ASPA 2019 Annual Conference

CORRUPTION INVESTIGATIONS, POLITICIZATION AND INSTITUTIONAL CRISES? A COMPARATIVE POLITICS, POLICY AND LAW APPROACH

PANEL: HAVE ANTI-CORRUPTION MEASURES FAILED? WHY? – Washington, DC – March 9, 2019

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Topics List

1. The Operation Car Wash / Jet Wash / “Lava Jato” – a concept

2. Agreement between MPF, DOJ, and OAG

3. Enforcing authorities and their roles

4. Case study on authorities’ cooperation or competition

5. Details regarding pecuniary contributions discussed by CADE’s Tribunal

6. Details regarding fines (etc.) imposed by CGU/AGU

7. Concluding remarks. Have anti-corruption measures failed?

Short bio and contact

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1. The Operation Car Wash / Jet Wash / “Lava Lato” – a concept

Task force led by the Federal Public Prosecution Office – MPF and the

Federal Police to dismantle Brazilian corruption scandals

Started in March 2014, it used to focus on public procurement promoted by

the state controlled oil company Petrobras (and its supplying construction

companies), and the accusations alleged the existence of bid rigging and

bribery

Car Wash investigations are significant due to its economic importance and

the fact that they involve several important Brazilian politicians.

Adapted from Ribeiro/Cordeiro/Guimaraes, 2016: 141

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2. Agreement between MPF, DOJ, and OAG (map by Oxford Analytica, 2017)

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2. Agreement between MPF, DOJ, and OAG (BRIBERY TIME RANGE)

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3. Enforcing authorities and their roles

Car Wash main enforcing authority?

Federal Public Prosecution Service – MPF

Criminal law

Huge political repercussion

Agreement with the U.S. DOJ, the Office of the Attorney General of

Switzerland – OAG and defendants

80% of the amount returning to Brazil (Lagunes, 2018: 11)

Major administrative issue: different authorities competing for decision

making power in the scope of the Operation Car Wash?

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3. Enforcing authorities and their roles 2

Administrative Council for Economic Defense – CADE*, enforces the

antitrust (administrative) law of 2011 *U.S. FTC

Comptroller-General of the Union – CGU*, enforces the anti-corruption

(administrative) law of 2013 *U.S. DOJ

Advocacy-General of the Union – AGU*, enforces the anti-corruption law

jointly with CGU (since 2016) *U.S. DOJ

Federal Court of Auditors – TCU*, oversees the anti-corruption law

enforcement since 2015 *U.S. GAO

And again, the

Federal Public Prosecution Office – MPF*, that also enforces the anti-

corruption (civil/judicial) law of 2013 (and by executing leniency agreements

since October 2014) *U.S. DOJ

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4. Case study on authorities’ cooperation or competition

Major administrative and political issue on whether authorities are:

Working cooperatively; or

Competing among each other

Case study – contributions/fines (etc.) advocated by CADE and CGU:

CADE is an internationally acknowledged agency (GCR)

Transparency: access to Commissioners’ votes

Debate on pecuniary contributions/fines since 2016

TCU, CGU and MPF also making estimates on gross overcharge (taxes

included) (“advantage obtained”) between 7 and 25% (CADEb, 2018: 7)

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5. Details regarding pecuniary contributions discussed by CADE’s Tribunal Adapted from CADEa, 2018: 4

Investigation Settlement Defendant Calculation

basis (relevant

sales)

Percentage

(overcharge)

(> than 17% in

all cases - TCU)

Deterrent

factor (in

addition to the

overcharge)

Discount

(regressive in

multiple

settlements)

Commissioner’s

dissenting vote

(BRL)

CADE’s

decision (BRL)

Difference (due

to ≠ calc basis

and deterrent

factor)

Onshore

refineries

(Petrobras)

1

2

3

OAS

Carioca

Odebrecht

Confidential Confidential 40% 19%

14%

12%

917,591,042

190,081,572

1,949,250,962

116,220,578

49,356,180

300,651,617

690%

285%

548%

Nuclear plant

(Angra III)

4 Odebrecht Confidential Confidential 40% 22% 37,346,147 13,349,110 180%

Shanty town

urbanization

(PAC Favelas)

5

6

7

OAS

Carioca

Odebrecht

Confidential Confidential 40% 41%

32%

16.5%

54,019,075

30,406,752

152,862,155

12,967,312

6,914,016

28,088,245

317%

340%

444%

Arenas World

Cup 2014

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9

Carioca

Odebrecht

Confidential Confidential 40% 30.5%

48%

35,142,178

200,541,966

4,619,100

90,740,615

661%

121%

Petrobras’s

special

buildings

(Cenpes)

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11

12

OAS

Odebrecht

Andrade

Gutierrez

(“leaders”)

Confidential Confidential 40% 46%

29%

19%

51,584,171

70,155,662

62,490,046

31,641,977

40,479,654

38,070,391

63%

73%

64%

Railways 13

14

15

16

OAS

Odebrecht

Carioca

Andrade

Gutierrez

Confidential Confidential 40% 30%

16.9%

16.7%

50%

5,799,618

182,016,338

5,037,572

185,468,779

3,716,640

46,090,624

2,606,249

31,649,620

56%

295%

93%

486%

Total - - - - - - 4,129,794,035 817,161,929 405%

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6. Details regarding fines (etc.) imposed by CGU/AGU Self-elaboration, based on CGU, 2019

Leniency Defendant Injured party Calculation basis

(relevant sales)

Percentage

(overcharge)

CGU/AGU decision (BRL)

1

07/2017

UTC Engenharia Federal Government,

Petrobras, others

Confidential Confidential Subtotal 574,000,000

Specification between fine and

indemnification*** not available

2

04/2018

MullenLowe and FCB

Brasil

Federal Government,

public bank (CEF), others

Confidential Confidential Subtotal 53,100,000

Fine 8,000,000

Indemnification:

Damages 3,500,000

Profit 38,500,000

3

07/2018

Odebrecht Federal Government,

Petrobras, others

Confidential Confidential Subtotal 2,720,000,000

Fine 442,000,000

Indemnification:

Bribes 900,000,000

Profit 1,300,000,000

4

07/2018

SBM Offshore Petrobras Confidential Confidential Subtotal 1,220,000,000

Fine 264,000,000

Indemnification:

Damages 285,000,000

Not clear 667,000,000

5

12/2018

Andrade Gutierrez Petrobras, Federal

Government, others

Confidential Confidential Subtotal 1,490,000,000

Fine 286,000,000

Indemnification:

Bribes 328,000,000

Profit 875,000,000

Total - - - - 6,050,200,000

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7. Concluding remarks. Have anti-corruption measures failed?

Working paper

Operation Car Wash generally associated with criminal enforcement and

political reform

Administrative issues also play a key role, and can reveal political moves

within the administration

Administrative agencies (and related institutions) should search for

cooperation with foreign authorities experienced in enforcing sentencing

guidelines

Working paper needs further development in comparative law, policy and

politics

Have anti-corruption measures failed?

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Short bio and contact

www.agpr.consulting

Denis Guimaraes

AGPR – Law, Policy & Advocacy (Partner)

Michigan Grotius Research Scholar, Public Law and Regulatory Policy,

University of Michigan (2014-15)

PhD in Economic and Public Finance Law, University of Sao Paulo (2003-

08)

Attorney at the Secretariat of Economic Law of the Ministry of Justice of

Brazil (2003-05)

Publications: http://ssrn.com/author=2494233