Bribery investigations often cross international borders and it is not uncommon to find connected investigations taking place across the globe, involving a number of prosecuting bodies. Brazil's federal prosecution service, the MPF, has announced new guidelines on how it will conduct leniency discussions in bribery and corruption cases. Recent cross-border investigations include the Serious Fraud Office (SFO) investigation into Rolls Royce, which eventually culminated in a global settlement involving the UK SFO (which dealt with Rolls Royce by way of a deferred prosecution agreement), the US Department of Justice and the Brazilian authorities. The investigation into Alstom was similarly international and involved Brazil. The international nature of bribery investigations means that companies, in seeking a global settlement, have to negotiate with a variety of prosecuting bodies and need to understand the differing national landscapes.
Differences between jurisdictions
Each jurisdiction has its own specific procedures and law. An admission of what may be a relatively inconsequential factor in one jurisdiction may turn out to be of fundamental importance in a different jurisdiction. For example, what will the consequence of admitting bribery in Brazil be if the activity touches on a jurisdiction which does not have in place a system for granting Leniency Agreements or Deferred Prosecution Agreements? There is a risk that admitting bribery in one jurisdiction to secure leniency may give rise to derivative litigation in other countries. The circumstances in which any such admission was made may also determine whether it can be used elsewhere.
To highlight two key differences, between Brazil and the UK:
Under Brazilian law a company cannot be held criminally liable, so any corporate penalties in Brazil will be confined to civil fines.
The Brazilian law does not contain the equivalent of the UK adequate procedures defence. Therefore, whilst establishing that the company had adequate procedures in place might be a very important part of any UK based investigation, in Brazil it will not provide a route for the company to preclude liability as a result of bribery, although will be a factor in determining the level of any civil fine.
The Guidance (ORIENTAÇÃO No 07/2017)
The new rules aim to clarify some important procedural steps regarding Brazil's leniency programme. Whilst they codify current practice, they provide helpful information on what to expect and assist those engaged in international settlement agreements. For example, they set out the obligations which will be imposed upon those entering the leniency programme which are similar to what is expected in the UK. They include:
A commitment to cease the unlawful conduct;
A commitment to implement a compliance programme and to submit to external audit; and
A commitment to cooperate fully with the investigation and act in good faith.
Included in the guidelines are sections which prescribe what will happen when there needs to be cooperation between multiple domestic agencies or when multiple jurisdictions are involved. Item 7.6 requires the MPF to conduct negotiations with other Brazilian authorities to seek their coordination with the Leniency Agreement, and item 13 states that negotiations should include consideration of Brazil's international obligations, for example under the OECD Convention against Corruption.
These guidelines are a first step to encourage corporates to come forward and make applications for leniency agreements. As further guidance is published and there is greater clarity on the Brazilian authorities approach to bribery, we may see more companies making an approach for leniency which, in turn, will have a significant impact upon those bribery investigations where there are other jurisdictions in play.
Candour and openness
Leniency Agreements in Brazil, as with deferred prosecution agreements in the UK, carry an expectation of candour. Brazil's Attorney General has just announced that he will review the leniency agreements offered to J&F Investimentos (Brazil's biggest ever fine) because of information received which suggests that J&F did not disclose the full extent of its misconduct to prosecutors.
As investigations into corporate entities take on an increasingly global character, it is ever more important to have specialist advice in the jurisdictions which may apply. It is also of fundamental importance that the DPA or Leniency agreement covers everything there is. Companies often recover their share price, or value, once a deal with the prosecutor is agreed. What markets and shareholders alike are unlikely to forgive is the reopening of an investigation they had thought was closed. Before agreeing the terms of a settlement with the authorities, it is essential that the company has investigated itself, warts and all, so that there is absolute certainty in the outcome.
James Watson is an Associate in the Business Crime Group at Mishcon de Reya