Proposed Changes in Brazil’s Anticorruption Legislation: A Summary and Critique

Early last month, Brazilian Minister of Justice Sergio Moro (a former judge best known for his role in the so-called Car Wash corruption cases) introduced an extensive anti-crime legislation package. The package includes many measures, including some related to things like violent crime, but it notably includes five measures that are especially relevant to Brazil’s fight against corruption. What are these proposed changes, and what would their implications be?

  • First, the legislative package calls for much harsher sentencing across the board, including for white collar offenders. In addition, the package includes a requirement that people sentenced for corruption offenses (embezzlement, bribe-taking, and bribe-giving) should begin serving their sentences in maximum or medium security prisons. This would seem to be a big change, because under the current criminal code those sentenced to less than eight years may begin their sentences in minimum security prisons or under house arrest. Many of those convicted of corruption offenses in the Car Wash operation were sentenced to less than eight years (though this was not true for some the highest-profile defendants, like former President Lula, who was sentenced to nearly 13 years). However, while this change may at first appear significant, it may turn out to be less than meets the eye. The reason is that where an inmate begins serving his or her sentence doesn’t matter very much: transfers and releases can and do happen quite quickly—for things like writing book reports (seriously), or simply for “good behavior.” In one particularly extreme case, ex-Finance Minister Guido Mantega, who was convicted in one of the Car Wash cases, was released from prison just a few hours after he entered. And this is perhaps not so surprising, given that there is little space for non-violent offenders in Brazil’s overcrowded prisons. A corrupt politician may therefore see this proposed legislative reform as an annoyance, but without other changes such a person would probably not worry too much about actually ending up in a medium or maximum security prison. The proposal is thus more symbolic than meaningful. Moreover, while I do believe that corrupt officials should be held accountable for their actions, I am not convinced that throwing them all in jail is the right solution.
  • Second, the proposed legislation makes it easier for the state to confiscate a convicted criminal’s assets. Currently, the state can confiscate assets that are product of, or related to, the crime for which the defendant was convicted. Under Moro’s proposed changes, criminals sentenced to more than six years would face the possibility of having their assets confiscated if the convicted party cannot prove that the value of his or her assets is “compatible with [the convicted individual’s] legal income.” In other words, the assets potentially subject to confiscation would not be limited to those that the government could show were connected to the specific offense for which the defendant was convicted. This seems like a desirable reform—but here again, it may be less significant than it at first appears, unless accompanied by other reforms. In particular, the confiscation process (investigations, hearings, etc.) is currently so cumbersome that it can take years. The expansion of the scope of the assets that can be confiscated won’t mean much unless Brazil also enacts administrative reforms that streamline the confiscation process. Additionally, though confiscations of luxury properties, cars, or jewels taken from the corrupt may make interesting headlines, the value of these goods doesn’t come close to the amount lost by the state to begin with. Recovering all of the luxury goods owned by those involved in the schemes investigated by Car Wash, for example, still won’t make up for the billions of losses and domino effect of said losses that Brazil has suffered since the revelations became public.
  • Third, the proposed legislation imposes more limits on defendants’ right of appeal. Under the current version of the Criminal Procedure Code, defendants may ask for a rehearing of an appeal if the judges do not unanimously agree on the decision—not only the verdict, but also the sentence. This provision has been used by those convicted of white collar crimes to slow the judicial process when the judges do not agree unanimously on the length of the sentence, even when they all agree that the defendant’s conviction should be upheld. The proposed legislative change would allow a motion for rehearing only if one of the judges in the minority of the original panel voted to acquit the defendant. The Justice Ministry argues that this reform is needed because many people convicted of corruption used this loophole to delay the finalization of their conviction for sufficiently long that the statute of limitations ran out. (In Brazil, the statute of limitations keeps running after an indictment, and even after a trial and conviction, meaning that it is possible that even a convicted defendant can escape punishment if the statute runs out during the appeals process, or if imprisonment is delayed for some other reason.) This reform seems sensible, but again, it is hard to see it as more than a targeted band-aid, one that doesn’t address the more significant problems.
  • Fourth, the proposed legislation alters the rules on which courts can handle cases when the accused have special legal standing (known as foro privilegiado). The special legal standing afforded to seated politicians means that they may only be tried by the Supreme Court. Under the current law, when at least one of the defendants in a case qualifies for special legal standing, the entire case is sent to the Supreme Court and enters a long line of indictments that may never be seen in court. Under Moro’s proposed legislation, foro privilegiado would be available only to the individual defendant. Other defendants involved in the same scheme could still be tried in the ordinary first-instance court. For example, if a politician and the owner of a large construction company are indicted in the same operation, under the current law they can both invoke special standing, which has the consequence of delaying further investigation and trial. Moro’s proposal hopes to accelerate the trial of the company owner through the regular court system. The impact of this reform is limited, however, by the fact that it doesn’t address the inefficiency of the ordinary court system. The reform may be helpful at the margins, making a difference for some of the highest profile cases, but it may not move the needle much in the mine-run of cases, which will continue to be drawn out for a host of other reasons that the reform package does not address.
  • Fifth, and perhaps most important, Moro’s initial proposed reform package included an attempt to crack down on so-called “caixa dois” (literally “second box,” colloquially “black box” or “slush fund”) political financing. His original legislative proposal did so by criminalizing the “collecting, receiving, maintaining, moving or using any resource, value, goods or services estimated in cash, parallel to the accounting required by electoral legislation.” The reform also specified that possible violators of this law include not only politicians but also members of political parties and coalitions, as well as donors. The proposed language, taken directly from Transparency International Brazil’s New Measures Against Corruption, would have been a significant positive step. Alas, the day before the reform package was presented to Congress, the Bolsonaro government announced that the caixa dois reform would be severed from the rest of the package and proposed at some later date as a standalone bill. The rationale was that while caixa dois is a serious problem, it is not the same as the other types of corruption and crime covered by the package. As Moro put it, in defending the decision to separate the caixa dois prohibition from the rest of the anti-crime package, “Caixa dois is not corruption and corruption is not caixa dois.” It remains to be seen if the caixa dois will actually be presented to Congress at a later date, but I wouldn’t get my hopes up. The omission of this provision from the anti-crime legislative package is particularly disappointing because this was one of the few sections that provided some conceptual clarity and attempted to tackle an entire issue, not just make changes in procedural rules or sanctions.

As a whole, the anti-crime package has received mixed reviews. In a recent survey, other judges generally favored the proposed changes, while civil society members and journalists have criticized the proposals as ambiguous and/or insufficient. There are some innovations in the anticrime legislation package that will certainly inflict harsher penalties on those (few) defendants accused of corruption, and some that seem like little more than stopgap measures. Notably missing, however, are measures that improve existing transparency and monitoring structures. Improving regulation and infrastructure of transparency portals, clarifying rules and procedure for financial reporting standards, and public access to government documents could go a long way in preventing corruption rather than just choosing how to punish the corrupt.

By far the most innovative and important element of the original reform package, at least from an anticorruption perspective, was the caixa dois prohibition, but that didn’t even reach the floor of Congress. What the government does regarding the caixa dois proposal is a huge question moving forward. Will Moro follow through on his promise to introduce a separate bill on caixa dois? Or will he continue to kick the can down the road, even as new allegations come out daily about caixa dois in the President’s party, the current lower house President, and possibly President Bolsonaro’s own son?

7 thoughts on “Proposed Changes in Brazil’s Anticorruption Legislation: A Summary and Critique

  1. I enjoyed reading this helpful overview of Brazil’s proposed reforms. Based on your post and the CFR article you linked to, it sounds like the combination of dreadfully inefficient judicial proceedings and a statute of limitations that continues to run post-indictment is a recipe for disaster. Has there been any movement to toll statutes of limitation during the pendency of trial and appeal proceedings? It could be a simpler fix (albeit an incomplete one) than an overhaul of judicial procedure more generally and would at least remove the huge incentive to delay that officials currently enjoy (“practical immunity,” the CFR article calls it).

    On another note, I’d be interested to know why the STF has original jurisdiction over officials with special legal standing. The cons are clear: the STF is backlogged and usually deals with constitutional issues (not criminal ones). The CFR article you cite calls into question the only pro I can think of –– some degree of objectivity that may be lacking in the official’s home constituency –– by suggesting that the STF is deferential to officials because they “share the same rarified Brasília air.” Are there other justifications I can’t think of?

    • Hi Blake,
      Thanks for your reply! There are some clauses in the anticrime bill currently on the floor now about statute of limitations more generally (you can throw this article into google translate to get a more detailed take on it – https://www.conjur.com.br/2019-mar-29/iab-rejeita-17-19-medidas-projeto-anticrime-moro) but this more streamlined statute of limitations law is dependent on a more controversial measure, also in the package, about going straight to jail after losing a second appeal. I’m not sure if there have been other movements to toll statute of limitations at other times in the past, but it is still on the periphery of this bill.

      I think you make a great point about STF vs. the regional courts. Another reason I can think of that has consequences in many areas of Brazilian politics is that things are a lot more federal-centric in general in the country than in the US. It is a federalist system, like the US, but the norms of decentralizing are pretty weak and power tends to be pretty concentrated. I could see a similar thing happening with criminal procedure – where, despite the backlog, lawmakers choose to leave a lot of cases with the STF in Brasília because that is where power has been concentrated in the past.

    • Great comment, Blake! I do agree with you that Brazil needs a “overhaul of judicial procedure”. By the way, Jessie Blake’s post totally nailed it. Congrats to Jessie too!

      I’d like to add that when one official in Brazil is charged for a felony occurred after he gets his certificate of election, his chamber gets a communication by the Supreme Court, after what a party can propose the standstill of the trial. If the chamber votes for stopping it, the statute of limitation automatically gets stopped too (Article 53, § 5º, of Brazil’s Constitution), so the official gets no delay benefits regarding the statute of limitation.

  2. Jessie, great summary of these important changes.
    In reference to the end of your first point, rather than jail, would you suggest they they confiscate assets equivalent to (or ideally, greater than) the amount stolen? It seems like the ideal system of punishment would (1) recuperate all of the state’s assets that have been stolen, and (2) sufficiently punish the perpetrator for the crime committed so as to deter others from such corruption. (If you only recuperate assets, then they haven’t really been punished. They’re just back where they started before embezzling money.)

    • Hi Alex, thanks!
      This is a hard question. I do think that the worst embezzlers, money launderers, and other white collar criminals should go to jail. I agree that the 1-2 punch you suggest above would seem like the right way to go about both punishing current offenders and deterring future politicians by showing that their former colleagues actually did have to go to and spend real time in jail.

      I suppose some of my pessimism about the penitentiary system in general was revealed in point 1 above — The harsher sentencing laws goes hand in hand with some other punishment measures towards violent criminals and lower level drug offenders, who currently make up a large share of Brazil’s prison population. The rhetoric of the current President also makes me think they have no intent on slowing down putting low-level drug dealers or violent criminals in jail so from a practical standpoint… where are they going to put all the convicted people? And who are they ultimately going to reduce the sentence for?… My bet is for the white collar criminals, given the country’s history. I think it is a combination of the legal text and informal norms that emboldens (potential) white collar criminals to continue to act with impunity in Brazil.

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