The Office of the Comptroller General (CGU) announced on June 4, 2022, the release of its newest document: the Handbook for Handling Conflicts of Interest.
It is important to point out that Brazil enacted a Statute of Conflict of Interest (Statute #12,813), on May 16, 2013, which aimed to qualify situations that could be considered as potential conflict of interest involving Brazilian authorities.
1.1. RELEVANT RULES
The handbook begins by listing the main rules related to conflict of interest:
| SPECIFIC RULES | DEFINITION |
| 1. Statute #12,813/ 2013 | Statute of Conflict of Interest |
| 2. Decree #10,889/2021 | Provides for the disclosure of the agenda of public commitments and the participation of public agents within the scope of the Executive Branch in hearings and on the concession of hospitality by a private agent. |
| 3. Interministerial Ordinance #333/2013 | Provides for consultation on the existence of conflict of interest and the request for authorization by a civil servant or employee of the Executive Branch to exercise private activity within the scope of the power attributed to the Office of the Comptroller General |
| 4. Ordinance CGU #1,911/2013 | Provides for the internal procedures necessary for the deliberation of the Office of the Comptroller General on consultations regarding the existence of conflict of interests and requests for authorization to exercise a private activity |
| 5. Ordinance CGU #1,705/2019 | Provides for the delegation of powers to the Director for Preventing Corruption |
| 6. Normative Orientation CGU #2/2014 | Provides for the exercise of teaching activities by public agents of the Executive Branch |
| ANCILLARY RULES | DEFINITION |
| 1. Statute #8,112/ 1990 | Provides for the legal regime of civil servants of the Government, agencies and federal public foundations |
| 2. Normative Instruction SGP/SEDGG/ME #34/2021 | Establishes guidelines to the bodies and entities part of the Civil Personnel System of the Federal Administration (Sipec) regarding procedures to be followed when granting licenses to accompany a spouse or partner in political activity and to deal with private interests |
| 3. Normative Ordinance SGP/MPOG #6/2018 | Provides for the impediment of the exercise of administration and management of a private company by the civil servant, personified or otherwise |
| 4. Statement CCC #26/2019 | Provides for the prohibition on the exercise of commerce provided for in Article 117, X, of Statute #8,112, of 1990, the prohibition of civil servants acting as an individual entrepreneur or as an administrator of a limited liability individual business |
| 5. Statute #13,303/ 2016 | Provides for the legal status of public companies, mixed capital companies and subsidiaries thereof, within the scope of the Government, the States, the Federal District and the Municipalities |
1.2. ANALYSIS OF CONSULTATIONS AND AUTHORIZATION REQUESTS
Regarding the analysis of consultations and authorization requests, they are divided into 3 distinct phases, among which the following aspects will be addressed:
1ST PHASE – PRELIMINARY ANALYSIS OF THE ENTITY OR BODY OF THE REQUESTING PUBLIC OFFICER
1. Judgment on Admissibility
2. Other Impediments
3. Risk Analysis of the Conflict of Interest
4. Consultation and Summaries of Previous Decisions
5. Conclusion of Analysis
6. Preparation of the Summary
2ND PHASE – ANALYSIS BY THE CGU UNDER REVIEW
1. Request for Additional Information from the Entity or Body of the Requesting Public Officer
2. Reply by the CGU
3. Mitigating Measures
3RD PHASE – APPEAL
1. Appeal
1.3. STEP-BY-STEP FOR A RISK ANALYSIS ON CONFLICT OF INTEREST
Firstly, one needs to consider whether a potential conflict of interest exists by examining three aspects:
1ST ASPECT – ARTICLE 5 OF STATUTE #12,813/2012
Article 5. Conflicts of interest in the exercise of a position or employment within the scope of the Executive Branch takes place when:
I – privileged information, obtained as a result of performed activities, is publicized or used for private benefit or that of a third party; a. Does the public agent, in the exercise of their public function, have access to privileged information? What information is this? How does the public agent have access to it?
B. Can this information be used for their own benefit or that of third parties in the exercise of the intended private activity? How so?
c. Is it possible to segregate the use of this information from the exercise of the private activity at hand? How so?
Risk analysis
• Positive answers to the first two questions indicate a risk of a relevant conflict of interest in the case at hand.
• A positive answer to the third question indicates that the risk of conflict of interest, although present, may be mitigated.
II – carrying out activities which involve providing services or maintaining a business relationship with an individual or legal entity with interests in the decision of the public agent or collegiate in which they participate; a. Does the interested party maintain a business relationship or provide services to a third party from the private sector? Who is this person? What kind of relationship does the interested party have with them?
b. Can this person benefit from a decision in which the interested party participates? What decision would that be? How can it benefit said third party?
c. Is the participation by the interested party in the decision-making process linked to predefined, specifics rules and procedures? Which are they?
d. Is the participation by the interested party in the decision-making process at hand subject to review and/or control and approval? Which ones? How does this review, control, and approval take place?
e. It is possible for the interested party to refrain from participating in decision-making processes in the interest of their private counterparty without impairing the performance of their public function or the interests of their body or entity?
Risk analysis
• Positive answers to the first two questions indicate a risk of a relevant conflict of interest in the case at hand.
• Positive answers to the third, fourth, and fifth questions indicate that the risk of conflict of interest, although present, may be mitigated.
III – directly or indirectly carrying out an activity that, due to its nature, is incompatible with the attributions of the position or job, also considering as such activities developed in related areas or subjects; a. The interested party intends to carry out some private activity. What is this activity? How will it be exercised?
b. Does the free exercise of said activity compromise the exercise of the public function by the interested party (should they occur simultaneously)? How so?
c. Does the free exercise of said private activity compromise the interests of the body or entity public to which the interested party is bound (or, alternatively, can it corroborate such interests)?
How so?
d. It is possible to limit the exercise of this activity so that it does not harm the exercise of the public function or the collective interest? How so?
Risk analysis
• A positive answer to the second indicates a risk of a relevant conflict of interest in the case at hand.
• A positive answer to the third question regarding the possibility of compromising public interests indicates a relevant risk of conflict of interest in the case at hand. A positive answer to the third question regarding the possibility of corroborating with public interests indicates that there is no relevant risk related to this aspect, nevertheless, the answer to question 2 still needs consideration.
• A positive answer to the fourth question indicates that the activity at hand is compatible with the attributions of the public position or job held by the interested party due to their nature, but there is possibly another situation of conflict of interest.
IV – acting, albeit informally, as a proxy, consultant, advisor, or intermediary for private interests in the bodies or entities of direct or indirect public administration of any of Government Branch, States, Federal District and Municipalities; a. Does the private activity to be carried out involve the representation of private interests before public bodies or entities? What are these interests? How could this representation take place? With which bodies or entities?
b. Does the interested party have some type of influence over these bodies or entities due to the position they hold? Which ones?
c. Can the activity be carried out if it does not involve representation of private interests with bodies and entities over which the interested party has influence?
Risk analysis
• Positive answers to the first and second questions indicate a risk of a relevant conflict of interest in the case at hand.
• A positive answer to the third question indicates that the identified risk of conflict of interest may be mitigated.
V – performing an act to benefit the interest of a legal entity in which the public agent, his or her spouse, partner, or close relatives participate, in a straight or collateral line up to the third degree, and which may benefit from it or influence its managerial acts; a. Does the public agent participate in a decision-making process that can benefit a specific legal entity?
What is this decision process? What is this legal entity? How might the decision benefit such person?
b. Does the public official or his/her spouse, partner, or close relative (in a straight line or collateral up to the third degree) participate in this legal entity? In the case of relatives, who are they? How does this participation take place?
c. Is the participation by the interested party in the decision-making process at hand linked to predefined, specifics rules and procedures? Which are they?
d. Is the participation by the interested party in the decision-making process at hand subject to review and/or control and approval? Which ones? How does this review, control, and approval take place?
e. It is possible for the interested party to refrain from participating in decision-making processes in the interest of their legal person at hand without impairing the performance of their public function or the interests of their body or entity?
Risk analysis
• Positive answers to the first and second questions indicate a risk of a relevant conflict of interest in the case at hand.
• Positive answers to the third, fourth, or fifth questions indicate that the identified conflict of interest risk may be mitigated.
VI – receiving a gift from someone who is interested in a decision by the public agent or collegiate in which they participate outside the limits and conditions provided in the regulation; and
a. Can the item offered be considered a gift, pursuant to item VI, head provision, Article 5 of Decree #10.889/2021? What is the economic value of the item? Was the item offered to multiple people or only the agent? Was it offered as a courtesy, advertisement, or publicity?
b. Is the direct or indirect donor of the item interested in the decision by the public agent or collegiate in which they participate? What are these decision-making processes?
c. Is the participation by the interested party in the decision-making process at hand linked to predefined, specifics rules and procedures? Which are they?
d. Is the participation by the interested party in the decision-making process at hand subject to review and/or control and approval? Which ones? How does this review, control, and approval take place?
e. It is possible for the interested party to refrain from participating in decision-making processes in the interest of the donor without impairing the performance of their public function or the interests of their body or entity?
Risk analysis
• A negative answer to the first question and a positive answer to the second question indicate a risk of a relevant conflict of interest in the case at hand.
• Positive answers to the third, fourth, or fifth questions indicate that the identified conflict of interest risk may be mitigated.
VII – providing services, even if occasionally, to the company whose activity is controlled, inspected, or regulated by the entity to which the public agent is bound.
a. Does the interested party provide services, even if occasionally, to a company? Which company? What kind of service?
b. Does the company carry out an economic activity controlled, supervised, or regulated by the body or entity public to which the interested party is bound? What is this activity? How does this control, inspection, or regulation take place?
c. Is the risk of conflict of interest identified in the case relevant? How likely is it to occur? If so, what impact could it have?
Risk analysis
• Positive answers to the first and second questions indicate a risk of a relevant conflict of interest in the case at hand.
• A negative answer to the third question indicates that the risk of conflict of interest, although present, may not justify an intervention by the Administration in the private domain of the public agent.
1ND ASPECT – ARTICLE 3, I, FROM STATUTE #12,813/2012
Article 3. For the purposes of this Statute, the following is considered:
I – conflict of interests: situations generated when there is a conflict between public and private interests, which may compromise the collective interest or improperly influence the performance of public function.
3RD ASPECT – ARTICLE 8, V, FROM STATUTE #12,813/2012
Article 8. Without prejudice to its institutional powers, it falls upon the Public Ethics Commission, established within the scope of the Executive Branch, and the Office of the Comptroller General, as the case may be, to:
V – authorize the holder of a position or job within the scope of the Executive Branch to exercise private activity when there is no conflict of interest or when it is irrelevant.
Briefly, the handbook establishes that, when analyzing the merits of the consultation or the authorization request to exercise a private activity, it is necessary to:
1. Check whether the conflict at hand involves the private interests of the requesting party and the public interests of the Federal Government;
2. Identify the risks;
3. Assess its relevance to the Federal Government.
1.4. GIFTS, FREEBIES AND HOSPITALITY
In addition to all the above, one must consider three particularly important items, with respect to existing rules, when analyzing conflicts of interest:
| Gifts | The Conflict of Interests Statute (Statute #12,813/2013) and Decree #10,889/2021 prohibit public officials from receiving gifts (goods, services, or advantages of any kind) offered by those interested in their decision or that from the collegiate in which they participate. That is, even if the gift is offered by a friend, if they are interest in a decision by the public agent, receiving it is considered a conflict of interest. In accordance with Decree #10,889/2021, if it is not feasible to refuse or immediately return a gift whose acceptance is prohibited, the public agent must deliver the gift to the patrimony sector of its body or entity, which will adopt the appropriate measures regarding its destination. Decree #10,889/2021, by regulating item VI, head provision, of Article 5 and Article 11 of Statute #12,813, of May 16, 2013, establishes that freebies are not considered gifts and may thus be received pursuant to the regulations. Hospitalities are also not considered gifts and may also be received, pursuant to Decree #10,889/2021. |
| Freebie | According to Decree #10,889/2021, freebies are items of low economic value and widely distributed as a courtesy, advertising or common disclosure. As low economic value, it is understood that less than one percent of the wage cap provided for in item XI, head provision, of Article 37 of the Brazilian Constitution (according to Paragraph 4, Article 5 of Decree #10,889/2021). On February 2, 2022, the wage cap was 39,293.32 Brazilian reais. As such, an item with an estimated value below 392.93 Brazilian reais could be considered a gift. |
| Hospitality | Hospitalities are services or expenses with transportation, food, accommodation, courses, seminars, congresses, events, fairs, or entertainment activities provided by a private agent to a public agent in the institutional interest of the body or entity in which they act. The public agent must be authorized to receive a hospitality item within the scope of the body or entity, according to the criteria established in Chapter VI of Decree #10,889/2021. Should the public agent receive hospitality as a result of their attributions, but unrelated to the exercise of institutional representation, that is, without the proper authorization of their body or entity, these will be considered gifts (unless they fall under the concept of freebie). |
1.5. PROTECTION OF THE REQUESTING AGENT’S PERSONAL DATA
All personal information contained in the consultation processes or authorization request of the Electronic System for Preventing Conflict of Interest (SeCI) must be restricted to the involved party in its analysis and in the monitoring and control of the term of commitment. Thus, the analyses cannot be fully disclosed in active or passive transparency, but the information unprotected by legal restriction can. In this sense, the preparation of summaries for publication must comply with these legal restrictions.
As the requests sent by means of the system contain various information concerning the private life of public agents, they are protected by Article 31 of Statute #12,527, of November 18, 2011 (Access to Information Act).
Pursuant to Item V of Article 3 of Decree #7,724, of May 16, 2012, which regulates Statute #12,527/2011, personal information is information related to the natural person, identified or identifiable, concerning their intimacy, private life, honor, and image. Pursuant to Article 55 of said Decree, personal information held by government bodies and entities will have access restricted to legally authorized public agents and to the person to whom they relate, regardless of secrecy level, for a maximum period of one hundred years from the date of its production; and may only have their disclosure or access by authorized third parties through legal provision or express consent by the person to whom they relate.
According to Article 57 of the same legal provision, the consent by the person to whom the information relates will not be required when:
a) access to such personal information is necessary for medical prevention and diagnosis;
b) the person is physically or legally incapable, and for use exclusively for medical treatment;
c) performing statistics and scientific research of obvious public or general interest, provided for by law, and the identification of the person to whom the information related is prohibited;
d) complying with court decisions;
e) resulting from the defense of the human rights of third parties; or
f) protecting the general public interest.
Pursuant to the Brazilian Data Privacy Act, the personal data of the requesting agent stored in SeCI must be used solely for the purpose for which they were provided by the interested party. And this purpose is currently set out in Article 2 of Interministerial Ordinance # 333/2013:
“Article 2. For the purposes of this Ordinance, the following is considered:
I – consultation on the existence of a conflict of interest: instrument available to a civil servant or employee through which they may request, at any time, guidance on a concrete, individual situation concerning them and that may raise doubts as to the occurrence of conflict of interest; and
II – authorization request to carry out a private activity: instrument available to the civil servant or employee through which they may request authorization to carry out a private activity.
Sole paragraph. The civil servant or employee may formulate the consultation and request mentioned in the head provision in the event of a situation constituting a potential conflict of interest.”
1.6. SUMMARIES
For the preparation of summaries of decisions issued within SeCI’s scope, using key words allows for the search of precedents and reiterated understandings of bodies and entities. In this sense, the text must be prepared so as to facilitate searches.
The construction and ordering of entries follow a logic, that is, they start with the entry representing the broader idea and then specifies, that is, the same logic of an organization of content by “section – title – subtitle”. Example: CONFLICT OF INTEREST. ITEM III. ACTIVITY INCOMPATIBLE WITH THE EXERCISE OF POSITION “X”. EXISTENCE OF A RELEVANT CONFLICT OF INTEREST. For entries referring to more specific content individualizing the case, more information must be provided, following the same organizational logic of contents (from the broader to the most specific).
The second part of the summary comes after the set of entries indicated above, called PROVISION. The provision is formatted in vertical characters (in the form of speech text) and in lower case.
1.7. FLOWCHART OF A RISK ANALYSIS ON CONFLICT OF INTEREST
Finally, the flowchart of a risk analysis on conflict of interest is shown below:
