On May 16, 2013, Law No. 12,813/2013 (“Conflict of Interests Act”)[1] was enacted regulating conflict of interests arising from the relations with government officials of the Federal Executive branch. In particular, Article 5, Item IV, of the Conflict of Interests Act establishes that a conflict of interests emerges when a government official “acts, informally or not, as attorney-in-fact, consultant, advisor or intermediary of private interests in the public bodies or government entities of the public administration, direct or indirect, from Federal, State and City levels and the Federal District”.[2]

To shed light to the scope of application of Article 5 aforementioned, Decree No. 10,889/2021[3] (“Decree”) was – recently – enacted in December 2021. According to the Decree,[4] federal governments officials are allowed to receive hospitalities from private players, including meals, as long as a few criteria are fulfilled, such as: (i) the specific public body or government entity to which the official is subject should allow (or not expressly prohibit) the receival of hospitalities; (ii) the hospitality should be directly related to legitimate interests’, as well as occur under appropriate circumstances of professional interaction; and (iii) the hospitality’s value should be compatible with the standards adopted by the federal public administration in similar occasions. Lastly, it should not characterize personal benefit for the government official.

Regarding the specifics of each public body or government entity, it is worth mentioning the standards provided by Code of Conduct of the Federal Administration (“Code of Conduct”),[5] which are most commonly reflected. The Code of Conduct is applicable to ministers and secretaries of state; individuals holding high ranked positions in the federal government, presidents and directors of federal agencies, independent government agencies, public funded foundations, public companies, and mixed-capital companies.[6]

The Code of Conduct sets forth that “the public authority shall not receive salary or any other type of income from a private source forbidden by the law, nor receive transportation, travel expenses or any kind of favors from private entities which could raise doubts about the public authority’s probity or honorability”.[7] Thus, provided that the “courtesy” does not raise distrust on the government officials’ integrity, the Code of Conduct allows such hospitalities.

We identified one ruling by the Office of Comptroller-General involving the offering of meals to government officials.[8] The restaurant chain Madero was found guilty of having paid undue advantages to inspectors of the Ministry of Agriculture, Livestock and Food Supply by means of cash and meals. Nonetheless, no further details were made available by the Office of Comptroller-General, providing no clarifications onto the criteria for hospitalities to government officials.

The Office of Comptroller-General also published the “Integrity Program: Guidelines for Legal Entities”,[9] where it outlines standards for companies to implement effective integrity programs. Regarding the policy on offering hospitalities, freebies, and gifts, the Office of Comptroller-General understands that companies should bear in mind the following:

• “Offering freebies, gifts and hospitality cannot be associated with the intention to obtain undue gains for the company, to compensate for a contract awarded or characterize an implicit or explicit exchange of favors or benefits;
• Before offering any type of hospitality, freebies or gifts, the employee or representative must ensure that his or her act complies with the local rules and the legislation regarding transnational bribery (i.e.: FCPA, UK Bribery Act, Brazilian Anti-Corruption Law) and the policies and internal rules of the legal entity of the person who will receive the hospitality, freebie or gift;
• Expenses must be reasonable and in accordance with the local legislation, the limits of which must be stipulated by the company itself;
• No type of hospitality, gifts or presents may be provided with unreasonable frequency or to the same receiver in a way that may suggest suspicion or impropriety;
• Invitations involving travel and related expenses must be clearly associated with the company’s activities whether to promote, show or present products and services or to enable the performance of potential contracts;
• Indicators must be created for the employee himself/herself to be able to develop his/her critical ability to assess how reasonable it would be to propose a given action regarding hospitality or an offer of gifts or presents. For example, employees can be guided by a basic list of questions: (i) what is the intention involved?; (ii) Besides promoting the company’s business, does the action involve anything that should be kept in secrecy?; (iii) Would reporting the situation to the external public – for example, as a news article of a high circulation newspaper – represent a drawback to the company?; and (iv) Would the company be misinterpreted? and
• Employees or representatives must be told who in the company they should turn to should they have any questions about practical situations involving hospitality, freebies or gifts”. (emphasis added).

Although no explicit and unequivocal value standard is provided, three conclusions can be drawn from the guidelines above. First, that the reasonableness of the hospitality’s expenses should be perceived within the context in which it occurs, giving companies room for determining the precise amounts. Second, that the frequency of such hospitalities is also relevant, which means that a one-off meeting would hardly be construed as improper per se. And finally, that the hospitality should be intended to foster the companies’ business activities.

From all the above, we understand that prior to offering any kind of hospitality to government officials, companies should assess whether the criteria set forth in the Decree were observed. Although Brazilian legislation and regulation do not provide crystal clear guidelines on which hospitalities would violate the Brazilian Anti-Corruption Law, the Office of Comptroller-General’s standards allow companies to have a more precise course of action, offering hospitalities, including meals, that: (i) accommodate with the circumstances where they are intended to occur; (ii) are not frequent; and (iii) pursue the company’s business purposes.

[1] BRAZIL. Law No. 12,813, May 16, 2013. Available at: L12813 (planalto.gov.br)

[2] In Portuguese, “Art. 5º Configura conflito de interesses no exercício de cargo ou emprego no âmbito do Poder Executivo federal: (…) IV – atuar, ainda que informalmente, como procurador, consultor, assessor ou intermediário de interesses privados nos órgãos ou entidades da administração pública direta ou indireta de qualquer dos Poderes da União, dos Estados, do Distrito Federal e dos Municípios;”.

[3] BRAZIL. Decree No.10,889, December 9, 2021. Available at: Decreto nº 10.889 (in.gov.br)

[4] In Portuguese, “Art. 19. As hospitalidades de que trata o inciso V do caput do art. 5º poderão ser concedidas, no todo ou em parte, por agente privado, desde que autorizado no âmbito do órgão ou da entidade. § 1º A autorização a que se refere o caput observará: I – os interesses institucionais do órgão ou da entidade; e II – os riscos em potencial à integridade e à imagem do órgão ou da entidade. § 2º Os itens de hospitalidade: I – devem estar diretamente relacionados com os propósitos legítimos da representação de interesses, em circunstâncias apropriadas de interação profissional; II – devem ter valor compatível com: a) os padrões adotados pela administração pública federal em serviços semelhantes; ou b) as hospitalidades ofertadas a outros participantes nas mesmas condições; e III – não devem caracterizar benefício pessoal. § 3º A concessão de itens de hospitalidade poderá ser realizada mediante pagamento: I – direto pelo agente privado ao prestador de serviços; ou II – de valores compensatórios diretamente ao agente público, sob a forma de diárias ou de ajuda de custo, desde que autorizado pela autoridade competente”.

[5] BRAZIL. Code of Code of Conduct of the Federal. Available at: Code of Conduct; and Guidelines for the relationship with the Public Sector by the Brazilian Institute of Business Law and Ethics, page 11. Available at: Guidelines for the relationship with the Public Sector IBDEE

[6] In Portuguese, “Art. 2º As normas deste Código aplicam-se às seguintes autoridades públicas: I – Ministros e Secretários de Estado; II – titulares de cargos de natureza especial, secretários-executivos, secretários ou autoridades equivalentes ocupantes de cargo do Grupo-Direção e Assessoramento Superiores – DAS, nível seis; III – presidentes e diretores de agências nacionais, autarquias, inclusive as especiais, fundações mantidas pelo Poder Público, empresas públicas e sociedades de economia mista”.

[7] In Portuguese, “Art. 7º A autoridade pública não poderá receber salário ou qualquer outra remuneração de fonte privada em desacordo com a lei, nem receber transporte, hospedagem ou quaisquer favores de particulares de forma a permitir situação que possa gerar dúvida sobre a sua probidade ou honorabilidade”.

[8] BRAZIL. Office of Comptroller-General. Proceedings No. 00190,105384/2018-01. Defendant: Madero Indústria e Comércio S.A. Plaintiff: Office of Comptroller-General. President of Commission: Antônio Augusto Sousa Fernandes. Brasília, September 15, 2020. Available at: Ruling by the Office of Comptroller-General  (in.gov.br)

[9] Integrity Program: Guidelines for Legal Entities. Available at: Integrity Program: Guidelines for Legal Entities

For more information contact to:

Eloy Rizzo | Socio Demarest | erizzo@demarest.com.br

Gustavo Chimure Jacomassi | Asociado Demarest | gjacomassi@demarest.com.br