Interview with: Fábio Medina Osório, Partner

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Medina Osorio Advogados

TheLegal500 interviewed attorney Fábio Medina Osório, partner of Medina Osório Advogados, former Federal Attorney General (2016) of Brazil, PhD in Administrative Law from the Complutense University of Madrid and former District Attorney in the state of Rio Grande do Sul.

In this interview, Medina Osório analyzes the Brazilian landscape in light of the Brazilian Anticorruption Law (Law 12,846/2013), considering the requirements of effective compliance and the fragmentation of the supervisory bodies.

Medina Osório advises: companies investing in Brazil must necessarily adapt to the requirements of the Brazilian Anticorruption Law. Fábio Medina Osório is considered one of the leading experts in anticorruption legislation in Brazil, having published the books “Teoria da Improbidade Administrativa” (Theory of Administrative Impropriety) and “Direito Administrativo Sancionador” (Sanctioning Administrative Law), both published by Revista dos Tribunais (Journal of the Courts).

In this interview, we had the opportunity to gather some of his impressions about the Brazilian Anticorruption Law.

Soon after the enactment of Law 12,846/2013, the so-called Anti-Corporate Corruption Law, you were interviewed by Veja magazine, in Brazil, to point out perspectives of this legislation in 2014. On that occasion, you warned about the risks of abuses and misuse of power by inspectors and about possible legal insecurity. What is your assessment on the evolution of the fight against corruption in Brazil?

Brazil has strong and solid institutions, and a stable democracy. The anticorruption law represents an advancement in the current regulatory system, which now requires vigilance from companies in the private environment. However, in reality, the multiplicity of supervisory bodies that manage this law generates legal uncertainty. Likewise, there are many open concepts in the law that provide a certain degree of discretionality to interpreters, which also produces uncertainties. Abuses and deviations have occurred in the managing of this law. Companies cannot be made unviable by the acts of their leaders. In Brazil, the fight against corruption has improved greatly in recent years, but it has also sacrificed countless businesses. This must be reviewed.

How important are administrative impropriety or corporate misconduct lawsuits against offending companies?

These cases provide the environment for leniency agreements. These agreements, however, should not serve to lead companies to bankruptcy. In the lawsuits, the institutions are obliged to point out certain losses signaled in expert opinions or reports. But the agreements do not have to follow these numbers. They have other purposes, among which are the preservation of jobs and the company´s social function, in addition to identifying the responsible individuals. The supervisory bodies should look at more realistic parameters in the agreements, using an economic reading and analysis of the Law.

Does a company, in order to operate in Brazil, need effective compliance?

The Corporate Anticorruption Law adopted the concept of effective compliance, which is actual compliance as opposed to illusory or theoretical compliance. Companies need certified compliance or a certification-searching compliance. They need an independent compliance officer, with a contract that guarantees his/her autonomy. The investment in the implementation of effective compliance brings legal security and quality. The business environment in Brazil is competitive and regulated. Having compliance is a market differential.

What are the risks for international investors who are ensnared by so-called “illusory or theoretical compliance”?

“Theoretical compliance” is forbidden in Brazil and can generate liabilities for companies and their managers. It is an alleged “compliance” that exists only on paper and not in the company´s organizational reality, serving as a front to cover up illicit acts. This kind of tool constitutes a violation of the anticorruption corporate law. It is a fraud and an attempt to frequently hinder investigations. There is a very high risk in hiring law firms or companies that implement compliance, since it is necessary to verify the expertise of the professionals involved in this line of work.

The culture of compliance is, in reality, a global culture that permeates international businesses. In this sense, Brazil is inserted in the international community and Brazilian legislation is aligned with the best international practices.