NEWSLETTER – MAY/20 | White Collar

THE COURT OF APPEALS OF SÃO PAULO DECIDED THAT THE COMPANIES WHOSE PARTNERS WERE INDICTED FOR BID RIGGING CANNOT BE EXCLUDED FROM ALL BIDS AND CONTRACTS WITH PUBLIC ADMINISTRATION
The Court of Appeals of São Paulo (“TJSP”) decided that it is excessive the precautionary measure that excluded companies from all public bids and contracts with the Public Administration due to the indictment of its partners for bid rigging crime.

Article 319, VI, of the Code of Criminal Procedure provides as one of the precautionary measures other than prison, the “suspension of public function or of an economic or financial activity when there is founded reason that it could be used for the practice of criminal offenses. ”.

The Justice of the Court of Appeals, Leme Garcia, underpinned that the supposed fraud had been committed when the companies participated in a bidding together. Therefore, the Justice limited the precautionary measure only to bids in which the companies would partake simultaneously.

The indicted companies also were unable to extend or renew the contracts and obligations resulted of the rigged bids.

It should be noted that these measures are precautionary and were imposed before the due process and sentencing of those involved in the alleged illegal practices. The imposition of precautionary measures of this nature, at the beginning of a criminal proceeding, can cause serious financial and economic impacts on companies without proof of the alleged illegal practice. Thus, the decision of the TJSP that prohibited both companies of participating in the same bid is a way of making the precautionary measure to avoid possible new bidding irregularities compatible with the economic activity of the companies.

However, it is necessary to question whether it would be possible to apply precautionary measures other than prison against the companies involved. The criminal action was filed against individuals, since legal entities can only be held responsible in the criminal sphere for environmental crimes. Thus, in case of a conviction, the penalties imposed will be restricted to the individuals involved. Consequently, there would be no sense in imposing precautionary measures to guarantee a criminal action that, even in the worst scenario of conviction, would not reach the companies.

Therefore, in our opinion, the precautionary measure of “suspension of the public function or activity of an economic or financial nature”, provided for in article 319, VI, of the Penal Procedure Code, should be imposed only on individuals, for example, by forbidding them to remain in the management of the companies that participated in the bidding, without prejudice that, in the appropriate administrative sphere, such companies may be temporarily prevented from bidding.

Writ of Habeas Corpus n. 2073096-19.2020.8.26.0000

THE COURT OF APPEALS OF SÃO PAULO DECIDED THAT THE COURT CANNOT IMPOSE A NON-PROSECUTION AGREEMENT
The Court of Appeal of São Paulo (“TJSP”) decided that the non-prosecution agreement (“NPA”) introduced by the Law n. 13.964/2019 (“Anticrime Law”) is bilateral and discretionary. Therefore, the Court may not impose it to the parties involved.

The NPA is an agreement between the person under investigation and the Public Prosecutor’s Office, in which the person under investigation confesses the responsibility for the crime and serves an agreed sentence in exchange for not being indicted. The NPA is applicable in criminal offenses with a minimum penalty of less than 4 (four) years. Thus, it is applicable in several white-collar crimes such as bid rigging, pollution, corruption and tax evasion.

This decision was rendered in an habeas corpus in which one of the parties had requested a NPA after both the Public Prosecutor’s Office and the State’s Attorney General’s Office (“PGJ”) refused to offer it.

According to the Anticrime Law, if the Public Prosecutor’s Office refuses to propose an NPA, the investigation may be sent to the PGJ, who will analyze if it is the case to propose the NPA.

The TJSP decided that if the PGJ does not offer the NPA, the court cannot impose it, since it is not a right of the defendant.

It is important to highlight that the failure to recognize the proposition of the non-criminal prosecution agreement as the defendant’s/suspect’s right reinforces the understanding of the Public Prosecutor’s Office, that the offer of the NPA is discretionary, and that such body may propose it in cases where it believes to be a sufficient measure for the reprobation of crime and its prevention.

On the other hand, the opinion of the court that it is not for the Judge to impose the NPA when the Attorney General refuses to offer it also reinforces the respect for the accusatorial principle of the criminal justice, as it impedes the judge from acting for the prosecution by interfering in the decision that belongs exclusively to the Public Prosecutor’s Office. With the distancing of the Judge from such decision, it ensures the impartiality of the court, which is of the bases for the exercise of jurisdictional power.

Writ of Habeas Corpus n. 2064200-84.2020.8.26.0000

STJ DEEMED AS ILLEGAL EVIDENCE OBTAINED AFTER A STATE COURT EXTENDED A WIRETAPPING MEASURE WITHOUT A REASONED DECISION
The Superior Court of Justice (“STJ”) deemed as illegal the evidence obtained by wiretapping because the State Court had extended the wiretapping measure without a reasoned decision.

This decision was rendered in an appeal regarding the exclusionary rule of evidence obtained through wiretapping of the suspects that were being investigated for the sale of admissions at a Medical School.

In the decision, the Court determined the wiretapping for 15 days and, in the same decision, granted the automatic renewal of the measure for 15 days, which violates article 5 of Law n. 9.296/96 (“Wiretapping Law”).

Justice Nefi Cordeiro underpinned that according to the law it is illegal to automatically renew wiretapping measures. In addition, the Justice noted that the decision was unreasoned because it did not indicate why the measure was indispensable to the investigations.

The STJ’s decision is important because, in addition to respecting the law, it reinforces the need for a reasoned decision for wiretapping, which is a serious measure that interferes in the privacy of the person under investigation. The extension of period of wiretapping requires a reasoned decision that, based on new elements of evidence that justify the continuity of the measure. The wiretapping may also not be extended indefinitely by the authorities.

Appeal in the Writ of Habeas Corpus n. 124.057

THE BRAZILIAN FEDERAL POLICE AND EUROPEAN POLICE OFFICE STRATEGIC COOPERATION AGREEMENT HAS BEEN ENACTED
Recently, the Law nº 10.364/2020 which introduces to the Brazilian legislation the agreement of strategic cooperation between Brazil and the European Police Office (“Europol”) was enacted under. It had been signed in Hague in 2017. The agreement, passed by the Brazilian National Congress at the end of 2019, aims to establish cooperative relationships between Brazil and the Europe Union in the prevention and fight against organized crime, terrorism and other forms of transnational crimes, such as money laundering, frauds, corruption, cybercrimes, environmental crimes etc., as well as related crimes.

Among the matters provided by the agreement, is that the cooperation shall occur with the sharing and exchanging of information, expertise, reports, results, prevention crime methods and support to investigations. The competent Authority in Brazil for the information sharing will be the Federal Police.

In addition, the information to be shared must be collected and stored according to the law and human rights.

The individuals who wish to have access to shared information must request it to the Federal Police.

The shared information may only be used to the purpose that it was requested. In case it is needed for another purpose, the Authority that sent the information must authorize it.

Although the agreement is an important measure in the fight against transnational crimes, it is possible for some discussions to arise in practice such as how to ensure the access to information by the suspect’s attorney.

In the same way, it will be difficult to perform an effective internal and external control of the information used by Federal Police in situations in which it was not authorized by the other country.

THE COURT OF APPEALS OF THE BRAZILIAN FEDERAL DISTRICT DECIDED THAT THERE IS NO FORMALITY FOR A VICTIM TO PRESS CHARGES FOR FRAUD
With the enactment of the Law n. 13.964/2019 (“Anticrime Law”) persons involved in fraud crimes may only be prosecuted if the victim presses criminal charges. The law aimed to prosecute only the cases in which victims have expressed their interest in the criminal prosecution. Since before the Anticrime Law victims did not have to press charges for fraud, there are many ongoing criminal investigations and lawsuits without such charges.

Now Justices are faced with the question on how a victim should press charges on ongoing cases. The Court of Appeals of the Brazilian Federal District decided that the act of pressing charges does not have to be formal. According to the Court, when the victim reports the fraud to Police Authorities it means that he or she is interested in the criminal prosecution and that should be understood as pressing charges.

The Justices based their decision on precedents from the Brazilian Superior Court of Justice (“STJ”) and Supreme Federal Court (“STF”) regarding other crimes that depend of victim’s approval.

Corporate fraud is a fundamental topic in white-collar practice. Although the case law already establishes that the victim’s request for a police investigation, and now the drawing up of a police investigation, meet the formality of pressing charges, it is important for the Courts to rule on whether theses standards also apply to fraud.

A possible issue will certainly be regarding the nature of the rule that requires the victim to press charges for the crime of fraud, whether it is of a criminal or a criminal procedural nature. If it is of a criminal procedural nature, it will be immediately applicable in ongoing cases. However, if it is a rule of a criminal nature, it is likely that the Courts will have to decide on whether the new rule will retroact to the benefit of the people under investigation and to the defendants. Retroacting in cases in which there was no representation within 06 (six) months counting from the date in which the victim found out who the perpetrator was, it is possible that many cases may be closed due to the expiration of the statute of limitations.

Appeal nº 0702278-63.2020.8.07.0000

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