brazil's clean company act
TRANSCRIPT
GOOD. SMART. BUSINESS. PROFIT.TM
Brazil’s Clean Company Act: Navigating Uncharted Waters
September 16, 2014
Clea Nabozny Director of Marketing and Media [email protected]
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Geert AalbersGeneral Manager Brazil & Director Corporate Investigations Latin America Control Risks
Michele Wiener Senior Managing Director Control Risks
Ana Carolina Freire de Salles Compliance and Legal Director, Brasil AES Brasil
SPEAKING TODAY
Navigating uncharted waters
Michele WienerGeert AalbersAna Carolina de Salles Freire
Brazil’s Clean Companies Act
Agenda
• Brief overview of the law and its status
• Key compliance measures in reaction
• Executing compliance changes in Brazil
• Enforcement expectations and preparedness
The current enforcement environmentClean Companies Act goes into effect
President Rousseff's chief of staff resigns amid corruption allegations.
2011 2013 20142012
President Rousseff approves Brazil’s Clean Companies Act. Vetoes provisions that would have weakened the law.
Anti-bribery bill’s initial vote is delayed, reportedly due to resistance from business community
Former Petrobras director implicates several Brazil politicians in corruption probe
Public protests against corruption and poor public service escalates into largest Brazil demonstrations in decades
On the heels of protests, Congress approves Clean Companies Act
Bribery law enters into force
Brazil a founding member of the Open Government Initiative
Brazil considers overhaul of bribery laws
Formal guidance on law expected in 2014
18 companies investigated for corruption and price fixing
Supreme court makes first convictions in ‘Mensalao’ scandal
Brazilian Clean Companies Act Sanctions to Brazilian Corporations
Administrative
• Fine of up to 20% of the gross revenue of the previous year, after taxes• The fine will never lower than the advantage obtained, when it may be estimated• If the gross revenue criteria may not be applied, the fine will range from BRL 6K to 60 MM (USD 3K to 30MM)
• Publication of the condemnatory decision in newspapers of wide circulation and the web
Judicial
• Loss of assets, rights or valuables representing, directly or indirectly, the advantage or benefit gained from the illicit act• Partial suspension or interdiction of its activities• Compulsory dissolution of the legal entity• Prohibition to receive incentives, subsidies, grants, donations or loans from public agencies or entities and from public
financial institutions or institutions controlled by the government, from one to five years
How does the law stack up?
LEGAL ELEMENT US UK BRAZILBribery of foreign officials
Yes Yes Yes
Bribery in private context No Yes No
Extraterritorial reach Yes Yes Yes – Only for Brazilian entities
Other prohibited acts No No Yes – fraud in public tenders
Facilitation payments exception
Yes No No
Corporate criminal liability
Yes Yes No – civil liability only
Credit for compliance programme
Yes – sentencing guidelines
Yes – can be full defence
Yes – leniency in penalty
Key compliance measures in reaction to the law
Risk Assessments
• Government touchpoints
• Go to market strategy
• Existing controls• Employee
activities
Fraud in Public Tenders
• Customized tenders
• Ghost bidding• False
authorizations• Collusion and
kickbacks
Third Party Partners
• Sales• Consultants• Payment terms• Scope of
services• Influence
Effective Compliance Programme According to Brazilian Clean Companies Act, sanctions can be mitigated if there is place an EFFECTIVE COMPLIANCE PROGRAMME:
COMPLIANCE CULTURE: Values, Code of Conduct, Tone at the Top and the buy-in process of business leaders and high management
ETHICS AND COMPLIANCE TRAINING, including on the Brazilian Clean Companies Act, as a tool (i) to support people in their efforts
to conduct business with the highest standards of integrity; and (ii) to combat breach of laws, regulations, policies
HOTLINE AND INVESTIGATION: Need to provide a way for employees, suppliers, customers, or anyone to ask a question, make a
comment, seek advice, or raise a concern about the business practices or the legal and ethical conduct of the company.
Effective Compliance Programme
CONTRACT COMPLIANCE REVIEW PROCESS: Prior due diligence review process on business partner (any third party with whom the company subsidiary enters into a business relationship with) in order to:
.
1. Assessing the level of risk posed by a particular transaction
2. Conducting appropriate compliance due diligence for each agreement, contract or transaction with the prospective counterparty
3. Incorporating appropriate contract compliance representations and warranties in all agreements, contracts or purchase orders; and obtaining compliance review and approval prior to entering into an engagement or business relationship
4. The level of compliance review is based on the assessed level of risk of a particular engagement: high risk and low risk engagements. Third parties report may be relevant.
Managing Uncertainty….
“The power of the lawyer is in the uncertainty of the law”
- Jeremy Bentham
What might Clean Companies Act enforcement look like?
How to prepare
The standard response…
What you should be doing Investigations protocols Identify the team Map your data - know where and how to collect it Tailored training for employees Procedures for cooperation Crisis Management & Communications procedures
1. Assess your risks
2. Ensure you have policies and procedures to address risk
3. Reinforce third party integrity program
4. Update employee training
5. Encourage reporting
6. Monitor transactions
7. Protect and preserve key information
8. Prepare for an investigation
Key Takeaways
www.controlrisks.com
QUESTIONS?
This webcast and all future Ethisphere webcasts are available complimentary and on demand for BELA members. BELA members are also offered complimentary registration to Ethisphere’s Global Ethics Summit and other Summits around the world.
For more information on BELA contact:
Laara van Loben SelsSenior Director, Engagement [email protected]
Business Ethics Leadership Alliance (BELA)
September 17, 2014Anti-Corruption Due Diligence in Transactions: Expectations and
Strategies
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