Search for:
Anti-Corruption

Brazil: New decree regulates the Anti-Corruption Law at the São Paulo State level

By and 6 Mins Read

In brief

On 24 November 2022, Decree No. 67,301/2022 was published by the government of the state of São Paulo and provided for the administrative liability of legal entities for the practice of acts against the public administration in the city. The decree, which came into effect on the date of its publication, establishes the competence to judge administrative infractions and sets the jurisdictional authority to initiate an Administrative Liability Proceeding (PAR) and the procedural norms for its execution.

Main aspects

Administrative liability: jurisdictions and attributions in the state of São Paulo

The establishment and judgment of a PAR will be the responsibility of the following:

  1. The Secretaries of State and the State General Comptroller’s Office when dealing with direct public administration
  2. The entity’s top management when dealing with indirect public administration
    The establishment and judgment of the PAR may be exercised ex officio by the respective authorities. This competence may be delegated, but never more than once.
  3. The State General Comptroller’s Office, when able to verify the following:
    • The omission by the responsible authority from the public administration regarding the establishment and judgment of the PAR
    • The lack of objective conditions for the originating body/entity to initiate or judge the administrative procedure
    • Complexity, repercussion and pecuniary and/or material relevance
    • The involvement of more than one agency of the public administration of the state of São Paulo

The State General Comptroller’s Office may also call up a PAR already in place, to examine the regularity of its proceedings and, if necessary, to rectify it, as the public body has the competence to apply the appropriate administrative penalties. The public bodies and entities originally competent to establish and judge the PARs are obliged to forward documents and information when requested by the State General Comptroller’s Office.

The jurisdictional authorities, after identifying a possible occurrence of an act harmful to the public administration, must decide, upon justification, to initiate an PAR, open a preliminary investigation or archive the matter.

Preliminary ascertainment

  • Will be applicable when there are not enough elements to characterize the infraction or define its authorship
  • Must observe the period of 180 days, which may be extended for the same period
  • Will be confidential and nonpunitive
  • Will be conducted by a commission of at least two civil servants appointed by the initiating authority

The commission may propose, by means of a conclusive report, the initiation of a PAR when there are indications of an act harmful to the public administration. Otherwise, it must determine the closing of the preliminary investigation.

Administrative Liability Proceeding

  • It will be conducted by a processing commission of at least two civil servants from the initiating authority.
  • It will be directed to legal entities.
  • When established by the State General Comptroller’s Office, it will be conducted by a processing commission composed of its members.
  • It will observe the period of 180 days, with the possibility of extension.
  • It should guarantee the right to defense and preserve secrecy.

The processing commissions may, at any point in the process, forward to the State General Comptroller’s Office, or to the body responsible for representing the injured entity, a judicial measures proposal for the following:

  1. Processing of infractions
  2. Ensuring payment of the defined fine
  3. Reparation of the damage caused to the public administration.

The indicted legal entity will have a period of seven days after the citation to present the final allegations.

Upon completion of the works, the commission must prepare a report on the facts ascertained, containing the description of the imputations, the exposition of the arguments presented by the defense, the analysis of the existence and functioning of the integrity program of the investigated legal entity and the conclusion about its responsibility.

The processing committee may decide to do the following:

  1. Apply sanctions
  2. Forward the records, when infractions are identified to be investigated in other instances
  3. File a PAR

An appeal with suspensive effect may be filed against the administrative decision within a period of 15 days.

Administrative sanctions

  • The legal entities considered responsible at the end of the process will be subject to the imposition of a fine and extraordinary publication of the condemnatory decision. Both sanctions do not exclude the obligation to fully repair the damage caused to the public administration.
  • The fine to be imposed will be between 0.1% and 20% of the gross revenue of the legal entity in the year immediately prior to the establishment of the PAR.
  • The formula for calculating the fine will be defined in an act by the State General Comptroller’s Office.
  • If it is impossible to estimate the gross revenue for the previous year, the fine imposed will be calculated based on the gross revenue for the year in which the harmful act occurred or on the estimated revenue for the previous year.
  • The conclusion of a leniency agreement will imply a reduction in the amount of the fine to be imposed.

The sanction in the form of publication of the condemnatory decision must be complied with via publication in a widely circulated communication medium in the legal entity’s area of ​​operation and in a public notice posted at the establishment itself and highlighted on the main page of the legal entity’s website. All forms of publication must be fulfilled cumulatively.

Leniency agreement

  • Celebrated, with exclusivity, by the State General Comptroller’s Office
  • Will receive confidential treatment during the proposal phase, unless disclosure is authorized by the proponent before closing the agreement
  • Can be carried out until the conclusion of the PAR’s final report
  • May be subject to withdrawal by the legal entity before its subscription and may also be rejected by the State General Comptroller’s Office

Legal entity’s integrity program

  • The integrity program will be evaluated, as to its existence and application, based on the following:
    1. Commitment of the legal entity’s top management
    2. Standards of conduct, code of ethics, integrity policies and procedures
    3. Periodic training
    4. Periodic analysis of risks with a view to necessary adaptations/improvements
    5. Existence of records of procedures and internal controls
    6. Degree of independence of the internal body responsible for the program
    7. Maintenance of a reporting channel, as well as its proper disclosure
    8. Adoption of disciplinary measures that may be applicable and/or necessary
    9. Monitoring of possible irregularities and/or illegalities in mergers and acquisitions in which the legal entity participates or intends to participate
    10. Monitoring and continuous improvement of the integrity program

State Register of Punished Companies

Sanctions applied based on Decree No. 67,301 will be gathered and published in the State Register of Punished Companies (CEEP). The registration must contain the corporate name, the registration number, the sanction applied and the final date of validity of the limiting/sanctioning effect applied to the legal entity.

Relevant points

  • The provisions of Decree No. 67,301 provide greater legal certainty to investigations and sanctions for administrative infractions within the jurisdiction of the state of São Paulo.
  • The PARs already in progress must observe, from the entry into force of this decree, what is established therein. The acts already produced can and should be used, if they do not contradict the procedural provisions now in force.

* * * * *

LOGO_TrenchRossiWatanabe_Brazil

Trench Rossi Watanabe and Baker McKenzie have executed a strategic cooperation agreement for consulting on foreign law.

Categories:
Author

Heloisa Barroso Uelze joined the Firm in 2000 and became a partner in 2005. She has over 25 years of practice and is currently the head of the Brazilian Public Law, Government Relations and Regulatory Group at Trench Rossi Watanabe. Heloisa is recognized as a leading practitioner in such areas of law by various international publications such as Chambers, LACCA, Análise Advocacia, and PLC. Before joining Trench Rossi Watanabe, Mrs. Uelze worked for thirteen years in a law firm specialized in Public Law created by four of the most regarded scholars in Administrative, Public, Tax and Constitutional Law In Brazil, all of them respected Professors that held PHDs: Celso Antonio Bandeira de Mello, Geraldo Ataliba, Adilson Abreu Dallari and Michel Temer. In April 2000 Heloisa was nominated – due to her recognized ethical reputation and specialized legal knowledge, head of the legal department of Federal Government Autarchy, where she stayed for 12 years. Such position was not inconsistent with the private practice of law. Trench Rossi Watanabe and Baker McKenzie have executed a strategic cooperation agreement for consulting on foreign law.

Author

Felipe Ferenzini is a Partner in Trench, Rossi e Watanabe Advogados, Sao Paulo office. Trench Rossi Watanabe and Baker McKenzie have executed a strategic cooperation agreement for consulting on foreign law.

Related Posts

Write A Comment