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Legal Update

Brazil: Normative Ruling clarifies Methodology for Calculation of Fines Applicable in Leniency Agreements Signed with CGU

29 May 2018
Tauil & Chequer Legal Update
On May 21, 2018, the Ministry of Transparency, Inspection and Comptroller General of the Federal Government ("CGU") enacted Normative Ruling No. 02/2018 (Instrução Normativa – "IN"), which sets out the methodology for calculating the administrative fine established by Law No. 12,846/2013 ("Clean Company Act"). The provisions of the IN are applicable to leniency agreements executed with the CGU.

The Clean Company Act, which provides for the administrative and civil liability of legal entities for the carrying out of illicit acts against the public administration, establishes the following administrative penalties to the legal entities responsible for the illicit acts set forth therein: (i) a fine corresponding to 0.1% to 20% of the gross revenue of the last fiscal year prior to the filing of the administrative proceeding; and (ii) the extraordinary publication of the conviction.

Subsequent to this provision, the Federal Government enacted Decree No. 8,420/2015 which defines the elements to be taken into account for the calculation of the administrative fine, among other aspects of the Clean Company Act.

The IN, in turn, while detailing the methodology and approving a spreadsheet for calculating the administrative fine, aims to ensure greater legal certainty and transparency in the calculation of the fine to legal entities that intend to enter into leniency agreements with the CGU.

The IN details the criteria that will be taken into consideration to aggravate or mitigate the penalty. Among the aggravating factors are the recurrence of the offense in less than 5 years, which can lead to a 5% increase in the fine, and the value of the contract maintained with, or intended for, the injured entity or agency, which may also increase the fine by 1% to 5%.

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