Participatory Budgeting: A Way Forward for the Brazilian Anticorruption Agenda

In Brazil’s presidential elections last month, former President Lula, leader of the left-wing Workers’ Party, narrowly defeated right-wing incumbent President Bolsonaro. But even though many Brazilian anticorruption scholars and activists, as well as members of the international anticorruption community (including on this blog), had endorsed Lula over Bolsonaro, there is considerable pessimism about the future of anticorruption reform in Brazil, at least in the near term. Although Lula’s previous administrations had advanced important anticorruption reforms, as well as broader institutional reforms to strengthen the independence and effectiveness of Brazil’s institutions of justice, the fact that Lula was himself incarcerated for corruption offenses until the Supreme Court voided his conviction on procedural grounds has made anticorruption such a polarizing issue—and so associated the anticorruption agenda with the right wing—that many believe that Lula will be much more hostile to an anticorruption agenda this time around. Moreover, even if President Lula were amenable to backing anticorruption reforms, the right wing dominates Congress, making such reforms even less likely to pass.

Although the prospects for significant advances in the anticorruption agenda at the national level are dim, there are more opportunities for progress than the dominant pessimistic view acknowledges. Importantly, Brazil is a federal republic, where both state governments and local municipalities have a considerable degree of autonomy. Furthermore, even if the rhetoric of anticorruption has become unhelpfully politicized in Brazil, there are many reforms that do not overtly target “corruption” but that nonetheless may have significant anticorruption benefits. So, the way forward for Brazilian anticorruption reformers over the next several years involves a shift in focus from federal-level anticorruption prosecutions to local-level institutional reforms with significant but indirect anticorruption effects.

One reform that fits the bill is participatory budgeting (PB). Brazil’s anticorruption community should make common cause with other good-government and pro-democracy advocates to push for the expansion of PB at the municipal level.

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Brazilian Anticorruption Experts Weigh in on the Presidential Election

The upcoming presidential election in Brazil, which pits right-wing incumbent Jair Bolsonaro against former President Lula–leader of the left-wing Workers’ Party (PT)–puts voters who care primarily about government integrity in a tough spot. Some of the leading figures in Brazil’s so-called “Car Wash” anticorruption operation have publicly embraced President Bolsonaro, pointing (explicitly or implicitly) to the corruption scandals under Lula and the PT. Others, including Victoria on this blog, have argued that between the two, Bolsonaro would be worse for the fight against corruption than would Lula.

Recently, a group of 59 Brazilian scholars who research and teach on anticorruption and related topics weighed in on this issue with an open letter, originally published in Portuguese. This is an important contribution to the discussion, of interest not only to Brazilians but to the international community that cares about this issue. With the permission of the letter’s organizers, their English translation of the letter is below, with the list of signatories: Continue reading

When it Comes to Corruption, Lula is Toxic, but Bolsonaro is Lethal

The second round of Brazil’s presidential election—which pits incumbent right-wing President Bolsonaro against left-wing former President Lula—is a no-win situation for those who principally care about anticorruption. Both candidates have been embroiled in corruption scandals, and though both have deployed corruption allegations against their opponent, neither has articulated anything resembling a meaningful anticorruption agenda. For those voters whose top priority is increasing integrity and accountability within the Brazilian government, the question at the ballot box on October 30 will be: which candidate is the lesser of two evils?

Though painful, that question has a clear answer: Bolsonaro poses by far the greatest threat to anticorruption efforts in Brazil, and to the integrity of Brazilian democratic institutions as a whole. Lula is by no means an ideal candidate, and it is entirely understandable that many Brazilian voters are deeply concerned about the numerous corruption scandals involving his party, the PT (see here, here, and here). But Bolsonaro’s administration has been ripe with scandals as well (see here, here, here, and here). Ultimately, whatever Lula’s personal ethical failings may be, he is far more likely than Bolsonaro to preserve the institutional accountability mechanisms that are necessary to address corruption over the longer term.

To get an idea of why, it is useful to take a look at Bolsonaro and Lula’s track records:

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Brazil’s Presidential Election: No Matter the Outcome, Corruption Wins (and Everyone Loses)

On October 2, the first round of Brazil’s presidential election failed to produce a single winner, and the two front-runners—Jair Bolsonaro, the far-right incumbent, and Luiz Inácio Lula da Silva (“Lula”), the former president and leader of the Workers Party (PT)—will face each other in the second round on October 30.

For many, particularly those in the anticorruption community, the fact that Brazil’s next president will be either Lula or Bolsonaro is a source of despair and deep concern. One only needs to take a cursory look at the corruption scandals that have mired both candidates to understand why:

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Civil Non-Prosecution Agreements: A Promising New Tool for Advancing Brazil’s Anticorruption Agenda

In late 2019, the Brazilian Congress passed an “anti-crime package” which included, among other things, an amendment to the Administrative Improbity Act that authorized a new form of “civil non-prosecution agreement” (known by its Portuguese initials, ANPC). Under an ANPC, prosecutors can reach civil agreements with individuals who voluntarily disclose their corrupt acts, thus avoiding the usual judicial proceedings for determining penalties under the Improbity Law. (To be clear, ANPCs are used to resolve civil matters and impose administrative sanctions, rather than to resolve criminal cases.) More recent amendments to the Improbity Act have strengthened this mechanism by giving prosecutors greater discretion to reach settlements with individuals accused of improbity.

This reform is a major change to the traditional Brazilian approach to administrative sanctions, which historically bars the settlement of any case involving corruption or improbity. That said, Brazil has already expanded the use of settlement agreements in other contexts. For example, in the context of enforcing criminal laws against corporations, the 2014 Clean Company Act (CCA) authorized so-called “leniency agreements,” under which prosecutors may offer to lower penalties to companies that self-disclosure wrongdoing and cooperate with the investigation. The ANPC mechanism is similar but different in a couple of important respects. First, the ANPC applies to individuals rather than firms. Second, while the CCA authorizes leniency agreements only in cases where the company discloses information about other unlawful activities and thus helps the investigation, an ANPC may be issued as long as the individual agrees to reform her own conduct, even if she does not provide additional information that is useful in ongoing investigations. On the other hand, similarly to leniency agreements, the enforcement authorities need not seek judicial approval to resolve a case via ANPC, so long as the agreement is reached before the beginning of a judicial proceeding. (If a formal proceeding has already begun, then the judge would still need to sign off on the termination of that proceeding.)

Although ANPCs have yet to be used on large scale, this tool holds great promise for substantially improving Brazil’s effective enforcement of its anticorruption laws, for several reasons:

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The Brazilian Supreme Court’s Most Recent Ruling in the Lula Case Reveals the Court’s Own Bias

Back in 2017, a Brazilian court convicted former President Lula for corruption offenses in connection with a seaside apartment that Lula allegedly received as a bribe from a construction firm. In 2019, he was again found guilty of a corruption offense in a separate trial, this time for receiving bribes in the form of improvements to his country house. And he faced other corruption charges as well, including an indictment in which Odebrecht—a major construction firm and one of the most significant players in the Car Wash scandal— allegedly bribed Lula by agreeing to construct a headquarters for his foundation, the Lula Institute. The principal evidence for this latter accusation was acquired by prosecutors as part of a so-called “leniency agreement” with Odebrecht. In Brazil, leniency agreements are negotiated settlements, regulated by the Clean Company Act (CCA), in which companies voluntarily agree to confess unlawful conduct, pay penalties, and take other remedial action—including cooperating with prosecutors by providing evidence against other wrongdoers—and, in return, the companies have their sanctions and fines reduced (see, for example, here, here, and here). Such agreements have been critical to the success of the Car Wash Operation, and more generally to the effectiveness of Brazil’s fight against corruption.

But this past June, the Brazilian Supreme Court decided to nullify the evidence against Lula that had been collected under the Odebrecht leniency agreement (here). The Court’s ruling was not only legally flawed, but its reasoning, if accepted, threatens to undo dozens of prior corruption convictions and to create a cloud of uncertainty surrounding the validity of evidence obtained in leniency agreements. Such a ruling would needlessly undermine the ability of Brazilian prosecutors and courts to fight corruption in the future. Of course, the Court may not actually adhere to its legal reasoning in future cases—but that only underscores another problem: though the Brazilian Supreme Court has criticized lower court proceedings as biased against Lula, the Court’s own conduct, particularly in the most recent case, suggests an unacceptable bias in Lula’s favor.

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Narrowing the Scope of Brazil’s Administrative Improbity Law: Why the New Limits Will Strengthen, Not Weaken, the Law’s Efficacy

Brazil’s 1992 Administrative Improbity Law, which authorized severe sanctions on government agents who commit “acts against the public administration,” was the first Brazilian statute specifically targeted at government corruption. Last year, Brazil adopted extensive amendments to this law, many of which were controversial. In a recent post, I criticized the amendment that reduced the number of institutions responsible for enforcing the Improbity Law. But other controversial amendments to the law are, in my view, positive developments. In particular, I want to defend two other amendments that critics have asserted weaken the law:

  • First, under the original version of the Improbity Law, a public official could be sanctioned for negligent behavior that caused damage to the public treasury. Under the amended version of the law, only intentional acts can be considered administrative improbity punishable under this statute.
  • Second, the original version of the law listed ten forms of administrative misconduct that would constitute “violations of the principles of public administration,” but, importantly, that list was not exclusive. Rather, the listed forms of misconduct were presented only as examples. This meant that law enforcers could, and often did, bring an action under the Improbity Law for conduct that, in the enforcer’s view, violated a “principle of public administration,” such as morality and equity, even if the particular form of alleged improbity was not included as one of the specifically listed forms of misconduct in the statute. The amended law constrains enforcement discretion by establishing a well-defined and restricted list of acts that qualify as violations of the principles of public administration.

Critics, including many anticorruption advocates, assert that these changes unduly narrow the scope of the law, thereby undermining one of Brazil’s most important anticorruption instruments. These concerns, while understandable, are misplaced: Both of the above amendments improve the law by ensuring that it is administered fairly and used to target serious corrupt acts, rather than being wielded as a political weapon to punish partisan adversaries for good-faith mistakes.

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How to Reform Brazil’s Freedom of Information Regime

Ten years ago, Brazil enacted its Access to Information Law, which implements the constitutional guarantee of the right to information. Under the law, certain government data must be proactively disclosed, and other information must be provided upon the request of a member of the public, without the requester needing to show any special reason or justification. This law was supplemented with the enactment, last March, of the Digital Government Law, which streamlines the procedures for information requests, clarifies the government’s obligations to provide information in an open format that fulfills completeness, quality, and integrity requirements, and includes a non-exhaustive list of data that must be disclosed.

These laws, like other freedom of information laws, are intended to make government more responsive and accountable and to help fight corruption by making it easier for citizens, journalists, advocacy groups, and prosecutors to scrutinize and analyze government information for evidence of suspicious activity. But while the laws are very detailed about the rules for disclosing information upon request, the law’s provisions on proactive disclosure are not sufficiently specific or effective. And proactive disclosure is quite important. After all, while the right to request information is helpful to those who want to investigate a specific event, the proactive disclosure of data—for example, with respect to public expenditure, public procurement processes, and public contracts—may raise “red flags” that can spur more in-depth investigations.

There are three deficiencies in particular that should be remedied, so that Brazil’s freedom of information laws can be effective in ensuring the sorts of proactive information disclosure that can foster transparency and detect or deter corruption:

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The End of Institutional Multiplicity: A Drawback in the New Administrative Improbity Law

Brazil’s Administrative Improbity Law is one of the cornerstones of the country’s anticorruption framework. The law imposes administrative and civil liability on public officials and political agents for illicit enrichment, damage to the treasury, and acts against the principles of public administration. Before its enactment in 1992, these forms of misconduct were only punishable under criminal law, which imposes a much more demanding evidentiary standard. The enactment of the Administrative Improbity Law thus played a valuable role in enabling the government to hold corrupt actors liable in those situations where the evidence of corruption, though strong, was not enough to establish proof beyond a reasonable doubt.

This past October, the Brazilian government enacted significant amendments to the Administrative Improbity Law. Some of these changes were welcome, particularly those that clarified vague provisions and attempted to speed up the process. (Brazilian courts have taken on average six years to adjudicate administrative improbity claims.) But another change is much less welcome: The amendments to the law reduced the number of institutions that can file a suit for violations of the law. Under the original version of the law, a suit could be initiated either by the Public Prosecution Office (an autonomous body) or by the government entity that was harmed by the corrupt act (the federal Attorney General’s Office in the case of acts that harm the national government, and the state or municipal authorities in the case of acts that harmed subnational government entities). This arrangement is a form of what Brazilian scholars typically refer to as institutional multiplicity—an arrangement where multiple institutions have overlapping authority to enforce legal provisions. Institutional multiplicity is a key feature of Brazil’s anticorruption framework. The new version of the Administrative Improbity Law scraps this multiplicity, at least in this context, by giving the Public Prosecution Office the exclusive right to file administrative improbity suits.

This is a mistake.

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Guest Post: What Should Brazil’s Next President Do To Get the Anticorruption Agenda Back on Track?

Today’s guest post is from Marcelo Malheiros Cerqueira, a Brazilian federal prosecutor and a member of the GAECO/MPF (Special Action Group for Combating Organized Crime) in the state of Minas Gerais, Brazil.

Since 2019, Brazil´s anticorruption efforts have been disrupted and derailed. Institutions in charge of fighting corruption are being constantly weakened or attacked. Tools that have been central to Brazilian prosecutors’ anticorruption investigations, such as plea bargains and leniency agreements, are being dismantled by new legislation, and the Congress has not moved forward on proposals that would enhance the fight against corruption (see here and here). The judiciary, mainly by its Supreme Court, has have nullified convictions, or sometimes entire investigations, in major corruption cases, and in so doing has weakened the anticorruption system (see some examples herehere and also here). And despite the fact that anticorruption was a central theme of the 2018 presidential campaign, the government has been questioned for lending its support to pushback against the anticorruption agenda and politicizing formerly non-partisan bodies like the Federal Police.

While the backlash against Brazil’s anticorruption efforts is a three-branch problem, Brazilian voters have an opportunity to address at least one aspect of the problem next year, when they go to the polls to select Brazil’s next president.

This brings us to the question: What should the next Brazilian president do, whoever he or she may be? To put this question another way, when voters and civil society organizations are assessing the future presidential candidates’ anticorruption platforms, what sorts of policies and proposals should they look for? While the issue is obviously quite complicated, here are four initial proposals, from the simplest to the most difficult to implement:

  • First, the president needs to demonstrate a commitment to integrity as a core values of the administration—and must do so not simply through rhetoric, but by taking practical action such as refusing to appoint individuals implicated in corruption cases to senior government positions and pushing for the adoption of integrity measures at lower levels of the bureaucratic hierarchy. Doing so will not only help ensure integrity in the Federal government, but will also set a positive example for state governors and mayors, and help foster a culture of integrity more broadly in the society.
  • Second, the president should respect and empower the institutions of the anticorruption system, avoiding any risk of their political capture. This requires that the appointment of directors for bodies such as the Financial Activity Control Council (COAF), the Federal Police, and the Comptroller General of the Union (CGU) be guided by non-partisan technical criteria, instead of making appointments on the basis of political alignment or personal relationships. Likewise, the next president should restore the longstanding tradition of choosing the Prosecutor General of the Republic (PGR) from the list of three candidates previously voted by the members of the Federal Prosecution Office. This model is ideal for guaranteeing the autonomy of the PGR, which, in turn, is essential for the criminal investigation and prosecution of higher-ranking political agents (including the president) for possible acts of corruption.
  • Third, the president must commit to working to enact legislative and constitutional reforms that decrease impunity for acts of corruption, such as the proposed constitutional amendments to allow incarceration of defendants after the first affirmation of a conviction in an appeal´s court (rather than allowing convicted defendants to remain at liberty until all possible appeals are exhausted) and end to the “privileged forum” rule that says high-level public officials can only be tried in higher courts. On the other hand, the president must also oppose—and if necessary veto—any attempt by the Congress to inhibit the action of anticorruption bodies or to weaken existing anticorruption tools (as unfortunately occurred recently with respect to amendments to Brazil’s Administrative Misconduct Act).
  • Fourth, the most difficult anticorruption challenge facing Brazil’s next president will be reforming the Brazilian electoral system, which is a root cause of the grand corruption that recent investigations have exposed. Any attempt to change the electoral system will face strong opposition by influential politicians, whose power relies in rules that ensure expensive campaigns and unequal distribution of the public electoral fund. Thus, the president must spearhead the attempt to reform the political system—but should probably only do so when he or she has sufficient high public approval, probably after the implementation of the other three proposals mentioned above.

This short list obviously does not encompass all the possible measures that can be taken by the next president against corruption. It would be helpful to know what GAB readers think about these suggestions, as well as what other proposals they might suggest.

One last word. Political leaders can do a lot to help the anticorruption agenda. But that does not mean that societies depend exclusively on them. Good education, transparency, popular control, high standards of morality and many other factors are crucial to the success of the fight against corruption. Therefore, although the central question posed here brings the opportunity to debate the role of the president, civil society also needs to take care of its role.