Brazil: whistleblowing implementation and whistleblower protection

RIO DE JANEIRO, BRAZIL – With the introduction of the Inter-American Convention against Corruption in 1997, the anti-corruption agenda gained significant prominence in Latin America. Several countries in the region began to execute the various commands emanating from that convention internally, and, for their due compliance, a mechanism was created to monitor the convention’s implementation.

It is important to mention that the internationalization of the anti-corruption agenda is an important strategy for local governments, often themselves involved in corruption, to be charged by their international peers and thus constrained to implement internally anti-corruption mechanisms. Because if they were executed by themselves, the internal groups benefiting from corruption would put tremendous pressure on this agenda to be blocked. Hence the importance of administrative structures in these international organizations to monitor the implementation of the conventions and issue periodic reports.

In the wake of the internationalization of the anti-corruption agenda in Latin America, several countries were also signatories of the United Nations (UN) Convention against Corruption of 2003. Among them Brazil.

Within a series of tools to fight corruption prescribed by these two conventions, we highlight whistleblowing, which involves the interrelationship of the state structure and the private sector, both with the participation of civil society.

First, it is vital to begin with the meaning of whistleblowing through a classic conceptualization. Whistleblowing is the disclosure by organization members (former or current) of illegal, immoral, or illegitimate practices for the control of them by employers, persons, or organizations that may be able to carry out such actions.

In most cases, whistleblowers are the primary source of fraud detection. In the United States, they represent 40% of the source of information, compared to 15% from internal audits, according to 2020 data from the Association of Certified Fraud Examiners.

Globally, there is data indicating that of the three most relevant fraud exposure methods, whistleblowers top the list, accounting for 41% of mechanisms in use, followed by external audit, with a percentage of 31%, according to the Global Fraud and Risk Report 2019/2020.

Thus, whistleblowing is a more efficient mechanism than auditing (internal or external) for detecting fraud in an organization.

It is important to clarify that whistleblowers, which we will call reporters here, are not restricted to members of organizations. They are citizens, members of society in general, journalists, you, and me. We are all potential whistleblowers, and we need to be protected. States must provide us with legal protection.

Brazil has advanced on this agenda in recent years, despite several reports from the Follow-up Mechanism for the Implementation of the Inter-American Convention against Corruption (Mesicic) of the Organization of American States (OAS), which makes numerous recommendations to countries to improve their mechanisms, especially concerning the protection of the reporter.

Initially, we have an evolution of jurisprudence in recent years in the Federal Supreme Court, which initially rejected anonymous denunciation in 2003, but now has been recognizing the admissibility of anonymous denunciation in its judgments, in which it is admitted that the anonymous denunciation in the criminal prosecution, based, of course, on further steps to investigate the facts reported therein. The police authority must conduct a preliminary analysis of the plausibility of the report to open an inquiry formally.

In addition to the positions of the highest national court, there was a crucial legislative innovation, both for the public and private sectors, in the last ten years.

In the private sector, Law No. 12,846 was issued on August 1, 2013, which only came into effect in 2014, known as the Anti-Corruption Law, with a tremendous timidity in fostering a whistleblowing policy, because it made integrity programs in the corporate world, which provided for channels for denunciations and a possible protection policy for whistleblowers, optional for the private sector.

In the public sector, with the edition of Law No. 13,608 of January 10, 2018, there was the recognition of some important institutes components of the whistleblowing policy for the prevention, repression, or ascertainment of crimes or administrative offenses:

(a) Guarantee of anonymity (Article 1, item II);

(b) Confidentiality of informant’s data (article 3); and

(c) Reward (article 4).

In 2019, there are now some more additions within the scope of this policy in the public sphere, with the edition of Law No. 13,964, dated December 24, 2019, coming from the “anti-crime” package as:

(a) An institutionalized channel to receive reports;

(b) Full protection against retaliation and exemption from civil or criminal liability of the reporter concerning the report;

(c) Disclosure of the identity of the reporter will only be made upon prior communication to them and with their formal agreement;

(d) Removal from public service for the severe disciplinary fault of the agent committing the retaliation;

(e) Double compensation to the reporter for any material damage caused by actions or omissions in the scope of the retaliation, without prejudice to moral damages; and

(f) Reward in favor of the reporter in the amount of up to 5% of the recovered value.

At the federal Executive Branch level, the whistleblower protection policy has been materialized at the administrative level through regulations issued throughout the years 2019 to 2021, through Decrees No. 10,153, of December 3, 2019 No. 10,890, of December 9, 2021. The first protects the reporter’s identity, and the second, in turn, protects against retaliation.

The first is the regulation of confidentiality, called by the decree pseudonymization, which is the treatment by which a data loses the possibility of an association, direct or indirect, to an individual, if not by the use of additional information kept separately by the controller in a controlled and secure environment. The reporter has their identity preserved by dissociating their identity/identifying elements and their report by the federal ombudsman system.

We highlight article 6 of the decree mentioned above, which notes that the reporter will have their identifying elements preserved from the receipt of the complaint, according to the provisions of §7 of article 10 of Law No. 13,460 of 2017, and the ombudsman unit responsible for handling the complaint must provide their pseudonymization for subsequent submission to the competent investigative bodies.

Access restriction is also granted to the reporter’s identification elements, which must be maintained by the ombudsman unit for 100 years, according to the provisions of item I of Paragraph 1 of Article 31 of the Access to Information Law.

In addition to pseudonymization, which is the procedure for operationalizing confidentiality, an important point to note is that the ombudsman units that handle the complaint, concerning the identification elements of the reporter that are deposited in the computerized systems for receiving it, will have access control that records the names of public agents who access the complaints and the respective dates of access to them.

The second decree, at the end of 2021, established the competence of the Office of the Comptroller General to protect or mitigate the retaliation suffered by whistleblowers.

Thus, it is now up to the Office of the Comptroller General, at the federal level, to receive and investigate complaints regarding retaliation practices against reporters, practiced by public agents of federal agencies and entities, initiating and judging the proceedings for administrative accountability resulting from such investigations, in addition to suspending administrative acts practiced in retaliation to the right to report.

Moreover, in addition to the repressive disciplinary measures, the Federal Comptroller’s Office may proceed to adopt or determine, ex officio, protection measures against actions or omissions practiced in retaliation for the exercise of the right to report, such as arbitrary dismissal, unjustified change of duties or assignments, imposition of sanctions, of damages to pay or materials of any kind, withdrawal of benefits, direct or indirect, or refusal to provide positive professional references, provided in the caput of Article 4-C of Law No. 13,608, 2018.

Thus, it is verified in recent years, more specifically the last two, significant progress in the whistleblowing policy in Brazil, although restricted to the public sector without a more incisive legislative measure concerning the private sector, as adopted by France, through its Sapin II Law, of December 9, 2016, which made mandatory the whistleblowing policy in large corporations or sectors with a higher risk of corruption.

This conception in the whistleblowing policy in Brazil means that the anti-corruption policy is still understood as a state problem (agency problem), still characterizing a deficit in the treatment of corruption as a collective action problem that must involve and create conditions of reliability in the combat policy in all sectors of society, even more, the corporate sector.