The Brazilian Supreme Court (STF) decides that the Federal Court of Accounts (TCU) cannot declare the debarment of a company that had already signed leniency agreements with the Federal Prosecutor`s Office (MPF), the Administrative Council for Economic Defense (CADE), and the Office of the Comptroller General (CGU)/ Office of the Attorney General (AGU).

In a session held on March 30, 2021, the Second Panel of the Brazilian Supreme Court (STF), by majority of the votes, granted the Writ of Mandamus (MS) 35.435/DF, filed by the construction company Andrade Gutierrez, confirming the preliminary injunction previously granted, to suspend the application of the sanction of debarment imposed by the Federal Court of Accounts (TCU) to the construction company based on article 46 of Law No. 8.443/1992 (Organic Law of TCU). According to the Second Panel of the STF, the TCU cannot declare the debarment of legal entities that have signed leniency agreements with other Brazilian authorities of the anticorruption microsystem, in order not to undermine the institute of leniency agreements.  If the sanction of debarment applied by the TCU were maintained, the construction company Andrade Gutierrez could be prevented, for up to five years, from participating in public bids with the Federal Public Administration.

The reporting Justice Gilmar Mendes took the winning vote. In his vote, Justice Gilmar Mendes stated that the TCU, when rendering the Court Decision 483/2017-TCU-Plenário, concluded for the occurrence of bid rigging for engineering services in connection with  the Angra III Thermonuclear Plant, which would have been committed through collusion between several construction companies, among them Andrade Gutierrez. Regarding Andrade Gutierrez, considering that the construction company, at the time, had already signed leniency agreements with CADE and MPF, the TCU decided to suspend the application of the debarment sanction, in order to reward the collaborative stance of the construction company. However, the TCU conditioned the maintenance of the suspension of the debarment sanction in favor of Andrade Gutierrez to the presentation, by the MPF, of the construction company’s commitment to collaborate with the external control procedures conducted by the TCU. According to Justice Gilmar Mendes, when rendering Court Decision 483/2017-TCU-Plenário, TCU recognized the validity of the leniency agreement entered into between Andrade Gutierrez and the MPF, but determined that the agreement does not set aside TCU’s attribution to judge accounts and seek full reimbursement of damages to the treasury.

In his vote, Justice Mendes reaffirmed the TCU’s attribution to audit the use of public money and seek full compensation for the damages caused to the treasury. Nonetheless, he highlighted the need for coordination among the institutions that are part of the anticorruption microsystem in Brazil. According to him, the alignment of institutional incentives for collaboration and maintenance of the principle of legal certainty are essential for legal entities to have predictability regarding the applicable penalties and premium benefits when adopting a collaborative stance with the government.

In this context, tthe decision points out that the leniency agreement entered into between Andrade Gutierrez and CGU/AGU expressly provided for immunity regarding the administrative sanctions of Law No. 12.846/2013 (Brazilian Clean Companies Act), the sanctions provided for in items I to IV of article 87 of Law No. 8.666/1993 (former Public Bidding and Contracts Law) and the penalties provided for in Law No. 8.429/1992 (Administrative Improbity Law), among them the debarment. Thus, according to the reporting Justice, the application of the debarment sanction would undermine Andrade Gutierrez’s leniency agreement and the binding nature of article 17 of Law No. 12.846/2013 (Brazilian Clean Companies Act).

Moreover, he stressed the factual overlap between the illicit acts admitted by the construction company before CGU and AGU and the TCU’s object of investigation. In this context, the reporting Justice analyzed the risk of a certain company being punished two or more times for the same fact in different spheres of liability due to the lack of coordination among the Brazilian authorities, resulting in double jeopardy, which could undermine the incentives for legal entities to enter into leniency agreements and to cooperate in the collection of evidences, thereby weakening the very effectiveness of the anticorruption microsystem in Brazil given the scenario of legal uncertainty.

For these reasons, the reporting Justice determined that the possibility for the TCU to impose the debarment on Andrade Gutierrez for the same facts that gave rise to a leniency agreement with Brazilian authorities would not be compatible with the constitutional principles of efficiency and legal certainty, while it would hinder the effectiveness of the leniency agreement institute.

Notwithstanding, the reporting Justice highlighted that, even after the STF partially granted the preliminary injunction to prevent TCU from applying the sanction of debarment against Andrade Gutierrez, the TCU rendered a decision to determine the unavailability of the construction company’s assets, establishing that this measure would reach the assets considered necessary for ensuring full reimbursement of damages. According to the reporting Justice, the TCU is entitled to declare the unavailability of the construction company’s assets to seek full reimbursement of damages to the Treasury, based on article 44, paragraph 2, of Law No. 8.443/1992 (Organic Law of TCU), as the signing of leniency agreements does not prevent the TCU from seeking compensation for complementary damages to the Treasury that were not considered in the agreements.  Accordingly, the reporting Justice underscored that the signing of leniency agreements does not exempt the legal entity from the obligation to fully repair the damages caused, pursuant to Article 16, paragraph 3, of Law No. 12.846/2013 (Brazilian Clean Companies Act). Nevertheless, for the reporting Justice, the application of the debarment sanction by the TCU would prevent the performance of the leniency agreement, as it contained an explicit provision exempting the company from being debarred.

The recent STF’s decision represents an important milestone for strengthening the leniency agreement institute in the Brazilian legal system. The understanding adopted by the STF provides for greater legal certainty to companies applying for leniency in a scenario of lack of coordination among the various authorities in the anticorruption microsystem, enhancing the incentives for legal entities to enter into leniency agreements in the future and, thus, collaborate in the fight against economic infractions and corrupt misconducts.

In this sense, the vote of Justice Gilmar Mendes also highlighted the notable expansion of the use of leniency agreements in the Brazilian legal system, in line with the global efforts to fight corruption, and in compliance with the multilateral anticorruption conventions signed by Brazil, as well as that leniency agreements are fundamental instruments to collect evidence and are aimed at strengthening a policy to combat economic infractions. However, the reporting Justice exposed the difficulties created by the coexistence of multiple leniency regimes in the Brazilian legal system, particularly with respect to the asymmetries between the different leniency regimes and the difficulties of cooperation and coordination among the multiple authorities that encompass the anticorruption microsystem. According to the  reporting Justice, there are at least 4 (four) types of leniency agreements that can be entered into by legal entities to reduce administrative or judicial liability for economic misconducts: (i) the Antitrust Leniency Agreement, provided for in Law No. 12.529/2011 (CADE Law); (ii) the Anticorruption Leniency Agreement, provided for in Law No. 12.843/2013 (Brazilian Clean Companies Act); (iii) the Leniency Agreement of the Prosecutor´s Office, which arises from a systematic interpretation of the constitutional functions of the Prosecutor`s Office; and (iv) the Leniency Agreement of the National Financial System, provided for in Law No. 13.506/2017. The reporting Justice also highlighted that it is possible to consider a fifth type of leniency agreement, the so-called “civil non-prosecution agreement”, recently introduced by Law No. 13.964/2019 (“Anti-crime Package”).

While analyzing the different leniency regimes in Brazil, the reporting Justice highlighted significant asymmetries, especially with respect to the absence of common parameters for calculating reimbursement of damages, and to the benefits attainable in the criminal sphere. Accordingly, the reporting Justice stressed the need for legislative and administrative efforts to standardize leniency regimes and existing incentives, as well as to create cooperation and coordination mechanisms among the institutions of the anticorruption microsystem, in order to ensure legal certainty for companies that enter into leniency agreements and, ultimately, ensure the effectiveness of leniency agreements, with the provision of a solid incentive structure for conclusion of agreements. In this context, the reporting Justice emphasized the understanding of part of the academia that advocates the need to create a “single table” for the negotiation and conclusion of leniency agreements among the Brazilian institutions that encompass the anticorruption microsystem.

Therefore, it is noteworthy that the Technical Cooperation Agreement for the negotiation and conclusion of leniency agreements signed in September 2020 between the CGU, AGU, TCU and the Ministry of Justice and Public Security, under the supervision of the STF, has also enhanced the regime for coordination and cooperation among the signatory institutions. The Technical Cooperation Agreement provides for the duties of each signatory institution within the anticorruption microsystem, establishing several operational actions to foster the performance of the signatory institutions in a cooperative, collaborative and systemic fashion, including with respect to the procedures for negotiating and signing leniency agreements, use and sharing of evidences among the signatory institutions, seeking consensus among the signatory institutions on the determination and settlement of damages caused to the treasury, and establishment of mechanisms for compensation and/or reduction of fines paid by companies in order to hinder double liability, thereby avoiding duplicate payments for the same illicit acts sanctioned in the various spheres of liability.

In line with the efforts already adopted and the justification of the vote of Justice Gilmar Mendes, the Anticorruption Plan prepared by the Federal Government also provides for several initiatives to improve the coordination and cooperation regime among the Brazilian authorities regarding the negotiation and conclusion of leniency agreements, as well as to standardize leniency regimes. In particular, the Anticorruption Plan provides that, by June 30, 2021, the AGU and CGU will update the ordinances regulating the procedures for negotiation of leniency agreements (i.e. AGU Ordinance No. 411/2019 and AGU/CGU Ordinance No. 4/2019), in order to address the guidelines provided for in the Technical Cooperation Agreement discussed above (item 7.1 of the Anticorruption Plan). In addition, the Anticorruption Plan provides that the CGU will propose, by June 30, 2021, the amendment of Decree No. 8.420/2015 (Decree that regulates the Anti-Corruption Law) to improve and clarify the cooperation regime with other bodies in anticorruption matters (item 1.10.5 of the Anticorruption Plan).