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Acting Brazil President Dissolves Anti-Corruption Agency

The first formal act of Brazil’s interim president has been a Provisional Measure that completely dissolves Brazil’s main anti-corruption enforcement agency, the Comptroller General (CGU).

Michel Temer, pictured left, who assumed office yesterday following Dilma Rousseff’s removal to stand trial for impeachment, approved the Provisional Measure No. 726 of May 12, 2016, which was published today in the Brazilian Official Gazette.

This Provisional Measure dissolved and/or merged a series of Ministries of the Brazilian Federal Executive Power, changing the entire structure of the Federal Government.

The CGU authored Brazil’s watershed 2014 anti-corruption law, the Clean Company Act, and was charged with principal enforcement authority over corporations.

Temer has replaced the CGU with a new Ministry of Transparency, Monitoring and Control. His motives for doing so remain unclear, as do the composition and powers of the new Ministry. It appears to be an effort to streamline federal agencies, cutting costs in a time of recession and spiraling deficits.

The measure may change the CGU in name only while preserving important enforcement authority.  But it may not. The impact on anti-corruption enforcement remains unclear.

We are of course following the story closely and will post updates on the FCPA Blog.

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Luiz Phillip Guarani Moreira is an Associate Attorney in the Compliance and Anti-corruption practice of Souza, Cescon, Barrieu & Flesch Advogados in São Paulo, Brazil.

Andy Spalding is a Senior Editor of the FCPA Blog and Associate Professor at the University of Richmond School of Law. He’ll be a moderator and panelist at the FCPA Blog NYC Conference 2016.

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8 Comments

  1. This is definitely an interesting undertaking by the Interim President, and it speaks volumes that it was his first formal act during this period of economic and political crisis in Brazil. Hopefully, the impact on anti-corruption enforcement will be positive (e.g. enhance efficiency) and it is not an attempt to weaken the Federal Government's ability to pursue alleged corruption. Given the focus on the Petrobras prosecutions and related political corruption cases, the Federal Government can ill afford to further violate the public trust by undermining enforcement of the CCA. Looking forward to future updates.

  2. Dear sirs,
    I have to say that the post is misleading and reflects a very negative view on the measures adopted. The topic is misleading, since it strongly suggests that the new government has no commitment to the fight against corruption. Needless to say that all the corruption under investigation in Brazil was a result of the independent investigators and the CGU had an almost non-existing role in that regard. On the contrary, the head of the CGU have been said to be quite lenient towards the companies under investigation. See that Provisional Measure No. 703, known for undermining the new anticorruption law, was proposed by the former government and had the CGU participation.
    The measure is just a simple administrative reorganization. No employee was fired but those with political connections. There is no indication that the new anticorruption agency will be anyhow weakened.
    Please correct the title of the post. It really goes against the stated intentions of the government.
    Regards,

  3. For those who follow Brazil closely, CGU was an effective organization, at its principle. Under Dilma it became, in my opinion, mostly sterilized. As Federal Judge Sergio Moro says, we should do anything in our power to avoid the maneuvres done in Operation Clean Hands (Mani puliti) in Italy in the 90`s, when politicians not only continued misbehaving, but created obstacles to the investigation and conviction of crimes against public administration. Fact is that CGU will remain the same, but the only lasting hope of reducing "Systemic Corruption", as instituted by PT (Workers`Party) is the ongoing mobilization of the population. Nothing works on politicians more effectively than the voice of the streets.

  4. I must agree with Julius Frank. Even at Wikipedia the respective articule is clear about the continuity of those anti-corruption activities

  5. This is untrue. The new Brazilian President simply changed the name of the Comptroller General Federal Agency.

  6. Frank's position is absolutely right. Where did the authors get all this information?

  7. Sorry, but the comments here are sadly tendencious. We don't know yet what will happen with CGU, but the fact is that it has been put on lower relevance. The 12.846 law and related regulation have been made by CGU! What world you live in?

  8. Actually, they just change the name of CGU – Controladoria Geral da União (Federal General Control Agency) to Ministério da Transparência, Fiscalização e Controle (Ministry of Transparency , Monitoring and Control). Despite the fact the head of CGU already had "Minister status", the new government gave more status formally recognizing as "Ministry". Therefore, I think the title of the article is misleading.


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