Justice Luis R. Barroso (Brazilian Supreme Court) at Fordham Law School on fighting corruption in Brazil - US/Br NYC Mission on Compl.& Anticorruption

Still on our US/Brazil New York Mission on Compliance and Anticorruption, we had another opportunity to learn, discuss and share ideas with the most respected Justice from the Brazilian Supreme Court of all times: Justice Luis Roberto Barroso! And now I take this vehicle here to spread some basic keys of the lessons he indulged us there about the current situation of fighting corruption in Brazil over the next paragraphs.

This time, at Fordham Law School, with many of the most distinguished scholars and professors of compliance and anticorruption of both US and Brazil, Justice Barroso started his presentation explaining the concept of corruption and associating its idea with governance (good governance and bad governance) and human rights. The idea of governance he has been working on is "the exercise of power or authority with efficiency, transparency and accountability; and human rights are political individuals and social rights which include the right of participation, freedom, equality and a right to vital basic needs". His basic premise was that corruption undermines good governance and that bad governance dramatically affects human rights!

He pointed out that Brazil has one of the four largest democracies in the world (along with India, USA and Indonesia), last year Brazil has celebrated the 30th year of its democratic constitution and during this period Brazil has had institutional stability, monetary stability, major social inclusion and major advancements with regards to human rights (woman rights, Afro-Brazilian rights, gays rights, native populations rights, etc). In this sense, although we are seeing and discussing negative events related to corruption and bad governance, he said that "the movie of the Brazilian democracy, over the last 30 years, has been fairly good".

After showing a line of more recent events (particularly the "Mensalao", the "Petrolao", ) Brazil has been shaken by a series of revelations of corruption practices of which two scandals have acquired great visibility: the "Mensalao" (monthly bribe paid to congressman to vote in favor of bills that interested the government with money obtained from the overpricing of public contracts) and the "Petrolao" (an operation that revealed that Petrobras main executive positions have been distributed among several political parties that would charge a bribe in the company's public contracts); shortly after both big scandals some other ones have come to light: i. the receiving of bribes and demands for electoral donations from companies that benefited from loans granted by public development banks (most relevant loans granted by public development banks came with the payment of bribes to their directors and the parties which appointed those directors), ii. the receiving of bribes for the approval of laws granting tax benefits and other advantages to private companies; iii. extortion of people and companies to avoid being summoned or indicted in congressional investigative commissions; iv. bribes paid to directors of pension funds of state-owned enterprises who have made investments contrary to the companies' interests, compromising the solvency of those pension funds.

Therefore, all of a sudden, a great number of wrong-doings, scandals and bad practices came to light in Brazil at the 'same' time and we all realized at a certain point that our country was involved in a structural, systemic and institutionalized corruption. And, then, something started to change... it triggered a feeling of anger, resentment and frustration in the Brazilian population.

Yes, because back to 2009, everything seemed to be going very well... the Brazilian citizens finally felt Brazil was no longer the country of the future rather the country who had just surpassed the 'line' which segregates the developed countries from the developing ones, and Brazil had become the 5th economy in the world - even The Economist magazine (one of the most respected and influential magazines worldwide) had published an issue back in 2009 (November) which cover had Brazilian Christ The Redeemer in a very positive trend and its headlight was "Brazil Takes Off" (meaning everything seemed to be going really well for Brazil at that time - the prices of Brazilian commodities were very high, oil prices were high, major social inclusion, international prestige, Brazil was chosen to hold the Olympic games, the World Football Cup (soccer for the Americans!), we were disputing a seat at the United Nations' Security Council...

However, something went quite wrong in the following years and apparently the "rocket" did not pass the atmosphere... so the Brazilian cycle of prosperity seemed to have ended and in 2013 (September) The Economist brings Brazil again in its cover, but this time the perspective was quite the opposite from the previous cover (back in November 2009): the picture of Christ The Redeemer was in a loop downwards with the headlight: "Has Brazil blown it?". Since then, a big wave of negativity and frustration has continuously hit the Brazilian citizens, and much of it remains nowadays.

Although the picture is somber, his perspective and conviction - to which we completely share and agree - is that we are going through this because we needed to go through this in order to overcome some of the deepest difficulties of our cultural traditions in Brazil: there was no way to move from being a developing country to a developed one without facing those poor ethical standards that we used to have in Brazil.

Countries, like people, go through what they need to go through in order to become more mature and to better themselves. Therefore, despite of the terrible feeling that we are currently having while seeing what is going on (mostly what had been going on and now is coming to the surface), we believe that things will get better and better going forward! It is a sort of a new beginning for a country which had and still has to raise its ethical standards!

This is the current picture: moving on from the old ways and old ethical (unethical) standards... Corruption in Brazil is not the by-product of individual failures or petit/small weaknesses, or related to some specific political party, rather it has been rooted in professional schemes of collecting and distributing money, through bribes and other illegal activities; schemes that were really generalized and very contagious, involving public companies, private enterprises, political parties, business leaders, members of the parliament, members of the executive, and so on... As he said: it was a "pathological process of naturalization of what is wrong and it is impossible not to be ashamed for what happened in Brazil". It is unbelievable the depth and extension of what happened in terms of corruption in Brazil.

The great thing of this whole process is that Brazil realized as a country that such institutionalized corruption was actually a major problem for the whole nation and the world... that it was holding it back short of its real destiny. That is why there is a reaction which is new to Brazil: the civil society is strongly reacting to that same (un)ethical standard as it started to see and witness the devastating consequences that it brings to everyone and ceased to accept what now understands as unacceptable! So the civil society is now pushing the institutions to a major change in that direction, forcing them to reinvent themselves as corruption will not be accepted as part of the game anymore. In the judiciary this change is also very visible: in several prior court level judges ceased to treat white-collar crimes as something unimportant (as has always been in the Brazilian tradition) and so started with the Operation Car Wash (which was caused by the "Petrolao") the judiciary in Brazil began - for the first time - to treat white-collar crime as a serious crime and high executives and politicians started to be convicted for those crimes.

We had a previous judgement by the Brazilian Supreme Court in the "Mensalao" case, with important convictions for corruption, for embezzlement, money laundering, among other crimes, and it was an important landmark in Brazil in terms of fighting corruption but it was more a politically driven sort of corruption. But in the ordinary jurisdiction it was with the Operation Car Wash that money laundering started to be treated as something serious which needed to be fought against.

As the legitimate pressure from the civil society has forced the institutions to adjust their practices, it has also influenced the Brazilian Supreme Court, from which a new caselaw has change the fight against corruption in Brazil: he highlighted the admission that after conviction in the appellate level you could enforce an order for arrest in case the defendant has been convicted. That was a major change! As a matter of fact, it has actually always been that way in Brazil, at least since the 1988 Constitution, but in 2009 (curiously the same year we referenced above!) when criminal law and the corruption cases first started to reach the upper level classes in Brazil, they changed the caselaw to say that it could not enforce a decision shortly after the appellate level without waiting until the total end of the lawsuit, in all possible instances, waiting the case to go to all the levels up to the Superior Court of Justice and then to the Supreme Court (which meant that if the defendant could pay a good lawyer the statute of limitations would apply, because the lawsuit would never end timely for the conviction in white-collar crimes). So the change occurred in 2009, when the "Mensalao" case occurred, the trial level courts started to treat white-collar crimes as a serious crime. Then, in 2016, Justices Barroso and late Teori Zavascki articulated to change that change in the caselaw in order to admit enforcement of convictions after the appellate level judgement and they were successful in such effort, which brought more credibility to the whole judicial system and the judiciary as a whole, avoiding procrastination and impunity.

A second major change Justice Barroso pointed out was the unconstitutional declaration of the mob style funding of the election system that we had in Brazil, in which private companies could borrow money from public development banks (particularly BNDES) and then "donate" that money for political campaigns in a system that could allow the same company to donate money to all candidates at the same time, meaning that they either had been extorted or they were buying future "favors"; even worse than that (which was already terrible in both possibilities), the company which made those "donations" could be "hired" by the elected administration which received those "donations" so that the private "favor" could be paid back with public money. The Brazilian Congress would not change this legislation but the Supreme Court has declared it against the constitution and abolish it.

A third major change by the Supreme Court was to reduce dramatically the so-called privileged forum that meant that all relevant public authorities, including all members of the parliament, could only be judged by the Supreme Court - so now the Supreme Court severely restricted the interpretation and applicability of such law.

This positive movement bottom up coming from the civil society to change the ethical environment in Brazil has helped the institutions to change practices that were very deficient to say the least... so there have been new laws on money laundering, new laws regulating the plea bargain, new laws raising the punishment for corruption, the clean records act ("Lei da Ficha Limpa"), so the civil society has clearly caused a movement to push corruption and corrupts to the margin of Brazilian history.

On the other hand, as life is not easy as it could seem, there has come a strong reaction against this positive movement from civil society currently going on, by what Justice Barroso rightly called "the oligarchic pact", which involves part of the political class, part of the business class and part of the state bureaucracy, a pact of plundering the Brazilian state, the Brazilian society and the Brazilian people.

So the oligarchic pact has reacted very clearly against all the movements and actions towards integrity and ethics which were meant to replace the oligarchic pact (un)ethical standards. It comes from all sides, parties and peoples, as corruption in Brazil (as anywhere else in the world) has no ideology or sides... it goes from the right to the left, vice-versa, to the center, in and out, and so forth... so the arch of alliances we have in Brazil against the progress of investigations, against the needed change of culture, is a major reaction as well, so we have people in politics, in high governmental positions, in positions we would least expect to find against this new pact that Brazilian society needs to celebrate and achieve - a pact of integrity to replace the oligarchic pact of corruption that has been still in place.

A brief description of some recent happenings in Brazil include following facts: the most recent former president has been indicted at least three times for crimes involving corruption, money laundering and obstruction of justice; another former president has been convicted for corruption and money laundering; two former chiefs of staff of the presidency have been convicted: one for active corruption (paying bribes) and another one for passive corruption (taking bribes); another chief of staff of the presidency was arrested with the ridiculous amount of 51 million reais in cash hidden in luggages placed in a flat; two former presidents of the chamber of deputies have been arrested and one of them has been convicted for passive corruption, money laundering and clandestine evasion of money; an earlier president of the chamber of deputies was convicted for embezzlement, several state governors have been indicted and convicted, and some are in prison right now, a senator and former candidate for the presidency has also been indicted and convicted for corruption.

Of course these are just some picked facts amongst many others and they are already so impressive... that anyone who claims some sort of conspiracy against everyone cannot be taken seriously! The only problem with this conspiracy version are the facts, the evidences, the videos, the audios, the money, the apartments filled with illegal money, the confessions, etc... The facts are undeniable!

A curious fact is that nobody assumes a wrong-doing and apologizes... they all say they are being persecuted for political reasons, so 'there is no corruption in Brazil'... everyone is being persecuted by mean police, mean persecutors, mean judges, who like to condemn innocent people...

One of the reasons for that, besides the cynicism, is that the wrong things have been so naturalized in Brazil that people has lost any critical sense of what they have been doing.

We should be careful in not criminalizing politics. Politics in a democracy is an essential need! We need democracy, we need congress and we need (good) politics. So one of the main goals of our generation has to be improving politics, attracting idealistic people to join all the good people who has decided to do politics and work for the better of our Brazilian society, working on its behalf, towards a new pact of integrity!

At the same time we should not criminalize politics, we should never allow to glamorize crime... If a congressman takes bribes to grant a tax exoneration, that is not doing politics, that is committing a crime.

As to the consequences of this picture of generalized corruption, the oligarchic pact has the reactive adherence of many people: in the progressive camp, people think that corruption is just a footnote in history and that the ends justify the means (this is completely wrong as corruption just creates a perverted relationship between the citizens and the state); in the conservative camp, people think that corruption is the corruption that come from who they do not like, from their adversaries, but corruption coming from people on their side is generally seen as minor act which would not be seen as a real problem; and finally there are the corrupts themselves, who do not want to be punished and therefore are totally against any change of a situation which has always been in place.

And this is astonishing: many people want things the way they always have been and will fight any change of our current situation. This also goes to the Supreme Court and the reaction from the Brazilian society, perceiving the Supreme Court as an obstacle in the fight against corruption in the country. Many times being on the side of the corrupt elite that has been empowered in Brazil, why does the society has this feeling? Justice Barroso points out some of the reasons he sees as justifying this feeling from the Brazilian society:

1) everything that could be removed from the Federal Court of Curitiba, where things were going well, were removed by a decision from the Supreme Court; 2) the Federal Courts were doing a good job in fighting corruption but the Supreme Court removed lawsuits involving corruption to electoral courts which have no expertise nor structure to deal with corruption cases; 3) the possibility of what we call "coercitive conduction" (forcibly bringing someone under investigation to be questioned) - a possibility that was in the law since the 1940's - was voided by the Supreme Court when this practice reached the high powerful corrupts; 4) several justices do not abide by the precedent of the full court that determined the enforcement of criminal judgements after the decision at the appelate court level - only in Rio de Janeiro, more than 40 people arrested under corruption charges were released due to habeas corpus granted by the Supreme Court; 5) some Supreme Court Justices have gone to public media to criticize anticorruption investigations, showing more anger towards the prosecutors and the judges for doing a good job than towards the criminals who have plundered the country. So based on these objective facts, civil society have demonstrated anger towards the Supreme Court.

Going back to link to how corruption damages human rights, all researches show that corruption and violence in a society come together and it is no surprise that Brazil has become the most violent country in the world, with the impressive number of 63.000 homicides in 2017. Corruption affects individual rights, political rights and social rights.

In 30 years of democracy, Brazil has defeated a totalitarian dictatorship, has defeated hyper inflation, has obtained very important victories against extreme poverty and these should definitely be celebrated. Notwithstanding, it still needs some critical structural reforms in order to overcome corruption - changing the political system is definitely one of them and reducing the 'size' of the state that offers "favors" and charges "loyalties".

In the acclaimed book "Why Nations Fail" by Acemoglu and Robinson, they present the reasons that lead countries either to prosperity or to poverty and they brilliantly show that it is not geography, it is not culture, it is not not knowing what is the right thing to do, what really makes the difference is the existence or not of truly inclusive institutions. So, where you have extractive institutions with elites that appropriate these institutions and make them work in their own benefit then you have poverty or at most middle income; while when you have inclusive institutions, then you have prosperity.

So we need to push to the margin of history these extractive self-referential elites that have appropriated the Brazilian state for their own benefit and maybe this ethical, political and economic storm that has hit Brazil in the recent years will represent what they call the 'critical juncture' that helps make these changes that will allow us to rebuild many of our institutions and get rid of this mentality, still this days tolerated, of diverting public money.

Justice Barroso belief in this 'new beginning' has nothing to do with politics or the recent elections, it has to do with this feeling in the Brazilian society, this huge demand for integrity, for idealism, for patriotism, and that is the energy that shifts paradigms and really pushes history in the right direction, therefore he is very confident so it may be the case for us in Brazil!

Unbelievable honor for all of us - for me, for Camila Olivetti, for EVOLVERS Governance & Integrity, for Olivetti & Regina Attorneys at Law, for the New Law Institute and for all the participants of this remarkable opportunity to learn, discuss and share ideas with this Brazilian giant of law, ethics and integrity!