The Brazilian Federal Prosecution Office ("MPF") has released new guidelines on requirements for leniency agreements to be signed with Brazilian companies and foreign companies with headquarters, branches or offices in Brazil with respect to corruption investigations. The guidelines were approved on 24 August and announced to the public on 30 August 2017 and have developed as a reaction to criticism the MPF received regarding the terms of and procedures followed in previous leniency agreements.
Under the Brazilian Clean Company Act, legal entities are strictly liable for corrupt practices. Sanctions include: (i) fines of up to 20 percent of a company's gross revenue in the year prior to the initiation of the investigation (or BRL 6,000 to BRL 60 million if it is not possible to determine the company's revenues); and (ii) an obligation to publish the decision that applied the fine in a newspaper. If the conduct also included a violation of the Public Procurement Law in Brazil, an entity can also be barred from participating in future bids or from executing agreements with public bodies, which significantly impacts the business of subject companies due to the importance of public procurement contracts in Brazil.
Other sanctions include: (i) confiscation of the subject company's assets; (ii) suspension of the subject company's activities or the mandatory dissolution of the entity itself; and (iii) prohibition from receiving incentives, subsidies, grants, donations, or loans from public bodies, public financial institutions, or those companies controlled by the public authorities for a prescribed period of time.
To protect themselves, companies can decide to self-disclose corruption and cooperate with authorities by means of the execution of a leniency agreement. In this case, companies are eligible for a potential reduction of up to two-thirds of fines that would otherwise be imposed. Under the leniency rules in Brazil, companies are also eligible for three other benefits: (i) an exemption from the obligation to publish the decision that applied the sanctions; (ii) an exemption from the prohibition from receiving incentives, grants, subventions, donations, or loans from public bodies, public financial institutions, or those companies controlled by the public authorities for a prescribed period of time; and (iii) immunity or reduction from the administrative sanctions related to violations according to the Public Procurement Law or other regulations related to bids and contracts.
The benefits of the Clean Company Act leniency program are not extended to the individuals involved in the self-reported scheme. Individuals who participated in illicit acts may enter into their own plea bargain agreements (or "delao premiada") with the Public Prosecutor's Office.
The  most relevant requirements (out of 18) included in the guidelines are listed below:
1) All discussions, negotiations and formalization of the leniency agreement must be conducted by the MPF member with legal powers to prosecute the applicants for the leniency agreement (Guideline No. 1);
2) If individuals are applying for plea agreements as well, negotiation with respect to the leniency agreement should be conducted in parallel with or after the negotiation of the individuals' plea agreements (note a leniency agreement signed under the Clean Companies Act will not protect individuals from being criminally liable under the Brazilian Criminal Code) (Guideline No. 2);
3) A confidentiality agreement shall be signed before negotiations begins and will only be lifted after the leniency agreement is signed (Guideline No. 3);
4) Negotiations should be conducted with the participation of more than one member of the MPF, ideally with members pertaining to the two relevant departments (criminal and public procurement departments). If negotiations are being conducted in parallel with other public authorities, such as the Federal Court of Accounts (TCU), the Minister of Transparency, Oversight and Office of the Comptroller General (CGU), Office of the Attorney General (AGU) and the Administrative Council for Economic Defense (CADE), the leniency agreement shall be prepared in different documents so that they can be forwarded to the different public authorities (Guideline No. 5);
5) Minutes should be prepared for all meetings, including date, place, participants and a brief description of the topics discussed. (Guideline No. 6);
6) The leniency agreement should contain specific clauses addressing key aspects, such as (i) whether the parties are part of a group of companies and, if applicable, indication as to whether other companies within the group, directors, officers, employees and other individuals will join the agreement afterwards and within a specific timeframe; (ii) a general description of the facts to be self-reported and who will submit the information; (iii) provision on the expected level of collaboration from the applicant and on the MPF's obligations; (iv) provision with respect to the possibility of cooperation with authorities abroad and on the adherence to the agreement by other authorities in Brazil, such as TCU, CGU, AGU and CADE, allowing these authorities to share evidence and information among themselves; and (v) a demonstration of the public interest in having the leniency agreement signed. As part of the analysis regarding public interest, the company must submit new facts not uncovered before and demonstrate it is helpful and effective to the investigation (Guideline No.7);
7) In determining the amount of the fine and other sanctions to be applied, the MPF will take into account the benefit to the investigation rather than the benefit granted to the settling party. Also, the guidelines foresee that other criteria could be taken into account for the purposes of the determination of the amount of the fine and other sanctions, such as the company's financial capacity and the damage caused by the conduct (Guideline No.8);
8) Any damages and losses caused by the illicit act will not be discharged as a result of the leniency agreement, but shall be considered in the total payment eventually determined by the competent court (Guideline No.10);
9) Prosecutors may refuse to negotiate with the self-reporting company's designee and may request another negotiator to act on behalf of the company if prosecutors are under pressure or facing an ethical dilemma as a result of the participation of the company's designee in the negotiations. (Guideline No.12);
10) Negotiations shall, whenever possible, take into account negotiations with foreign authorities with respect to cross-border corruption schemes and any such information should be indicated in the Brazilian leniency agreement. If multiple jurisdictions are investigating the same conduct, the MPF will avoid the imposition of double sanctions for the same conduct (Guideline No.13).
The guidelines are an important measure to ensure more predictability and transparency to leniency negotiations and outcome of leniency agreements under the Clean Company Act.