Interview: André Franco Montoro Filho
Author: Cynthia Ribeiro
Founded in 2003, the Brazilian Institute of Ethics in Competition (ETCO) is a civil society organization of public interest -OSCIP- which brings together companies and non-governmental business entities with the aim of promoting improvement in the business environment and encouraging actions to avoid imbalances competition caused by tax evasion, informality, forgery and other misconduct. With the mission of “promoting competitive ethics and fiscal equity, aiming at the development of business in a fair and attractive environment for investments” today ETCO is an important reference in business ethics and corporate citizenship in Brazil. Its Executive President, André Franco Montoro Filho, dispenses with presentations and performed important public functions: President of the BNDES, President of the Steering Committee of the National Privatization Program, Secretary of Economy and Planning of the State of São Paulo and President of the Park Orientation Council Villa-Lobos. To RESPONSABILIDADESOCIAL.COM he granted the following interview:
1) Social Responsibility - When, how was it created and what are the main objectives of the Brazilian Institute of Ethics in Competition (ETCO)?
André Montoro - Founded in 2003, the Brazilian Institute of Ethics in Competition is a civil society organization of public interest (OSCIP) that brings together companies and non-governmental business entities with the aim of promoting improvement in the business environment and encouraging actions that avoid competitive imbalances caused by tax evasion, informality, falsification and other misconduct. In a broader view, make society aware of the social harms of unethical practices and their negative effects on the country's growth. Initially, the institute included the beer, soft drink, tobacco and fuel sectors. Two years later, the important drug sector joined ETCO in a sectoral chamber that brings together 34 companies. In 2007, another chamber was created: the technology chamber.
2) RS - What are the main projects currently developed by ETCO?
AM - Our main projects are:
• Collaboration with federal and state farm authorities to implement electronic invoices;
• Defense of specific taxation as an important instrument to combat tax evasion in sectors subject to high taxation;
• Organization of an international seminar on the underground economy;
• Disclosure of a shadow economy index ordered from FGV;
• Publication and distribution of the book Cultura das Transgressões containing articles by renowned Brazilian intellectuals;
• Collaboration with ANVISA to establish an electronic medication tracking system;
• Continuity of the Justice and Economy debate cycle, promoting a fruitful dialogue between the “operators of the law and the operators of production”.
3) RS - In these years of existence, what are the main achievements of the institute?
AM - We have had several advances since the creation of ETCO. The main thing was to put the discussion on competitive ethics in the debate with the population and on the work agenda of federal and state authorities, including members of the judiciary and the Federal Public Ministry. Another was the mandatory installation of the flow meter system for the beer and soft drink sectors, which has demonstrated its effectiveness in controlling taxation. This measure had the full support of ETCO and is a major victory against tax evasion. Another initiative that we highlight is the support that ETCO has given to the implementation of the Electronic Invoice, which will certainly represent a great improvement of the Brazilian collection system. The measure is considered by all to be an ultra-effective means of ending unfair competition caused by tax evasion, in addition to facilitating the course of tax reform. It is also worth remembering our successful work in defending and maintaining the specific taxation or also called Ad Rem, which is a powerful mechanism for combating and preventing tax evasion.
4) RS - In your opinion, what is missing for Brazil to be more ethical?
AM - Unfortunately, a lot is missing. Our focus here at the institute is respect for tax, labor and social security legislation. Failure to pay taxes and practices such as smuggling, product adulteration and piracy generate unfair competition that needs to be fought. I believe that public awareness is lacking both about the advantages of ethical behavior and respect for the law, as well as the problems that deviations in business and consumer conduct can cause. Because of this ignorance, ordinary citizens lack initiative. In our daily lives it is common to complain about the absurdities that happen every day and the fact that nothing is being done to improve the situation. We blame other people for problems and always hope for a solution, but we do nothing to change things. However, we never ask ourselves if we can't do something. Can't everyone do their part? We at ETCO believe so. We believe that ethics is built in our daily lives and that with a change in attitude, it is possible to transform the “Brazilian way” and combat misconduct, such as buying pirated products, evading taxes, tax evasion, informality and counterfeiting.
5) RS - ETCO defends free competition, but brings together companies accused of adopting unfair practices (Souza Cruz, Ambev and Coca-Cola, for example). Isn't that a paradox?
AM - ETCO defends ethical competition that opposes unfair competition based on tax evasion, smuggling, counterfeiting and so on. The defense of free competition is made by the Administrative Council for Economic Defense (Cade). All ETCO members have always respected Cade's rules and decisions and, in a specific way to their determinations about market concentration. There is no contradiction or paradox, even if Cade defines what practices are harmful to free competition and not eventual competitors.
6) RS - Among ETCO members, which sectors have the greatest problems with regard to the practice of piracy?
AM - One of the sectors that suffers most from piracy is Technology. Only 40% of the software market in Brazil is legal. Most of the trade in computer programs sold in Brazil is pirated and causes losses of US $ 1,2 billion per year to the country. Another sector that suffers from this problem is that of fuels. In Brazil, tax evasion due to adulteration of fuels generates an annual leak of up to R $ 2,6 billion per year. Data from the National Union of Fuel and Lubricant Distribution Companies (Sindicom) point to a loss of revenue, from 2007 to 2010, of R $ 1 billion per year, which means 13,3 billion liters per year in the consumption of adulterated fuel.
7) RS - What is the reason for informality in the country?
AM - The informality that exists in Brazil is due to several factors: high tax burden, the rigidity of labor legislation and excessive bureaucracy. All of this ends up working as an incentive for certain companies to fall into illegality. With the reduction of the tax burden and the pluralization of labor legislation in order to deal with singularly different situations, we could improve this situation. However, I think that alone is not enough. We need to move forward on the central issue of promoting ethics in the broadest sense.
8) RS - What are the losses that this informality and the consumption of pirated products bring to the national economy?
AM - Economic development depends on a good business environment. This environment must be formed by clear and fair rules and that are complied with, that is, that there is legal certainty. Deviations in conduct, such as tax evasion, informality and piracy, alienate investments in the country, as they reduce this legal certainty by disregarding legal rules, generating imbalances in competition and illegitimate advantages for transgressors. Only in the sectors of beverages, tobacco, drugs and fuels do the municipal, state and federal governments fail to collect between R $ 8 billion and R $ 10 billion per year. For comparison purposes only, this amount is equivalent to everything the Union has to invest annually.
9) RS - How do you define the concept of Social Responsibility?
AM - Many people consider social responsibility to be just another marketing action. Others believe they are being socially responsible by practicing philanthropy. But the real Social Responsibility is to behave ethically, that is, to spontaneously obey the legal norms. This is a true social capital of a society that contributes a lot to an authentic development.
10) RS - In a country where part of the population uses the so-called “Gerson's Law” to obtain an easy financial return, is it possible to reconcile being ethical with having financial success?
AM - Of course it is! At least because you can put your head on the pillow and sleep in peace. I am sure that, despite the countless problems, we have not yet reached the stage where it is only possible to be successful through ethical deviations.
Article: The precariousness of the rule of law
Stability and clarity are minimum requirements for law enforcement. This is not what you see in Brazil. Standards are changed frequently, often with deplorable technical quality. The interpretation given to the norms also changes continuously, without plausible justification.