Newsletter ' May/20 | White Collar

• Published date: 08 July 2020
• Subject Matter: Criminal Law, White Collar Crime, Anti-Corruption & Fraud
• Law Firm: Koury Lopes Advogados
• Author: Koury Lopes Advogados

THE COURT OF APPEALS OF S'O PAULO DECIDED THAT THE COMPANIES WHOSE PARTNERS WERE INDICTED FOR BID RIGGING CANNOT BE EXCLUDED FROM ALL BIDS AND CONTRACTS WITH PUBLIC ADMINISTRATION

The Court of Appeals of S'o Paulo ("TJSP") decided that it is excessive the precautionary measure that excluded companies from all public bids and contracts with the Public Administration due to the indictment of its partners for bid rigging crime.

Article 319, VI, of the Code of Criminal Procedure provides as one of the precautionary measures other than prison, the "suspension of public function or of an economic or financial activity when there is founded reason that it could be used for the practice of criminal offenses. ".

The Justice of the Court of Appeals, Leme Garcia, underpinned that the supposed fraud had been committed when the companies participated in a bidding together. Therefore, the Justice limited the precautionary measure only to bids in which the companies would partake simultaneously.

The indicted companies also were unable to extend or renew the contracts and obligations resulted of the rigged bids.

It should be noted that these measures are precautionary and were imposed before the due process and sentencing of those involved in the alleged illegal practices. The imposition of precautionary measures of this nature, at the beginning of a criminal proceeding, can cause serious financial and economic impacts on companies without proof of the alleged illegal practice Thus, the decision of the TJSP that prohibited both companies of participating in the same bid is a way of making the precautionary measure to avoid possible new bidding irregularities compatible with the economic activity of the companies.

However, it is necessary to question whether it would be possible to apply precautionary measures other than prison against the companies involved. The criminal action was filed against individuals, since legal entities can only be held responsible in the criminal sphere for environmental crimes. Thus, in case of a conviction, the penalties imposed will be restricted to the individuals involved. Consequently, there would be no sense in imposing precautionary measures to guarantee a criminal action that, even in the worst scenario of conviction, would not reach the companies.

Therefore, in our opinion, the precautionary measure of "suspension of the public function or activity of an economic or financial nature", provided for in article 319, VI, of the Penal...