Brazilian baby-steps towards whistleblowers’ protection09/10/2018
By André Gustavo Isola Fonseca
Felsberg Advogados, São Paulo
Ludmila de Vasconcelos Leite Groch
TozziniFreire Advogados, São Paulo
In the context of Brazil’s latest corruption scandals and the huge police investigations that succeeded them, especially Operation Car Wash, several themes that had not yet received much attention from our legislators have now officially shown up on the radar. Whistleblowers’ protection, subject of Federal Law No 13,608, enacted on 11 January 2018, is one of them.
Such legislation contemplates fighting mechanisms against the new forms of criminalisation, which has been verified in the last few years in Brazil. The country is now facing sophisticated and high-level forms of corruption and organised crime, making the old apparatus obsolete and inefficient to combat illegal activities.
Funded by resources from the National Security Policy Fund, this new legislation aims at adding value to conducts that bring a positive impact, as well to incentive people’s participation on a daily fight against organised crime.
It is a fact that whistleblowing is a sensitive subject. On one hand, it increases people’s sense of corporate social responsibility and ultimately reduces a company’s risk of exposure to potential anticorruption acts, promoting a more ethical environmental for business and social development. On the other hand, whistleblowing splits public opinion all over the world – not only because its practice usually faces contradictory policies and laws (and sometimes the lack of them), but also because the whistleblower themselves is often seen as a traitor.
This last aspect is even more relevant in the Brazilian culture. The country experimented with a military dictatorship for more than 20 years and during that time, pointing a finger at someone could mean death penalty and no right to due process of law. This is the main reason to sustain legislation that accepts the participation of whistleblowers within investigation procedures that should also take care of their protection. Those who decide to bring to light individuals or company’s undue practices – most commonly related to fraud and corruption issues – may be highly exposed to retaliation, which highlights the importance of the matter when it comes to their preservation and safety.
In contrast to countries, such as the United States, that have already several pieces of legislation designed to protect whistleblowers (eg, the Whistleblower Protection Act, the The Notification and Federal Employee Antidiscrimination and Retaliation Act and the business-known Sarbanes-Oxley Act) Brazil is still in its first steps. However, the recent issuance of Federal Law no. 13,608 is definitely a relevant one. In order to make people feel more confident and comfortable about coming forward to report wrongdoings, it not only regulates the matter but grants rewards for those who provide helpful information to authorities within their official investigations.
In short, the law authorises Brazilian States to create government-operated telephone hotlines, preferably accessed for free (non-profit private entities are also authorised to establish the services, through a partnership). It also imposes that transportation concessionaries display on their vehicles information concerning a direct and free hotline for whistleblowers and to reinforce that collaborators’ complaints must remain anonymous – a controversial aspect of the document, considering that anonymity is prohibited by the Brazilian Constitution.
Rewards (including eventual payments in cash), shall be fixed by the Federal, State Governments and Municipalities within their jurisdiction if, and when, a whistleblower’s report provides useful information for the prevention, repression or investigation of crimes or administrative offences.
Lastly, the new law modifies Article 4 of Federal Law No 10,201/2011, adding that the Brazilian National Fund of Public Security will support the implementation of hotlines for whistleblowers, with the guarantee of confidentiality, and the payment of cash rewards for those whose information may help with solving crimes.
Opposing the controversial plea bargain agent, the whistleblower agent is not involved in the criminal organisation. It is a third-party that happens to know and possess valuable information, the details of how they obtained this information being irrelevant. As a means to encourage individuals to share knowledge, rewards must be put on the table, particularly because whistleblower agents are usually subjected to more harm that benefit from their conduct. In Brazil, awarding rewards is even more important, since retaliation is very common in the business environment. Most of the time, the police or any other authority are not able to provide full support and security to whistleblowers, especially if we are talking about white-collar crimes and corporate frauds.
Furthermore, the nonprofit organisation International Transparency launched on 5 June 2018, the document named ‘New Measures Against Corruption’, composed by 70 legislative proposals (among law projects, constitutional amendment proposals and resolutions), that also raise preoccupation regarding the whistleblowers’ guarantees, being one of the measures related to the creation of a more specific law for their protection. Note that this concern has been the object of several international treaties signed by Brazil, such as Inter-American Convention Against Corruption and Merida Convention.
As discussed, this is only a preliminary step for Brazil, but surely a significant one for a country that has so recently put efforts in the conception of up-to-date anticorruption regulations. Certainly, problems will arise concerning this matter, but it must recognise that this first step is a necessary one to create a new culture and business pattern, assuring the country follows the international standards and moves forward in a more lawful and ethical path.