Transparency International suggested the creation of a permanent fund using resources from the J&F leniency agreement.
The idea was that, after J&F's payments ceased in 2042, the fund would be transferred to the "independent control of the company"; the agreement was suspended by Dias Toffoli.
From Conjur – In 2019, Transparency International (TI) — which presents itself as an NGO based in Berlin — proposed that the resources from the leniency agreement with the J&F business group form a perpetual endowment fund, to be maintained even after the 25 years of payments stipulated in the schedule.
This was not agreed upon with the company. The suggestion was included in a "guide to best practices for promoting reparations for damages to society," released by the IT department.
The idea was that, after J&F's payments ceased in 2042, the fund would be transferred to the "independent control of the company." Ultimately, the initiative did not go ahead. Had it gone ahead, there would have been a balance of R$ 2,3 billion, and no one knows for sure who would have received it.
On Monday (5/2), Minister Dias Toffoli determined measures to investigate IT for the possible misappropriation of funds from the agreement signed between J&F and the defunct "Lava Jato" task force in June 2017.
Eternal bottom
In the document, the institution cited the "principle of perpetuity" to justify building a "permanent legacy for Brazilian society."
The leniency agreement with J&F stipulated a payment of R$ 10,3 billion, of which R$ 2,3 billion would be allocated to social projects in the areas of education, health, the environment, and the promotion of research and culture. There was also a provision for an independent audit of the execution of these projects.
The agreement established a disbursement schedule. Between December 2017 and the end of 2019, the company was to make five semi-annual payments, each in the amount of R$ 11 million. The remaining outstanding balance was to be covered by 22 annual installments, between 2020 and 2041.
According to TI's proposal, investments in social projects would be progressively expanded: starting from R$ 5,5 million in 2019 and reaching an annual average of R$ 50 million in 2028.
The application of resources would stabilize at this level between 2029 and 2041. With this, the estimated balance, at the end of J&F's payments, would be almost R$ 2 billion. At the interest rates at the time, this would "produce an approximate return of R$ 60 million per year".
Starting in 2042, with the fulfillment of the agreement's obligations, the "independent operation of the initiative" phase would begin. However, the tables presented by TI did not establish values for this stage.
According to the guide, "TI proposed and it was agreed that the entity cannot submit projects for funding under this leniency agreement as long as it maintains any type of influence over the governance of the resources."
Next steps
Later, the Independent Oversight Committee (CSI) of the leniency agreement presented a proposal for a "social investment governance model," with a bloated organizational chart.
The structure provided for the creation of a deliberative body, a fiscal council, a "plural advisory council," and seven directorates, all subordinate to a general directorate.
In April 2019, a ruling from the Federal Public Prosecutor's Office, signed by eight prosecutors, issued a warning to J&F. If the company decided "to directly execute social projects" without sending funds to the Fund for Diffuse Rights (FDD), it would "necessarily have to comply with the best governance and control practices recommended by IT".
Conversely, if the execution of the projects did not demonstrate a "high level of efficiency and excellent results," the Federal Public Prosecutor's Office could retain the amounts spent by the company, "in whole or in part."
Context
In December 2017, TI signed a memorandum to cooperate on solutions related to the management and execution of the agreement's resources. The document foresaw TI's assistance in presenting an investment project focused on the "prevention" and "social control" of corruption, prioritizing the strengthening and capacity building of organizations and projects with the greatest potential for impact.
In his decision, Toffoli indicated that, in March 2018, negotiations began to ensure that the funds obtained through the agreement would be transferred to TI. The institution would then be responsible for the administration and application of the resources.
In interview with GloboNews On Monday, the executive director of TI in Brazil, Bruno Brandão, denied that the NGO had received or even managed funds from the agreement.
As the online magazine showed Counselsix months before the signing of the agreement, IT proposed The Federal Public Prosecutor's Office (MPF) is instructed to establish a "general guideline" for allocating part of the resources from such agreements to projects focused on "prevention and social control of corruption."
Click here to read the IT guide
Click here to view the CSI organizational chart
Click here to read the MPF's decision