Opinion, by Michael Royster

RIO DE JANEIRO, BRAZIL – January 29th, 2014, one year ago, Brazil’s first Anti-Corruption Law (12.846/13) came into effect, six months after it had been voted by Congress. It had three novel and drastic features: strict liability in civil in administrative cases; fines up to twenty percent of annual turnover; and leniency agreements for collaborating defendants.

Michael Royster, aka The Curmudgeon.
Michael Royster, aka The Curmudgeon.

Almost all federal laws are regulated, usually within six months, by a Decree, signed by the President. So far, no Decree has been issued. Many are asking the obvious question: “why not?”

Under the statute, the federal agency having regulatory powers is CGU, the Federal Controller’s Office. CGU, under other legislation, is responsible for overseeing the financial activities of companies controlled by the federal government—for instance Petrobras.

Last month, Dilma replaced the CGU head. Upon leaving, he said his “first priority” was to get the Anti-Corruption Act regulated, that he’d sent a draft Decree along and it was “being examined”. In his view, the only thing a decree should do is flesh out a provision about companies having compliance programs. Maybe he’s right; read on.

One of President Dilma’s nightmares (she has many these days) is that the first companies charged with corruption under Law 12.846 will be those in the Petrolão scandal. Dilma knows that none of them has ever had a functioning anti-corruption compliance program in place.

Far worse, as Dilma well knows because she chaired its Board of Directors for eight years, neither did Petrobras. During all those years, she saw no reason to institute a compliance program—doubtless because, as she claims, she didn’t know anything about any corruption.

Imagine the political fallout if a Decree signed by Dilma recommends compliance guidelines for private companies, but not for Petrobras. So, rest assured that the Decree will only be promulgated after Petrobras has fully implemented its own plan.

As the Curmudgeon will explain tomorrow in Impunity 102, a Smidgen, Dilma is working on several fronts to ensure that drastic penalties are not imposed on the Petrolão companies.
In a word, she favors impunity.

The Curmudgeon plans to emit another Smidgen tomorrow, and more Smidgens opportunely. Stay tuned.


  1. I think that Dilma is not sleeping well these days. We tend to look at these things differently than latins do. Latins are generally pretty short-sighted, that is, they don’t look ahead of their current administration. The hind-sight is only hindered by “convenient” lapses in memory. DILeMAS’ current vision is concentrating on trying to control the extent of the fallout, that is to say, find somebody to blame it on that is not in the PT or herself. Of course there will be fallout but what will it avail if Brazil goes on being Brazil? Jim Wygand has had some interesting and fairly accurate predictions of where Brazil is going based on current facts. What has to happen in order that Brazil gets its shit together and forms a government that has an economically feasible plan to establish Ordem e Progresso for its people and not its governmental administrators? The bubble has burst, the wheel was already loose now it has come off of the Brazilian wheelbarrow. Instead of the WHAT TO DO list getting shorter it is getting longer. Maybe its time for this expat to pull up stakes and move to Panama.


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