Author: ANDRÉ FRANCO MONTORO FILHO *

Source: Gazeta Mercantil, 20/04/2009

Who is risk to the whole society

April 20, 2009 - The Federal Court recently sentenced businesswoman Eliana Tranchesi and her brother to a severe prison sentence. She complained claiming that they are not a risk to society. Apparently and superficially she may be right. There is no direct physical risk to the next. However, there are other relevant aspects that need to be considered. I do not intend to analyze the merits of judicial decisions or the possible fault of those involved, much less the justice of the sentence, but, if we analyze the issue from an economic and social point of view, the assessment of a possible risk to society can be very different.

In fact, the wealth of a nation and the well-being of its inhabitants depend, among other factors, on its productive capacity, which in turn is constituted by the stock of physical capital, that is, factories, machines, equipment, roads, existing plants, the qualification of the workforce and also the level of technology used. It is this installed capacity that limits the amount of goods, jobs and income that the economy can produce to supply its inhabitants.

Now, both the existing physical capital and the qualification of the workforce and the level of technological knowledge are not by chance, but the result of previous decisions made by the population. It was the decisions to save, to value education, to stimulate innovations and technological progress made throughout its history that determine the productive capacity of an economy.

This culture, these positive attitudes for economic growth depend on institutions, laws and rules, uses and customs, habits of a community that facilitate and encourage this growth-friendly behavior and thus develop a good, healthy and ethical business environment .

It is this good business environment that is threatened by the widely reported behaviors such as those that caused the condemnation of the owners and executives of Daslu and related companies. The continued ostentation of misconduct such as tax evasion, illegal import or embezzlement and other financial crimes is not only a risk, but represents a real wound in the indispensable ethics of a market economy and contaminate and pervert the business environment that, unfortunately , in Brazil has been suffering numerous and varied aggressions.

Non-punishment or a mild punishment for deviations from competitive conduct such as these and others that have recently been reported will only aggravate this injury and encourage similar business behaviors that are extremely detrimental to economic development. An eventual impunity would reinforce the perception that the path to success in our country is evasion and corruption. This would attract new speculators and adventurers who would invest their resources and talents to find ingenious mechanisms of transgression to profit a lot and in a short time.

This is not what we need. What Brazil needs, and in these moments of crisis such as the one we are going through even more, are companies and entrepreneurs who make productive investments, who seek technological progress and administrative improvements as the appropriate way to obtain profits and positive results in their ventures.

The business history of our country reveals countless cases of companies that have been successful due to ethical behaviors, which managed to grow through honest work, productive investment, the search for new technologies, innovation and managerial and administrative modernization. It is not by chance that they are companies or groups that have survived the vicissitudes of the Brazilian economy, have expanded over time, contributing decisively to the progress of Brazil. However, these companies have been suffering unfair competition from tax evaders and adventurers who specialize in the most varied misconduct such as informality, piracy, smuggling, disregard for environmental laws, etc.

It is no longer possible to ignore this reality and underestimate the risks and harms that these deviations in conduct cause to our country. Laws exist to be fulfilled by all, rich or poor, businessmen or workers, politicians or voters, tax or taxpayers. It is this culture that needs to be stimulated for Brazil to grow. Police bodies, the Public Ministry and the Judiciary have a lot to contribute.

kicker: Impunity can mean that corruption is the path to success.

* Full professor at FEA / USP and president of the Brazilian Institute of Competition Ethics (ETCO)