Brazil anti-graft head defends graft fines after backlash

Reuters News
Posted: Aug 31, 2017 5:25 PM

By Ricardo Brito

BRASILIA (Reuters) - A top Brazilian federal prosecutor defended the size of fines levied against companies involved in the nation's graft probes, saying that despite a public outcry some were too low, it was more important to dismantle the schemes than punish firms.

Fines of different sizes and different terms have raised concerns that Brazil's sweeping anti-corruption investigation may not be dishing out equal justice for all.

Marcelo Muscogliati, the coordinator of the anti-corruption committee within Brazil's federal prosecutors office, told Reuters on Wednesday that the main aim of the leniency deals which include the fines was to root out corruption.

"The deals are a tool to seek evidence, not to hand out fines," Muscogliati said. "The fine and reparations are secondary. What is important is dismantling criminal organizations, mafias."

Brazilian prosecutors came under withering criticism after they signed a 10.3 billion-real ($3.3 billion) leniency deal with the holding company running JBS SA, the world's largest meatpacker, in relation to kickbacks it paid politicians to win government investment deals and contracts.

Prosecutors gave the billionaire Batista family, which controls the company, 25 years to pay the fine and pegged it to Brazil's consumer price index, sharply reducing the penalty's net present value. According to Reuters calculations, the fine's net present value is 5.45 billion reais - about 47 percent less than in nominal terms. By contrast, a 3.9 billion-real fine that engineering group Odebrecht SA agreed to pay over 22 years will be adjusted by the benchmark overnight Selic interest rate, currently running well above annual inflation. A state attorney is investigating whether the Batistas' leniency deal harmed taxpayers' interests.

Federal prosecutors are working on creating clearer rules for future leniency deals to ensure more equal treatment in investigations into graft at top levels of private business, government and state-run enterprises.

Earlier this week, the federal prosecutors office released 18 new guidelines for reaching the accords, but nothing fresh on the size of fines companies should pay, telling prosecutors to refer to an existing law allowing fines of up to 20 percent of a company's net revenue.

Muscogliati said that if there were concrete guidelines on the fines for leniency deals, it would signal to firms a price tag they would pay if caught in corruption, money they would simply set aside.

Instead, prosecutors must focus on making leniency deals with companies making internal changes so that "they halt carrying out (corrupt) action and do not try to do it again."

(Reporting by Ricardo Brito; Editing by Andrew Hay)