Por André Ferreira da R. Rocha.
It is only in the last ten years that incentives for whistleblowing have gained steam in Brazil. This has resulted from factors such as the recognition of plea bargaining (delação premiada) in Law Nº 12,850 of 2013 and the initiation, in 2014, of Operation Car Wash, the most extensive corruption investigation in the history of Brazil.
In 2020, the National Strategy to Combat Corruption and Money Laundering (ENCCLA) also recommended the creation of effective reporting channels “with the goal of fostering a permanent culture of trust in the efficiency and integrity of public institutions.”
The statutory framework created with the passage of Law Nº 13,608 of 2018 (which provided for a telephone hotline service) and the amendments to it contained in Law Nº 13.964 of 2019 (which improved criminal law and procedure) finally established the tripod that supports whistleblower incentivization, namely: (i) reporting channels, (ii) secrecy and protection and (iii) reward.
Unlike the delator (the accused party to a plea-bargaining agreement), the whistleblower is not a participant in the illegal act but is typically someone who occupies a position within the organization that gives him access to information on illicit acts committed by others. While a reduced sentence is the incentive for a delator to inform other co-offenders, the whistleblower’s incentive is to receive a monetary reward. While the delator will likely not get the punishment he deserves, the whistleblower should get what he deserves to incur the risks associated with providing the information that sparks the criminal investigation.
Some legislative proposals that deal with the whistleblower are pending in the Brazilian Congress. These draft laws were based on the document prepared by Transparency International and provides for the reporting channel in the private sector, including a very detailed treatment in the topic “Incentive Measures to the Whistleblower.”
However, neither the reward determined by current legislation nor those provided for in draft laws constitute a sufficient incentive for whistleblowing. The actual law establishes a “reward in favor of the informant in up to 5 percent of the recovered amount,” whereas one of the bills mentions 10 percent. By comparison, rewards in the United States under the Dodd-Frank Act range from 10 to 30 percent of the total monetary sanctions collected by a covered SEC action. Secrecy is also necessary to protect the informant from harm, and the reward must be proportional to the financial risk incurred. Accordingly, for a whistleblowing regime to be an effective tool for combating fraud and corruption, it must provide the informant adequate financial incentives and legal certainty regarding the appropriate reporting channels and the honoring of reward agreements.
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