooperate with the investigations and the administrative proceeding.

As can be seen, it is important for companies to organize themselves so as to prevent slander from proliferating out of the leniency-agreement industry, in a distorted form, deteriorating the relationships of trust necessary for the defense of legitimate collective interests. The “cannibalization” of productive segments, through the spurious instrumentalization of Law No. 12,846/13 as a means of intimidating or eliminating adversaries, must be avoided.

There must be internal mechanisms and procedures for integrity, auditing and encouragement of whistleblowing, and the effective application of codes of ethics and conduct within the legal entities that make up the productive segments of Brazilian society. This is a factor that must necessarily influence the calibration of sanctions, as provided in art. 7, item VIII, but, beyond that, it may be decisive in assessing the causal relationship and the typicality of the conduct deemed harmful.

By provision of art. 7, sole paragraph, the matter will be the subject of regulation by the Federal Public Authorities, including by the Public Authorities in the States and Municipalities. But to what extent will States and Municipalities regulate this Law 12,846/13? Will the regulation be harmonious with federal legislation and the respective federal regulation? What will the environment of legal certainty in Brazil be, given possible discrepancies in the regulation of the Law?

* Fabio Medina Osório , lawyer and president of the International Institute of State Law Studies (IIEDE), is the author of Theory of Administrative Improbity , Administrative Sanctioning Law , and, most recently, Sanctioning Regime in the Capital Markets