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Doing Business in Brazil: Political and economic landscape

Licks Attorneys' COMPLIANCE Blog

HOW WHISTLEBLOWERS ARE TREATED IN BRAZIL AND IN THE USA

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Not many Brazilians are aware that Statute #13,964, of December 24, 2019, emerging from the former Justice Minister Sérgio Moro's anti-crime package, has brought a great innovation that could change the scenery of corruption  and other crimes in Brazil, especially the  "White collar” ones. It amended another Statute, #13,608, by introducing the role of the informer. Introducing protective measures therefor, such as: (i) full protection against retaliation, establishing specific sanctions for those who retaliate; (ii) exemption from civil or criminal liability in relation to a report in good faith; and (iii) identity confidentiality. Furthermore, the Statute provided for a reward of up to 5% of the amount recovered, when information results in recovery of revenue resulting from crimes against the public administration (government).

While Brazil's ignorance of the above information prevails, in the USA it was reported in September 2021, by The Wall Street Journal that the US Securities and Exchange Commission (SEC) rewarded about $114 million to two informers (also called whistleblowers).

The reward was in fact $110 million for a single informer, making it the second largest in the history of the SEC program, while the other informer received about US$4 million, as their information was much more limited.

It is important to highlight that the SEC whistleblower program has paid more than $1 billion to 207 informers since issuing its first reward in 2012.

This reward was instituted in the US by the Dodd-Frank Act (2010), under which a whistleblower can receive a reward of between 10% and 30% of fines imposed from a complaint in civil actions by SEC or other related agency provided that the fines are over $1 million.

It doesn't take a mathematician to understand that, in the worst-case scenario, the US Government has already imposed fines of over $3 billion, recovering important resources for public assets.

However, in Brazil, unfortunately, the dissemination of this important tool against relevant crimes, such as corruption, fraud, or money laundering, for instance, is not given the same importance. Certainly, the initiative would be of great value for the recovery of public assets dilapidated by criminals, acting actively or passively.

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