CGU updates regulation on investigation procedures provided in the Brazilian Clean Company Act

The Comptroller-General of the Union (“CGU”) recently published Regulatory Instruction No. 13/19 (“RI”), which updates the procedures that the agencies and entities of the Federal Executive Branch use to determine administrative liability of legal entities under Law No. 12.846/2013, the anti-corruption law known as the “Brazilian Clean Company Act.” Previously, CGU Ordinance No. 910/15 defined these procedures.

The RI applies to both the direct administrative bodies (such as ministries, their offices, coordination bodies and departments) and the indirect administrative bodies (such as government agencies, foundations, state-owned companies and government-controlled companies).

Regarding the competence for the establishment and judgment of the Administrative Procedures for Recognition of Liability of Legal Entities (“PAR”), the RI specifies that the competence lies with the minister of an entity of a direct administration and the president, CEO, managing director, dean or equivalent authority within an entity of an indirect administration.

The competent authority must hold an admissibility hearing about the alleged violation of the Brazilian Clean Company Act to decide whether to move forward with the PAR, depending on the existence of the necessary elements of probable cause for starting the PAR.

Among other relevant points, the RI notes that a Preliminary Investigation (“PI”) can be undertaken prior to the start of the PAR in order to collect evidence of the alleged harmful act to support the admissibility judgment by the competent authority.  

At the start of the PAR, the ordinance must indicate the trade name and the Corporate Taxpayer Identification Number of the liable legal entity, the deadline for the completion of the work by the PAR committee, information related to members of the committee, the member nominated to  chair the committee and the PAR number.

It is important to note that a legal entity on which sanctions were imposed under the PAR can request reconsideration of the sanctioning administrative decision, with suspensive effect, within 10 days from the decision’s publication. In a case in which the decision is upheld, the legal entity will have 30 additional days to comply with the sanctions.

As indicated by the CGU, the RI aims “to increase the speed of the PAR, as well as to ensure the accused companies the effective exercise of their rights to respond and defend themselves.”¹

¹ https://www.cgu.gov.br/noticias/2019/08/cgu-atualiza-regras-para-apuracao-e-responsabilizacao-de-empresas