(English) Corporate Criminal Law Newsletter 4 – Brazil 2019 – First Days

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Brazil 2019 – First Days

The elections of 2002, 2006, 2010 and 2014 were won by the same political party (Partido dos Trabalhadores), causing Brazil to go through the years with the same tendencies, ideological thinking and governmental direction.

The inauguration of the new term with President Jair Bolsonaro on January 1st spurs the change desired by most Brazilian voters and begins a transformation – at least announced – in the most diverse areas for the next four years in the country.

One of the critical areas is the economy and the new government intends to defend measures in the sense of economic liberalism – a theory that defends the non-intervention of the state in the economy and free competition.

To lead a more liberal economic policy, the president invited economist Paulo Guedes (from the Chicago School of Economics). Among the measures proposed by the new economic team are the cut of expenses; reduction of fiscal waivers to eliminate the primary deficit; reduction of the tax burden in order to attract new investments – especially foreign; exploitation of mineral resources; facilitating the entry of foreign capital into the financial system and investing in tourism.

The economic area of the new government is also studying the privatization or liquidation of some 100 state-owned enterprises and the strengthening of negotiations with the private sector to seek incentives for investments in infrastructure, especially in the rail, port and road sectors.

The first days of the government already indicate that the campaign proposals will be implemented at an accelerated pace, for example, only in the first week, the president officialized changes in relation to the powers of the indigene and quilombola policy, including authorizing the economic exploitation of indigenous lands by agriculture and livestock; the reduction of the number of personnel staff in the government in order to dry the public machine, as well as the flexibility of the rules for the possession of firearm by citizens without criminal antecedents.

A controversial measure promised yet in the campaign phase and also to be implemented in the short term is the move from the Brazilian embassy in Israel from Tel Aviv to Jerusalem. The change of address promises to bring turbulence in relations with the Arab world and represents possible shocks with historical trading partners, especially in the animal protein market.

In the criminal field. President Bolsonaro invited to the Minister of Justice the former federal judge Sérgio Moro, a magistrate who was at the helm of the so-called Operation Lava-Jato, which condemned major businessmen and important Brazilian politicians, including former President Luis Inacio Lula da Silva. Moro was taken to the Ministry of Justice with the objective of deepening the fight against corruption and organized crime in the country and should bring about sensible changes in security policies and criminal prosecution.

In his inaugural speech, Sérgio Moro said that “more general anti-corruption policies are needed, with laws that make the justice system more effective and laws that diminish incentives and opportunities against corruption” and justified the acceptance of the invitation to take over the Ministry of Justice when he says that “a judge in Curitiba can do little about this in the context of general policies, but in the Federal Government the story may be different.”

It noted the deepening of relations with partner countries in the fight against crime and, consequently, the hardening of investigations into transnational crimes by saying “that the Department of Asset Recovery and International Legal Cooperation – DRCI , deepen international legal cooperation, so that the refuge from the overseas criminal is an increasingly risky alternative.”

Despite the desire for immediate implementation of measures to combat corruption, several of the announced changes depend on the National Congress and the opening of the legislative year occurs only in February.

Some of the project objectives:

1. Addressing bottlenecks in criminal and procedural criminal law;
2. Prediction of disguised police operations;
3. Prohibition of regime advancement (in prison) for members of criminal organizations;
4. Implementation of the American plea bargain model for quick resolution of confession cases;
5. Implementation of text in the law to clarify the execution of the criminal conviction after the judgment in the second instance;
6. Strengthen the decisions of the Jury’s Court , providing for the immediate execution of convictions.

Invariably, many of the criminal prosecution actions desired by the new government and illustrated through the measures outlined above will cross borders. In recent years we have experienced several Brazilian companies and their executives signing cooperation agreements with the DOJ and the SEC or even had their international operations on the radar of the American authorities. It is important to remember that executives or companies that come to make agreements with the Brazilian authorities must evaluate the need to also sign an agreement with the American authorities to avoid double punishment (in different jurisdictions) for the same fact.

A new moment of crime fighting arises in Brazil. The idea of placing the judge responsible for the Lava-Jato operation in charge of the Ministry of Justice is to raise the prosecution of criminal organizations responsible for corruption and money laundering crimes. Currently, we are already experiencing the international developments of operations carried out by the Brazilian authorities and the announced policies promise to open a new chapter in the criminal environment between Americans and Brazilians, either through cooperation agreements between authorities or joint work between law firms.

The criminal-business area of the Mattos Engelberg office has extensive expertise in white collar crime and acts in all major operations conducted by Brazilian authorities and abroad developments. Among the activities developed by the area, we highlight the prevention of irregularities through the implementation of compliance programs; crisis management – imprisonment of executives, search and seizure of documents at the company’s headquarters; the conduction of agreements and leniency with the authorities; the leadership of internal investigations and the judicial defense of executives.

The Mattos Engelberg Advogados Corporate Criminal Team is available to provide any further information.

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¹ A quilombola is an Afro-Brazilian resident of quilombo settlements first established by escaped slaves in Brazil. They are the descendants of Afro-Brazilian slaves who escaped from slave plantations that existed in Brazil until abolition in 1888.

² Curitiba is the capital of the State of Paraná where the then Federal Judge Sérgio Moro was situated.

³ Department within the structure of the Ministry of Justice.

⁴ The Court of the Jury, instituted in Brazil since 1822 and provided for in the Federal Constitution, is responsible for judging intentional crimes against life.