Voice and Accountability Improving the Delivery of Anticorruption and Anti–Money Laundering Strategies in Brazil

In Brazil, public institutions historically have been used for and by a variety of private interests, permiĴ ing numerous corrupt schemes to take place, in a constant exchange of favors and neglect of public resources. During the past few decades, Brazil has experienced moments of deep unease with the many scandals that have involved corruption in the political environment—and that have precipitated popular street protests. The most important of these protests were the demonstrations during the impeachment of President Fernando Collor de Mello in 19921 and demonstrations in June and July 2013. Certainly, the historical importance of an event is determined by what succeeds it. It is therefore too early to evaluate the complete results of the demonstrations that occurred in June and July 2013, which were fueled by discontent with inadequate public services and recurring corruption scandals.2 However, some conclusions can be drawn even just a year later

Voice and Accountability

Improving the Delivery of Anticorruption and Anti–Money Laundering Strategies in Brazil

FAUSTO MARTIN DE SANCTIS

In Brazil, public institutions historically have been used for and by a variety

of private interests, permi ing numerous corrupt schemes to take place, in a constant exchange of favors and neglect of public resources During the past few decades, Brazil has experienced moments of deep unease with the many scandals that have involved corruption in the political environment—and that have precipitated popular street protests The most important of these pro-tests were the demonstrations during the impeachment of President Fernando Collor de Mello in 19921 and demonstrations in June and July 2013

Certainly, the historical importance of an event is determined by what succeeds it It is therefore too early to evaluate the complete results of the demonstrations that occurred in June and July 2013, which were fueled by dis-content with inadequate public services and recurring corruption scandals.2However, some conclusions can be drawn even just a year later

The demands from the demonstrators were many, and loudly expressed They fi rst demanded a halt to an increase of bus fares in the state capitals of Paraná, São Paulo, and Rio de Janeiro Startled by the impressive number of people who went to the streets to protest, local and state governments quickly backed down from the proposed fare increase

1 A popular campaign demanded the impeachment of President Fernando Collor de Mello, who took offi ce in 1990 Charged with corruption, infl uence peddling, and illegal schemes

within his government, he was targeted by the “Get out Collor” (Fora Collor) campaign,

which mobilized thousands of students to go to the streets with their faces painted in test On September 29, 1992, the National Congress impeached President Collor.

pro-2 “In Brazil, there are many words for corruption: cervejinha, molhar a mão, lubrifi car, lambileda,

mata-bicho, jabaculê, jabá, capilê, conto-do-paco, conto-do-vigário, jeitinho, mamata, negociata, por fora, taxa de urgência, propina, rolo, esquema, peita, falcatrua, maracutaia, etc There seems to

be more words in Brazil and in other countries where corruption occurs daily Originally,

the word corruption (corrupção) comes from Latin corruptione and it means: disruption, composition, debauchery, depravity, bribery, perversion, subornation.” (“Existem no Brasil

de-muitas palavras para caracterizar a corrupção: cervejinha, molhar a mão, lubrifi car, lambileda, bicho, jabaculê, jabá, capilê, conto-do-paco, conto-do-vigário, jeitinho, mamata, negociata, por fora, taxa de urgência, propina, rolo, esquema, peita, falcatrua, maracutaia, etc A quantidade de palavras disponíveis parece ser maior no Brasil e em países onde a corrupção é visualizada cotidianamente Originalmente, a palavra corrupção provém do latim Corruptione e signifi ca corrompimento, decom- posição, devassidão, depravação, suborno, perversão, peita.”) Antônio Inácio Andrioli, Causas estruturais da corrupção no Brasil [Structural causes for corruption in Brazil], 64 Revista Espaço

mata-Acadêmico (Sept 2006), h p://www.espacoacademico.com.br/064/64andrioli.htm.

391

Following these demonstrations, Constitutional Amendment Bill No 37/2011 (Projeto de Emenda à Constituição; PEC no 37/2011), also known

as the “impunity proposal” (PEC da impunidade), was abandoned on June 25,

2013 The bill had been an a empt to add a paragraph to Article 144 of the eral constitution to remove the investigative powers of the federal and state public prosecutors and grant exclusive authority for criminal investigations to federal, federal district, and state police offi cers

fed-In addition to the decrease in urban bus fares and the demise of Bill No 37/2011, other demands included free public transportation passes for stu-

dents; regulation of the “Clean Record Act” (fi cha limpa), which prohibits

con-victed politicians from assuming public positions; the addition of corruption

to a list of serious crimes with enhanced punishments; and the termination of salaries for administratively punished judges and prosecutors

After the initial popular groundswell, the demonstrations weakened because of the recurring acts of vandalism promoted by groups known as

“black blocs” in the two main Brazilian cities, São Paulo and Rio de Janeiro.3These groups relied on black masks for anonymity and used radical methods such as a acks on police offi cers, banks, stores, and car dealerships This radi-calization perverted the greater movement’s legitimacy and undermined the peaceful eff orts of the majority of protestors As a result, the initial agenda of popular demands evaporated, as did the possibility of using the movement’s propelling strength to spark greater discussion and provide new perspectives for political action in Brazil.4

3 As described by André Takahashi, the black bloc tactics were a response to police violence The black bloc is composed of small affi nity groups created during demonstrations that act independently within protests But, unlike the Free Pass Movement (Movimento Passe- Livre, or MPL) and its peers, the black bloc is not an organization or a collective group; it is

an idea, a tactic of self-defense against police violence, as well as an aesthetic form of protest based in the depredation of symbols of the state and capitalism The black bloc looks more like a decentralized network, such as the Anonymous, than an organic and cohesive move-

ment André Takahashi, O black bloc e a resposta à violência sócia [Black bloc and the response

to social violence], h p://www.cartacapital.com.br/sociedade/o-black-bloc-e-a-resposta-a -violencia-policial-1690.html.

4 As highlighted in the article Os projetos da pauta prioritária ainda não votados, these are the bills

presented or entered as part of the agenda at the National Congress as a response to the call

of the streets; voting on these bills is likely to occur in 2015 These are the highlights: (1) ate: (a) Bill 248/2013 institutes a national free pass for students in public transportation; (b) Bill of Constitutional Amendment 10/2013 ends privileged jurisdiction for common crimes commi ed by high authorities; (c) Bill of Constitutional Amendment 33/2013 ends social benefi ts for prisoners’ families (2) House of Representatives: (a) Bill 6,953/2002 establishes rules for defending and protecting public service users; (b) Bill 204/2011 includes corruption

Sen-in the legal hall of serious crimes; (c) Bill of Constitutional Amendment 6/2012 requires a clean slate for government employees; (d) Bill of Constitutional Amendment 11/2003 reduc-

es from two to one the number of senator substitutes; (e) Bill 8,035/2010, National Education Plan; (f) Bill 8,039/2012 creates the Educational Responsibility Act; (g) Bill for Complimen- tary Act 202/89 implements taxes for great fortunes; (h) Bill for Complimentary Act 123/12 reserves 10 percent of the GDP for public health; (i) Bill for Complimentary Act 92/07 autho- rizes the government to institute nonprofi table state foundations; (j) Bill 5,141/2013 exempts public transportation companies from paying CIDE (Portuguese acronym for intervention in the economic domain contribution) taxes; (k) Bill 4,881/2012 creates the Urban Mobility Pact;

In spite of their outcome, the popular demonstrations did raise questions about the need for political change José Eduardo Cardozo, head of the Brazil-ian Department of Justice, observed the following:

[I]n spite of the diversity of the agenda of demands, a very clear axis

was pointed out by the demonstrations: the demand for quality

pub-lic services in areas as diverse as health, education, and

transporta-tion Thus, the corruption topic is deeply connected to the reasons

that led people to a end these demonstrations Every cent misused

deteriorates the quality of public services 5

At the core of the Brazilian population’s dissatisfaction is the habitual appropriation of public resources Employment in public positions is routinely used as a means of private enrichment and infl uence peddling This trend has fostered the perception that impunity is almost always the rule and that the welfare state is constantly being undermined by powerful private interests.The diversion of public funds weakens a series of measures, including the implementation of policies that reduce child mortality rates, provide quality pub-lic health and education services, ensure the supply of potable water, and improve access to sewer systems, urban sanitation, and other forms of infrastructure.Corruption not only directly aff ects public administration but also indi-rectly aff ects the entire population, preventing the needs of a vast number of people from being met Corruption also creates unfair competition for compa-nies that adopt fair practices in their transactions, undermines the possibility

mis-of foreign companies investing in the country, and consequently slows ian economic growth, leaving a trail of misery and inequality

Brazil-As highlighted by UN secretary-general Ban Ki-Moon during a 2013 sage regarding International Anticorruption Day,6 corruption is a hidden cost that raises prices and lowers quality without benefi ts for producers or consumers Ban noted that crimes of corruption stifl e economic growth and undermine sustainable management of countries’ natural resources, thus

mes-(l) Bill 1,151/1995 regulates same-sex civil unions; (m) Bill 478/07 institutes the Unborn Child Statute; (n) Bill 5,139/2009 regulates public civil lawsuits for protecting diff use, collective,

or homogenous individual rights; (o) Bill 3,465/2012 grants priority for the adjudication of corruption crimes; (p) Bill of Constitutional Amendment 11/2011 prohibits ineligible people

from being appointed as ministers or to similar commissioned positions See Congresso em Foco, Os projetos da pauta prioritária ainda não votados [The still-unpassed bills of the priority agenda], h p://congressoemfoco.uol.com.br/noticias/os-projetos-da-pauta-prioritaria-ainda

-nao-votados.

5 Ministry of Justice (Ministério da Justiça), Reivindicações Sociais Pautam Metas Para a Enccla

Combater a Corrupção (Nov 29, 2013), h p://portal.mj.gov.br

6 Ban Ki-Moon, Mensagem do Secretário-Geral da ONU, Ban Ki-Moon [Message from the UN

Secretary-General, Ban Ki-Moon], Centro de Informações das Nações Unidas—Rio de Janeiro (Dec 2013), h p://www.unicrio.org.br/dia-internacional-contra-a-corrupcao-%E2%80%93 -9-de-dezembro-de-2010-2/ On December, 9, 2003, Brazil and 110 other countries gathered

in Mérida, Mexico, to sign the UN Convention against Corruption The date has since been celebrated as International Anticorruption Day.

negatively aff ecting billions of people around the globe.7 The UN Offi ce on Drugs and Crime (UNODC) estimates that developing countries lose about US$40 billion to corruption every year.8

In the 1970s, Brazil saw the emergence of the so-called Gérson’s law (Lei

de Gérson), which alluded to the behavior of pursuing advantages at any cost,

assuming that people should gain as many benefi ts as possible without rying about the means employed to obtain them.9 Eliana Calmon cautions that society should not lose its moral compass in the face of the behavior of the

wor-“Brazilian way of being” (jeitinho brasileiro) and Gérson’s law Such behavior,

Calmon explains, “helps people to survive, makes some even smarter and, li le

by li le, creates marginal rules to circumvent obstacles, including legal ones.”10This a itude is so ingrained in the collective unconscious of Brazil that one could say that Brazilian civil society’s inaction in the face of the innumer-able acts of corruption that have occurred in the past decades is caused by the acceptance of this thesis: people keep silent because they believe that it is perfectly natural for politicians to be dishonest

Corruption has reached alarming levels in Brazil Recent history is replete with acts of corruption in the federal government, municipalities, public hos-pitals, education boards, medicine distribution programs, agencies respon-sible for environmental supervision, and social security Brazilians demand repressive as well as preventive state actions to promote integrity and deter improbity, misuse of funds, and corruption

The Brazilian government has been considered too weak to clearly lish the limits between what is public and what is private.11 But there are a

estab-7 Mônica Villela Grayley, ONU diz que Corrupção Piora Situação de Pobreza e Desigualdade no

Mundo [UN says that corruption worsens poverty and inequality situations in the world],

Notícias e Mídia Rádio ONU (Dec 2013), h p://www.unmultimedia.org/radio/portuguese /2013/12/onu-diz-que-corrupcao-piora-situacao-de-pobreza-e-desigualdade-no-mundo/.

8 United Nations in Brazil, Corrupção tira 40 bilhões de dólares de países em desenvolvimento, afi rma

ONU [Corruption takes away US$40 billion from developing countries, UN states], Nações

Unidas no Brasil (July 2012), h p://www.onu.org.br/corrupcao-tira-40-bilhoes-de-dolares -de-paises-em-desenvolvimento-todo-ano-afi rma-onu/.

9 It started out as a TV commercial in 1976, in which Brazilian midfi elder Gérson, from the Brazilian national football (soccer) squad that won the 1970 World Cup, announced a brand

of cigare es by saying: “Por que pagar mais caro se o Vila me dá tudo aquilo que eu quero de um

bom cigarro? Gosto de levar vantagem em tudo, certo? Leve vantagem você também, leve Vila Rica”

(“Why pay more if Vila gives me everything I want from a good cigare e? I like taking advantage of everything, right? Take advantage yourself too, take Vila Rica.”) This message was infused into Brazilian culture as a principle by which people should take advantage at

any cost Hélio Gurovi , Viva a Lei de Gérson! Superinteressante (Feb 2004), h p://super.abril

.com.br/superarquivo/2004/conteudo_313516.shtml

10 Eliana Calmon, O jeitinho brasileiro [The Brazilian way of being], 10(20) Revista ETCO:

Insti-tuto Brasileiro de Ética Concorrencial 24–25 (Apr 2013)

11 Leonardo Avri er clarifi es recent measures taken by the Brazilian government and its eff ects

on the community See Leonardo Avri er, A Realidade Política Brasileira [The Brazilian political reality], Revista Carta Capital (June 1, 2011), h p://www.cartacapital.com.br/sociedade

/a-realidade-politica-brasileira.

number of ways in which this perception can be changed (and in the process reducing the level of bureaucracy in public services and improving the Brazil-ian economy’s competitiveness), including creating transparency with respect

to public services, providing high-quality education, undertaking political reform (especially campaign fi nance reform), modifying the punitive system (particularly regarding punishment for crimes commi ed by politicians), and reforming the tax system

Because public resources designated for the electoral campaign system are insuffi cient, there is a need for reform to guarantee government sustain-ability at the federal, state, and local levels A sense of impunity bred by a slow and ineffi cient judiciary and judicial system also hinders the reduction

of corruption The presumption of innocence and the legal possibility for an accused person to launch numerous appeals permits the perpetuation of cor-rupt acts, because criminal prosecution of corruption hardly ever obtains fi nal results with fi nal judgments, and very rarely leads to the imprisonment of those found guilty

Although they do not necessarily indicate the practice of corruption, the presence of some factors should invoke special a ention, such as those recorded by the Brazilian nongovernmental organization (NGO) Brazil Trans-parency (Transparência Brasil):12 lack of transparency in governmental admin-istrative actions, absence of administrative and fi nancial controls, subservience

of the legislative and municipal councils to the executive branch, low levels of employees’ technical capabilities, absence of training for government employ-ees, and alienation of the public regarding the budgeting process Dedicated exclusively to fi ghting corruption, Brazil Transparency has bee n working for years on what demonstrators are now demanding in an a empt to make their voices heard

Following this introduction, the second section of this chapter describes the collaborative eff orts, targeted recommendations, and results of the National Strategy for Combating Corruption and Money Laundering The third section summarizes the robust anticorruption legislation in Brazil, including the new Anticorruption Act The fourth section discusses how courts specializing in

fi nancial crimes and money laundering improve accountability in Brazil The

fi fth section, the conclusion, off ers recommendations on how to continue to improve the delivery of anticorruption and anti–money laundering strategies

The National Strategy for Combating Corruption

and Money Laundering (ENCCLA)

The Voice and Collaborative Involvement of Multiple Stakeholders

In 2002, the Federal Justice Council’s Studies Commi ee, a Brazilian eral justice administrative offi ce, elaborated concrete recommendations to improve investigation and prosecution of money laundering crimes through the cooperation of many sectors, from government and civil society, including representatives from federal courts, federal public prosecution offi ces, federal police, and the Brazilian Federation of Banks This commi ee is considered the embryo of ENCLA, the Brazilian acronym for what in English would be National Strategy for Combating Money Laundering and Recovering Assets, which was later renamed Estratégia Nacional de Combate à Corrupção e à Lavagem de Dinheiro (ENCCLA), or National Strategy for Combating Cor-ruption and Money Laundering

fed-ENCCLA aims to be the central government’s voice in articulating and promoting joint actions among Brazilian public enforcement agencies to perfect the systematic prevention and repression of corruption and money laundering ENCCLA is composed of 60 agencies and entities, including the following: public prosecution offi ces, police services, the judiciary, the Offi ce

of the Comptroller General (Controladoria-Geral da União), the Federal Court

of Accountability (Tribunal de Contas da União), the Securities Commission of Brazil (Comissão de Valores Mobiliários), the intelligence unit of the Council for Financial Activities Control (Conselho de Controle de Atividades Finan-ceiras), the National Superintendence for Pension Funds (Superintendência Nacional de Previdência Complementar), the Superintendence for Private Insurance (Superintendência de Seguros Privados; SUSEP), the Brazilian Federal Reserve (Banco Central do Brasil), the Brazilian Intelligence Agency (Agência Brasileira de Inteligência), the Offi ce of the Federal A orney General (Advocacia-Geral da União), and the Brazilian Federation of Banks (Federa-ção Brasileira de Bancos)

The topic of corruption was added to ENCCLA after the Federal Court of Accountability in its 2000 annual report suggested organizing a national strat-egy aimed at combating corruption modeled after the strategy against money laundering that had been created earlier

Brazil followed the international trend that a empts to halt this very deleterious practice The European Commission, responsible for combating organized crime, human traffi cking, and corruption, believes that “corruption

is one of the particularly serious crimes with a cross-border dimension It is often linked to other forms of serious crime, such as traffi cking in drugs and human beings, and cannot be adequately addressed by EU States alone.”13

13 See Corruption: Boosting Anti-Corruption Policy at EU Level, at the European Commission,

Home Aff airs website, h p://ec.europa.eu/dgs/home-aff airs/what-we-do/policies/organized -crime-and-human-traffi cking/corruption/index-eu.

Two topics are constantly covered by ENCCLA’s agenda: corrupt tices, defi ned as that which implies the obtainment of unjust advantages or the misuse of public funds by government employees or other third parties, and which are considered off enses in the Criminal Code and in other special legislation; and public policies capable of combating these crimes and others, including money laundering.

prac-The risks of corruption in public procurements and contracts involving services and construction related to the 2014 World Cup and 2016 Olympic Games have been the subject of particular a ention Accurate examinations have been demanded, and many people are concerned by the risks that cor-rupt actions pose for the international community’s perception of Brazil Thus, detecting areas, markets, and economic sectors that demand operational, reg-ulatory, and legislative adjustments is among ENCCLA’s main actions.Other actions undertaken by ENCCLA members in recent years have shown that the collaboration of institutions from the executive, legislative, and judicial branches is very eff ective Corruption and ethical deviations in the pub-lic sector—and in private corporations—are under constant vigilance There is

a serious commitment to perfecting Brazilian institutions amid a wider and inspiring social trend toward further development of public safety policies

Delivering Recommendations and Results

In its eleventh annual plenary meeting, held November 25–28, 2013, ENCCLA issued many recommendations and pronouncements, with a special emphasis

on the following:

1 ENCCLA recommends that control, supervision, and criminal

prosecution activities, especially those related to combating

cor-ruption and money laundering, should be considered priorities

and should be preserved in their effi ciency even in the face of

needs of adjusting budgets;

2 ENCCLA recommends the creation of a data repository that

allows the identifi cation of companies supervised by SUSEP

(Superintendence for Private Insurance), and which is modeled

after the Registry of Financial System Clients (Cadastro de

Cli-entes do Sistema Financeiro; CCS) Such a data repository should

address the need to provide precise and quick information in

order to identify policyholders, participants, and benefi ciaries

who are relevant for investigation and adjudication;

3 ENCCLA recommends the creation and strengthening—within

federal, state, and local public a orney offi ces—of groups that

specialize in combating corruption and administrative improbity,

especially in connection with activities related to adjudicating and

accompanying administrative improbity lawsuits, enforcement of

Audit Courts decisions, civil cases involving the recovery of assets,

the enforcement of civil and criminal decisions and civil cases ex

delicto, as well as possible interventions as assistant prosecutor

in criminal cases It is also recommended that, whenever possible,

the groups should act in partnership with other Public

Adminis-tration agencies and Public Prosecution offi ces;

4 ENCCLA recommends immediate approval by the National

Congress of legislation that criminalizes government employees’

unjust enrichment;

5 ENCCLA recommends that bills, approved by ENCCLA in 2011

and 2012, regarding (a) regulation of aspects related to

apprehen-sion, custody, transport, converapprehen-sion, and destination of funds in

cash withheld for noncompliance with legislation and (b)

prop-erty extinction, should be sent to the National Congress;

6 ENCCLA salutes the eff orts of the São Paulo Municipality’s Offi ce

of the Comptroller General as a good practice and a reference for

combating corruption in large Brazilian cities;

7 ENCCLA demonstrates its support of National Goal 4, set forth

by the National Justice Council (Conselho Nacional de Justiça),

which gives priority to producing judgments that concern

admin-istrative improbity-related and corruption cases, in order that

such judgments may consolidate into a clear pa ern that combats

the problem of impunity;

8 ENCCLA emphasizes the necessity that Act No 9,613/1998

(Money Laundering Act) should be enforced by those responsible

for enforcement of regulation on new subjects 14

The 2003 creation of criminal courts that specialize in fi nancial and money laundering crimes was a result of ENCCLA’s recommended actions ENC-CLA obtained other results in combating corruption and money laundering, including

1 Deploying, up to 2012, approximately 11,000 agents in all regions of the country, due to the creation of the National Program for Capacitating and Training to Combat Corruption and Money Laundering (Programa Nacional de Capacitação e Treinamento para o Combate à Corrupção e à Lavagem de Dinheiro)

2 Cementing its place as one of the most advanced countries for preventing money laundering with the implementation of the Registry of the Finan-cial System Clients, managed by the Brazilian Federal Reserve

3 Enhancing speed and economy in investigations and criminal tion by implementing standardization for requesting and responding to bank secrecy breach requests and the respective tracking, as well as the development of the Bank Operations Investigation System (Sistema de Investigação de Movimentações Bancárias)

prosecu-14 ENCCLA, Ações: ENCCLA 2014, Recomendações e Declarações, h p://www.cgu.gov.br/Imprensa

/Arquivos/2013/Propostas%20de%20Acoes%20ENCCLA%202014%20Plenaria%20Final.pdf.

4 Optimizing investigation and criminal prosecution, simplifying the analysis of great volumes of data with the creation of the Laboratory for Technology against Money Laundering and the replication of this model

in other parts of the country, creating an integrated technology network oriented toward combating corruption and money laundering

5 Gaining greater control over corruption with a draft for patrimonial inquiry to discipline fi ling assets that are part of government employees’ private property This draft culminated in Decree No 5,483/2005

6 Gaining greater transparency and control over corruption with the

regu-lation of government agencies’ access to accounting documents on ties hired by the public administration, culminating in Interministerial Ordinance No 127/2008

enti-7 Enhancing modernization and greater border control with the registry of national territory entering/exiting activity

8 Enhancing eff ectiveness in cu ing criminal organizations’ fi nancial fl uxes with the creation of the National System for Seized Goods (Sistema Nacio-nal de Bens Apreendidos), managed by the National Justice Council, and the promotion of “anticipated alienation” of these assets before fi nal deci-

sions, later modifi ed by Act No 12,683/2012 and Act No 12,694/2012.

9 Computerizing the judiciary’s access to the Internal Revenue Service branch thanks to the creation of the System for Supplying Information to the Judicial Branch (Sistema de Fornecimento de Informações ao Poder Judiciário; INFOJUD)

10 Enhancing publicity, transparency, and social control with the creation

of the Registry of Nonreputable and Suspect Entities (Cadastro de idades Inidôneas e Suspeitas), maintained by the Offi ce of the Federal Comptroller General

Ent-11 Enhancing publicity, transparency, and control with the creation of the National Registry of Social Entities (Cadastro Nacional de Entidades Soci-ais), managed by the Department of Justice

12 Enhancing eff ectiveness in investigating and prosecuting fi nancial crimes with the creation of police departments that specialize in fi nancial crimes, within the federal police service

13 Increasing the specialization of Brazilian authorities in combating nized crime by assembling the National Group for Combating Criminal Organizations (Grupo Nacional de Combate às Organizações Crimino-sas), at the state public prosecution level

orga-14 Increasing eff ectiveness in controlling cross-border money operations with the computerization of documents regarding the infl ow and outfl ow

of assets in the country

15 Providing greater transparency and control with the creation of an tronic list of people convicted by federal courts and a National Justice

elec-Council recommendation for the creation of a similar list at the state tice level.

jus-16 Enhancing Brazil’s adherence to international standards for the tion of money laundering with the defi nition of “politically exposed peo-ple” (Pessoas Politicamente Expostas) and the regulation of the fi nancial system’s obligation regarding them

preven-17 Providing greater eff ectiveness of justice with the possibility of searching

for evidence in other countries with the consolidation of a central

author-ity for international legal cooperation

18 Enabling greater control of a sector susceptible to criminality with the ulation of the acquisition and use of prepaid bankcards and similar tools,

reg-in order to prevent off enses and identify suspicious bank operations

19 Diff using knowledge with the creation of WICCLA, a Wiki dia for combating money laundering and corruption with information on such topics as action pa erns used by criminals when commi ing crimes, legislation regarding these topics, and databases available to government agencies

encyclope-20 Improving the legal system with the elaboration of many bills and als of changes in ongoing bills on such topics as criminal organizations, money laundering (Act No 12,683/2012), loss of ownership of property acquired with illicit money, statutes of limitation, lobbying, bank and tax secrecy, administrative improbity, and legal persons’ liability.15

propos-Delivering Anticorruption Legislation to Increase Accountability

Because corruption has a cross-border reach, the international community has adopted many treatises and conventions related to it Brazil is a signatory to the UN Convention against Corruption (Mérida Convention), enacted in 2006 The Mérida Convention was a legal milestone in the fi ght against corruption Within the Organization of American States, Brazil is a signatory to the Inter-American Convention against Corruption of 2002, and to the Convention on Combating Bribery of Foreign Public Offi cials in International Business Trans-actions (OECD Convention) of 2000

The Brazilian government’s eff orts to combat corruption led to the sion of an invitation to join the Open Government Partnership (OGP) The OGP is an international initiative launched in 2010 by U.S president Barack Obama that aims to secure concrete government commitments in the areas of promoting transparency, fi ghting corruption, and developing new technolo-gies capable of making governments more open, eff ective, and responsible.16

exten-15 Department of Justice, h p://portal.mj.gov.br/main.asp.

16 See Offi ce of the Comptroller General (Controladoria-Geral da União), Prevenção da Corrupção

[Preventing corruption], h p://www.cgu.gov.br/PrevencaodaCorrupcao/CompromissosIn

ternacionais/index.asp

In the legislative fi eld, the Anticorruption Act (No 12,846) of August 1,

2013, was partly motivated by the popular demonstrations starting in June

2013 that evidenced society’s rejection of corrupt practices and its distrust of the country’s institutions The act originated in the Chamber of Deputies in 2001; although it was analyzed by Congress for years, it was sent to the Sen-ate in 2013 as a ma er of urgency because of these demonstrations The act, which became eff ective in January 2014, intends to halt corruption and other practices that harm the public sector The legislature heard the population’s voice regarding anticorruption

The Anticorruption Act is based on international instruments for ing corruption, such as the U.S Foreign Corrupt Practices Act (FCPA) In eff ect since 1977, the FCPA is an innovative legislation that prohibits American com-panies from off ering bribes to foreign government employees The British equivalent is the 2011 UK Bribery Act

combat-The Brazilian Anticorruption Act is aimed at complying with tional commitments assumed by Brazil Its main characteristic is the adop-tion of strict liability (civil and administrative) for legal entities involved in practices against national or international public administrations This legisla-tion does not exempt managers, directors, or any other individuals who act as accomplices in any unlawful action from their individual liability It penalizes companies for acts against public administration commi ed by employees Companies are now responsible for the payment of any bribes to government employees made by their employees, thus dissuading company agents from engaging in such actions

interna-The statute has mechanisms for recovering public goods It imposes tions that aff ect companies’ revenues and possibly allow for the loss of some goods, thus signaling a greater possibility of recovering public assets There

sanc-is the possibility of implementing a fi ne of 20 percent of a company’s annual gross revenue, which may never be less than the net profi t If the gross rev-enue criterion is somehow inapplicable, the fi ne may reach a limit of R$60 million (around US$30 million) Moreover, these sanctions do not exempt any obligation to compensate for any damage caused under the act

Another highlight of the legislation is the possibility for public entities (the

Offi ce of the Comptroller General, the Offi ce of State Inspectors, Public ecutors, the Administrative Council for Economic Defense, and other state and local public agencies) to sign leniency agreements with companies responsible for harmful acts, as long as they eff ectively collaborate with investigations.Even though leniency agreements do not exempt transgressors from their obligation of completely compensating for damage, they off er such advan-tages as reducing fi nes by two-thirds, exempting impeached companies from publication of their conviction, and exempting such companies from the pro-hibition of incentives, subsidies, and loans from public institutions

Pros-Leniency agreements should be handled with confi dentiality so no harm

is generated against the presumed innocence of any persons involved The

confi dentiality of companies’ contributions is a determining characteristic

of these agreements, under penalty of causing them great damage Leniency agreements are conditioned on the immediate cessation of an accused person’s participation in the violation, as well as the admission of the person’s guilt in being involved in the legal transgression The agreements are also based on the assumption of eff ective cooperation with investigations and administra-tive procedures, identifi cation of other transgressors, and timely delivery of information and documents that demonstrate criminal conduct

Some aspects of the Anticorruption Act, which went into eff ect in January

2014, deserve examination even at this early juncture These include the severe sanctions contained in Article 19 that are supposed to be applied to off end-ing legal entities (such as the loss of assets that constitute benefi ts obtained, directly or indirectly, from the off ense); the compulsory dissolution of legal entities; prohibition on receiving any incentives, subsidies, subventions, donations, or government loans; the absence of technical and legal criteria for administrative decisions; the regulation of the statute; the parameters for evaluating such mechanisms and procedures; the harmonization of the act with guidelines adopted by other countries; and the ways in which small and medium-sized companies can adopt compliance measures

Sanctions are important measures used in halting the commission of

off enses, but they should encompass a greater set of activities involved in the

fi eld of risk prevention Eff ective compliance programs can mitigate sanctions imposed when the legal entity is able to demonstrate “the existence of mecha-nisms and internal procedures of integrity, audit and incentive for fi ling com-plaints about irregularities and the eff ective application of ethics and conduct codes within the legal entity.”17

This rule on internal audits, which is one of the act’s best reforms, lates the implementation or the strengthening of business compliance pro-grams whose main goal is to act according to the law It is a legal improvement that will use companies’ internal procedures and policies as mechanisms to minimize punishment

stimu-The Anticorruption Act creates, at the federal executive branch level, the National Registry of Punished Companies (Cadastro Nacional de Empresas Punidas), which publicizes convicted companies, making it easier for people

to verify sanctions applied to those companies The act also provides territorial coverage as demonstrated in Article 28, which states that the act is applicable to “harmful actions commi ed by Brazilian legal entities against foreign public administrations, even when commi ed in foreign lands.”

extra-By creating instruments that make it easier for people to identify those responsible for infractions, organize information about the investigations, and promote whistle-blowing as well as mechanisms for companies to incorporate ethical practices, the act should be eff ective in the prevention and repression

17 Art 7, ch VIII, Act No 12,846/2013.