In Brazil, as a general rule, only individuals are criminally liable. Criminal liability of legal entities is an exception under the Brazilian law, and it is only possible in case of environmental crimes.
Economic and corporate crime have been gaining relevance in Brazil. Since the 1980’s, several bills of law about economic and corporate crimes were approved. Among this new legislation are the crimes against the financial system, (Law n. 7,492/1986), crimes against the consumer relations (Law n. 8,078/1990), tax and economic crimes (Law n. 8,137/1990), crimes in the context of public bids (Law n. 8,666/1993), crimes against intellectual property (Law. 9,272/1996), crimes against the environment (Law n. 9,605/1998), money laundering (Law n. 9,613/1998), crimes against the public finances (Law n. 10,028/2000), crimes against the capital market (Law n. 10,303/2001), and antitrust crimes (Law n. 12,529/2013). All of these crimes can also be committed by criminal organizations (Law n. 12,850/2013, the same law that regulated criminal collaboration agreements).
The expansion of Criminal Law during the last decades increased the risk of criminal exposure in the business environment. There are concrete effects of this new scenario in some cases in Brazil that became nationally and internationally known, such as “Mensalão”, Operation Car Wash, Operation Zelotes, Operation Greenfield, and accidents involving tailings dams in the State of Minas Gerais.
Criminal Liability in Brazil
Criminal liability in Brazil is personal and subjective. This means that criminal penalties cannot reach other individuals then the ones who were responsible for committing the wrongdoing, since strict liability is not allowed in the criminal sphere. There are some situation, though, where certain individuals must act to avoid the occurrence of a certain crime.
According to the Brazilian law, everyone who contributed, somehow, for a crime are liable for such action.
Therefore, there are two ways to perform a criminal conduct: through an action or an omission. Specially in the context of economic and corporate crimes, the so called “improper omission crimes” deserve special attention. Those crimes can only be committed by individuals who have the duty and can act in order to avoid a wrongdoing, even if the action is committed by a third part.
Improper omission establishes a special form of criminal liability. The individual must (i) have a legal duty to act to avoid the illicit result, and (ii) besides that, in a concrete case, have the capacity to adopt effective measures to avoid the occurrence of the crime. If the individual fails to comply with this legal duty, he/she will be liable as if he/she had directly committed the crime.
Officers and directors of companies in Brazil are individuals who may hold such legal duty to avoid the occurrence of wrongdoings committed by their subordinates and employees. This is not a general duty. The exact scope of this duty will be defined in each concrete case, depending on how functions and duties are divided inside a company structure.
This same rationale will also be applied to verify if compliance officers may be criminally liable when a member of the staff commits a crime, even if the wrongdoings result in a financial gain to the company.
Therefore, general guidelines provided by officers and directors to all the company or the simples review and signature of documents drafted by subordinates may, or may not, base criminal liability when a wrongdoing is committed in the context of a business activity (for instance, a fraud, an environmental crime, tax evasion, or even corruption of public agents). There is not a general formula, because each case will depend on the distribution of responsibilities and powers inside a company and its internal controls.
Nonetheless, criminal liability does not depend only of an action that is set forth in law as a crime. Criminal liability also depends of evidence that an action was committed with intent or negligence.
In Brazil, as a general rule, crimes must be committed with criminal intent. Negligent crimes are exceptions that are expressly set forth in the criminal law. As result, there are no crimes as money laundering, tax evasion, or insider trading if the individuals acts with negligence.
Recent criminal cases and criminal charges’ strategies
Usually, criminal accusations are brought to curt when the Public Prosecutor press charges. Just in a few crimes, the victim is the one responsible for pressing charges. Crimes against the honor and unfair competition are examples of crimes that depend of the victim to press charges through a criminal complaint.
Recently, some cases became largely known in the media, because they disclosed large criminal schemes that allegedly involved the private and the public sector.
The “Mensalão” was a criminal lawsuit initiated in 2012 by the Brazilian Federal Supreme Court (AP n. 470) mainly involving corruption and money laundering schemes between political parties and companies. The strategy used to found several individuals guilty was the allegation that such individuals had the “control of the facts”, which means, they coordinated the criminal actions, even though it was not possible to evidence their direct participation in the execution of the wrongdoing.
Operation Car Wash is a compound of criminal lawsuits, many of them still ongoing, whose target is the occurrence of the crimes of corruption, money laundering, and criminal conspiracy involving public agents and businesspersons, mainly from the construction sector. The main victim of this scheme was the Brazilian oil company Petrobras and most of the convictions were only possible due to fact that came to light in criminal cooperation agreements.
Operation Zelotes – which is also ongoing – took apart a corruption scheme involving companies in the trial of major tax cases by the Administrative Counsel of Tax Appeals (CARF). In the same way of the Operation Car Wash, criminal charges reached the C-Suite of companies allegedly involved in the criminal facts.
Operation Greenfield, launched in 2016, investigates fraudulent and daring investments made by Brazilian pension funds. The common element to the cases covered by this operation is the accusation of fraudulent or daring administration of financial institutions – in the last case, a willful intent crime that is the result of non-compliance of a number of duties by individuals with management power over such institutions.
In 2015 and 2019, two tailings dams broke up in the State of Minas Gerais, causing the death of several persons. In one of the cases, the shareholders, the presidency, officers, managers, and technicians of the company, and, in the other, individuals from the presidency to the technical level, were charged for the crime of willful homicide – considering that, according to the Public Prosecutor’s Office, these individuals should and could act to avoid the disruption and, with their omission, assumed the risk to cause the death of others – besides some environmental crimes.
The analysis of these concrete cases, based on public available information, shows that all criminal charges try to hold the top management of the companies criminally liable, for actions as well as for omissions.
Besides that, this course of action shows the use by Public Prosecutors and the Courts of theories like the “control of the fact” and the willful blindness, two foreign theories: the first from German origin, deals abut the definition of who is the perpetrator or participant in a crime; the second, Anglo-American, was developed to input criminal liability when an individual avoids knowing facts that may reveal the occurrence of a crime that involves him/her. Both have served to convict individuals, but their use depends on careful evaluation so that unfair convictions do not occur.
Possible conclusions considering the current Brazilian scenario
The current scenario of economic and corporate crime cases in Brazil shows a more severe position in the criminal enforcement of conduct in the business environment, not only by those in the lowest hierarchical position, but mainly against those at the top of the companies, in management; in some cases, even shareholders can be reached.
In this context, it is essential that companies have effective integrity systems and clear corporate management controls. Such instruments not only allow the detection and prevention of crimes, but also help in the identification of individuals who, within the business structure, actually contributed, in some way, for the crime to occur, even if the wrongdoing resulted in financial gain for the company (for instance, an environmental or tax crime committed with the intention of trying to save the costs and expenses for a certain company).
Although there are strategies to reach the criminal liability of the top management of companies, it will only be possible to convict an individual if there is effective proof that he/she personally, even though may have acted otherwise, caused the illicit result or consciously contributed to the practice of the crime. Any other attempt of assigning criminal liability that fails to observe this premise is mistaken and cannot be accepted, because there is no strict criminal liability in Brazil.
Criminal liability of administrators in environmental crimes
Legal protection of the environment has been subject of a clear evolutionary process. Until the mid-twentieth century, the protection of the environment as a legal asset with an autonomous value practically did not exist 1. With the advent of the Federal Constitution of 1988, the environment was raised to a constitutional right guaranteed to every citizen through article 225 of the Citizen Charter and, from there, the so-called triple accountability – civil, administrative and criminal – for acts harmful to the environment arose 2.
From the constitutional relevance that the Legislator decided to give to the protection of the environment, its condition of criminal juridical asset came from the constitutional text itself, with express provision for criminal liability of individuals and legal entities for conduct and activities harmful to the environment 3. In fact, pursuant to the third paragraph of the aforementioned article 225 of the Brazilian Federal Constitution, “the conduct and activities considered harmful to the environment will subject violators, individuals or legal entities, to criminal and administrative sanctions, regardless of the obligation to repair the damage caused.” (art. 225, §3rd, FC).
To regulate this constitutional provision, Law n. 9.605, dated February 12, 1998, was created, a decade later, in which the criminal liability for environmental crimes was defined. According to the infra-constitutional text “whoever, in any case, practices the crimes provided for in this Law, incurs the penalties imposed on it, to the extent of its guilt, as well as the officer, the administrator, the board and technical body member, the auditor, the manager, the representative or agent of a legal entity, who, knowing about the criminal conduct of another, fails to prevent its practice, when it could act to avoid it”(art. 2, of Law no. 9,605/1998).
Therefore, in addition to the criminal responsibility of that person who, with a given action, contributes to the criminal result, the Brazilian criminal law also recognized the improper omissive criminal responsibility of that manager, who, knowing the criminal activity, fails to act to prevent its outcome, raising officers, administrators, members of boards of directors, managers or any other company representative to the condition of guarantor 4.
As in any other sphere of application of the criminal law, also in the context of environmental crimes, the criminal liability of individuals should be guided by the principles of Criminal Law and be personal and subjective, that is, the harmful result shall present a clear causal link with a conduct – commissive or omissive – of an individual so that the application of criminal law becomes legitimate.
However, crimes committed in large corporate structures pose the challenge of individualizing conduct and roles, consequently, of the correct, legitimate, and proportional criminal liability 5.
The hallmark of corporate crime is the division of tasks vertically, that is, the dissociation between those who decide to commit a crime and those who actually commit it in the company’s daily activities, and the horizontal division of tasks, that is, a very clear division of roles and responsibilities between different boards and departments 6.
From this dispersion of roles in large corporations, the risk of impunity arose, that is, the risk that no individual will be held responsible for a given fact that is harmful to the environment because the complete criminal action is not within the scope of anybody’s duties.
In order to solve situations like these, which are increasingly common in environmental crimes committed by large corporations, traditional concepts of criminal law were adapted to apply to corporate crime.
On the one hand, in relation to commissive crimes, it is possible to speak of criminal liability of administrators for mediate authorship in situations in which managers use subordinates for criminal practice. In this case, administrators may be aware and intent on criminal practice, but they use their hierarchical subordinates to effectively act. In this context, they can be fully responsible for the actions of their employees if it is proven that these employees acted according to the orders given by them.
On the other hand, there are the improper omissive crimes, those in relation to which the administrator omits when it should prevent the result. To better understand this type of criminal accountability, it is necessary, first, to analyze the nature of crimes against the environment.
The environmental crime is rarely practiced with direct intent, that is, the author of the crime rarely wished to deliberately harm the environment. Normally, when we are dealing with criminal liability for environmental crimes, we are dealing with indirect intent – a situation in which the agent wants other result but predicts and accepts that the result harmful to the environment will occur – or guilt – a situation in which the agent predicts the harmful result to the environment but hopes to be able to avoid it (conscious guilt) or does not even expect that that particular damage to the environment could occur (unconscious guilt).
The environmental offender, at least in the scope of the business activity, acts on behalf and for the benefit of the company, focused on business activity, and the harmful result to the environment is like an undesirable by-product of the production process 7. However, it is from this concept that the condition of guarantor of the company’s administrators is born and, therefore, their failure to avoid the harmful result to the environment becomes criminally relevant.
This is because, in the search for the economic result desired by the business activity, the entrepreneur creates the risk of the occurrence of the harmful result to the environment and, for this reason, it has, by legal definition (art. 13, §2, c, of the Brazilian Penal Code), the duty to act to prevent this criminal outcome. It is what Heloísa Estellita calls the binomial freedom-responsibility, that is, from the freedom to manage the company in order to achieve the best economic result comes the responsibility to ensure that the business activity does not result in risks to the community 8.
It is evident, however, that it is not enough for criminal liability that the administrator is included in the articles of association of the company, under penalty of incurring unacceptable strict liability in criminal matters. The administrator shall in fact exercise management activities of that specific activity area that resulted in the damage, that is, this duty to act to prevent the result must be within the sphere of duties of the individual – administrator, officer, manager – to be held responsible.
In small companies, however, the situation is different and accountability for omission of managing partners is often direct, since, in these cases, it is assumed that the manager must be aware of the duties of all its employees. In small companies, it is possible to know in depth the roles that are given to each of its employees and the administrator must know and inspect how these activities are carried out. For the Superior Court of Justice, “not being the case of a large legal entity, where many agents could practice criminal conduct in favor of the company, but of a small legal entity, where decisions are unified in the manager and the crime comes of the legal entity in its favor, the causal link between the result of the conduct verified by the activity of the company and the personal responsibility and subjective fault of its manager can be admitted.” (STJ, HC 71.109/PA, 6th Panel, Rapporteur Minister Néfi Cordeiro, DJe 08/26/2016).
But in large corporations, it is worth repeating, the difficulty of delimiting duties and powers is great and, usually, the tasks are so fragmented and compartmentalized, that no individual has in its sphere of duties enough elements to enable the identification of a typical conduct.
In these cases, in addition to the impunity of individuals, the legal system also faced the complete ineffectiveness of the constitutional rule that allowed criminal liability of legal entities. This is because the infra-constitutional legislation limited this criminal liability of companies to cases in which the violation was committed by decision of their legal representative and for their benefit.
In this scenario, national jurisprudence historically understood that corporate environmental crimes are multi-subjective and of necessary competition, that is, if it is not possible to individualize conduct within large corporations in order to criminally hold individuals accountable, it would also not be possible to punish legal entities separately, whose criminal liability was subject and limited to the concomitant criminal liability of individuals who would have acted on behalf of the entity. It was what the doctrine came to call the Double Imputation Theory, accepted by the Superior Court of Justice until 2013.
It was only with the paradigmatic judgment of Extraordinary Appeal n. 548.181/PA, of the Supreme Court, that the isolated criminal liability of the legal entity has now been admitted in cases where, given the complexity of the business structure, it is impossible to identify the individuals to whom a criminal act could be assigned 9, which it was agreed to be called the Assignment Theory. For Minister Rosa Weber, Rapporteur of the appeal responsible for changing the jurisprudential understanding, “the complex corporate organizations nowadays are characterized by the decentralization and distribution of roles and responsibilities, being inherent, in this reality, the difficulties to attribute the illicit fact to a concrete person” (STF, RE 548.181/PR, Rapporteur Minister Rosa Weber, 1st Panel, j. 08/06/2013, DJe 10/29/2014). Even so, it is possible to identify conducts “to clarify whether individuals acted or deliberated in the regular exercise of their duties internal to the company, and also to verify whether the performance occurred in the interest or benefit of the corporate body” (STF, RE 548.181/PR, Rapporteur Minister Rosa Weber, 1st Panel, j. 08/06/2013, DJe 10/29/2014), in order to make at least the criminal liability of the legal entity feasible.
In spite of the new Supreme Court jurisprudential guidance, which appears as an attempt to reduce impunity for environmental crimes committed within companies with complex corporate structures, the truth is that the difficulty faced by the legal system to impose criminal reprimands in these cases, without harming basic principles of criminal law, points to the conclusion that administrative sanctions are much more efficient and effective in regulating complex relationships in business life than the indiscriminate use of criminal law.
1 – Da Cruz, Ana Paula Fernandes Nogueira. Crimes Ambientais. Comentários à Lei 9.605/98. Ana Maria Moreira Marchesan e Annelise Monteiro Steigleder (org.). Porto Alegre: Livraria do Advogado Editora, 2013, p. 27.
2 – Marchesan, Ana Maria Moreira e Capelli, Silvia. Crimes Ambientais. Comentários `s Lei 9.605/98. Ana Maria Moreira Marchesan e Annelise Monteiro Steigleder (org.). Portol Alegre: Livraia do Advogado Editora, 2013, p. 23.
3 – Azevedo, Carlos Henrique Almeida José. A responsabilidade penal isolada das pessoas jurídicas em crimes ambientais. Revista dos Tribunais. Revista do Direito Ambiental, vol. 95/2019, pp. 77-104, jul-set. 2019.
4 – For the Brazilian Penal Code, the figure of the guarantor is the one who has the duty to act to prevent the criminal result: “Art. 13 – The result, on which the existence of the crime depends, is only attributable to the person who caused it. Cause is the action or omission without which the result would not have occurred. (…) §2 – The omission is criminally relevant when the person who omits should and could act to avoid the result. The duty to act is the responsibility of the person who: a) has by law an obligation of care, protection or surveillance; b) otherwise, assumed the responsibility for preventing the result; c) with its previous behavior, created the risk of the result occurring.
5 – Estellita, Heloísa. Quando o crime se oculta na empresa, Folha de São Paulo, 01/11/2015.
6 – Idem, ibidem.
7 – Da Cruz, Ana Paula Fernandes Nogueira. Crimes Ambientais. Comentários `s Lei 9.605/98. Ana Maria Moreira Marchesan e Annelise Monteiro Steigleder (org.). Portol Alegre: Livraia do Advogado Editora, 2013, p. 27.
8 – Estellita, Heloísa. Responsabilidad por omisión de los membros de consejos de administración. Derecho Penal, a`no IV, número 7, pp. 78-79.
9 – Azevedo, Carlos Henrique Almeida José. A responsabilidade penal isolada das pessoas jurídicas em crimes ambientais. Revista dos Tribunais. Revista do Direito Ambiental, vol. 95/2019, pp. 77-104, jul-set. 2019.
Authors: João Augusto Gameiro and Tiago Caruso Torres
Trench, Rossi e Watanabe Advogados
em cooperação com Baker & McKenzie
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