Leniency agreements, driven by investigations such as Operation Car Wash, returned to prominence in 2023. These agreements allow offending companies to cooperate in investigations in exchange for reduced penalties. It is worth noting that the agreement does not exempt the company from fully repairing the damage caused, and that non-compliance results in the prevention of new agreements. In addition, this mechanism is related to the so-called "anti-corruption law" and the Antitrust Law and offers benefits to companies that cooperate in the investigation of illegal practices.
This was the topic of the article in O Globo newspaper, in which I was interviewed. The full text is provided below. Enjoy your reading!
Leniency agreements can reduce penalties for companies
Offenders, however, must admit their involvement in the offense and cooperate effectively in investigations.
Due to investigations such asOperation Car Wash, some legal terms have become more popular in recent years. The leniency agreement is one of them, an expression that peaked in interest in 2017, according toGoogle Trends, and is back in the news again in 2023.
But what does the leniency agreement consist of? It is the possibility for the offending legal entity to establish an agreement, within the administrative inquiry itself, to cooperate with the investigations.
“With the aim of obtaining valuable information that could lead to the resolution of many political and economic crimes, the agreement is restricted to the administrative environment,” explains businessman and lawyerMaurício Ferro. “The leniency agreement is signed between the Secretariat of Economic Development, which acts on behalf of the Federal Government, and individuals or legal entities involved in economic fraud.”
Even though it is an agreement that aims to speed up the conclusion of criminal investigations and is beneficial to legal entities seeking to reduce their penalties, certain requirements are imposed by the Brazilian justice system. Mauricio Ferro cites, for example: the practice of the irregularity under investigation must be discontinued from the moment the agreement is proposed; the agent under investigation must admit their participation in the offense; and the company's cooperation must be effective in the investigations with information proving the offense.
It is important to note that entering into an agreement with the courts does not exempt the legal entity from the obligation to fully repair the damage caused. And if the company fails to comply with the agreement, it will be prevented from entering into a new agreement for three years.
Other applications
The leniency agreement is governed by Articles 16 and 17 of Law 12,846, dated August 1, 2013. This law, known as the "anti-corruption law," was incorporated into the legal system to regulate the administrative and civil liability of legal entities for acts committed against the public administration, whether national or foreign.
She also collaborates with the Antitrust Law (Law 12,529/11), a legal provision that establishes conditions for the prevention and punishment of a series of violations against the economic order in Brazil, including the formation of trusts, cartels, or monopolies.
“In short, these are deals with CADE that allow companies and/or individuals involved in a cartel or other collective anti-competitive practice to obtain benefits if they cooperate with the investigation of such illegal practices, confessing to the offenses, presenting evidence, and informing on their accomplices," points outFerro,explaining that such benefits can be granted in both the administrative and criminal spheres.
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