On August 22, 2017 a panel of Appellate Federal Judges of the Regional Federal Tribunal of the 4th Region (TRF4) responsible for civil lawsuits in the context of operation Car Wash ruled, that the Federal Prosecutor’s Office (MPF) alone cannot sign leniency agreements regarding Administrative Improbity acts.

The ruling comes in reference to a freezing order issued against Odebrecht upon the request of the Attorney-General’s Office (AGU) to ensure recoupment of damages to the Treasury following suspicions of overcharges amounting to BRL 2,1 billion in the construction works of the Abreu e Lima refinery in Pernambuco.

Odebrecht’s assets had been frozen but were later released by the trial court after the signing of the leniency agreement between the company and the MPF. The Attorney-General’s Office filed an appeal to the Appellate Court, and the Reporting Appellate Federal Judge granted a preliminary injunction to reinstate the freezing order.

The Full Panel of the Court affirmed the preliminary injunction, having argued that only the Office of the Comptroller-General (CGU) can represent the Federal Union in leniency agreements, so the CGU would have to analyze and approve the agreements signed by the MPF. As such, the Court ordered the suspension of the effectiveness of the leniency agreement until the CGU’s approval.

Although Law No. 12,846/2013 (“Anti-corruption Law”) entered into force in January 2014, previous corrupt events may also constitute Administrative Improbity acts as per Law No. 8,429/1992, which subjects violating entities and individuals to civil and administrative penalties.

The ruling may represent an important limitation on the competences and attributions of Public Authorities regarding negotiation and signature of leniency agreements.

For more information regarding this legal update, please contact Luís Adams, Luiz Santiago, Arturo Vecchi or Louise Dias.