CGU disciplines procedures for corporate accountability processes

Fight against corruptionLast Wednesday (8/04) edition of the Federal Official Gazette (DOU) brings two Ordinances and two Normative Instructions signed by the Chief Minister of the Comptroller General of the Union (CGU), Valdir Simão, who discipline routines and procedures for the accountability processes of companies involved in corruption cases. The edition of the rules complements Decree No. 8420/2015, which regulated Law 12.846 / 2013 (Anticorruption Law, and provides elements for the definition of fines applicable in each case by the commissions responsible for the accountability processes, which can reach 20% billing of companies.

Ordinance No. 909 defines criteria for evaluating integrity programs (compliance) of companies as a requirement for granting a reduction in the amount of the fine. The second publication, Ordinance No. 910, establishes the procedures for determining administrative responsibility and for entering into a leniency agreement within the scope of the Federal Executive Branch.

Normative Instruction No. 1/2015 defines what should be understood by gross revenue, the main element to be considered for calculating the fine provided for by law. The definition is made according to the tax profile of each company. The last publication made by CGU this Wednesday is Normative Instruction No. 2/2015, which regulates the registration of information in the National Register of Incidental and Suspended Expenses (CEIS) and in the National Register of Punished Companies (CNEP) by the bodies and entities the Executive, Legislative and Judiciary branches.

Source: CGU website (08/04)

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More than a year after the Clean Company Law came into force, President Dilma Rousseff signed its regulations, highlights Evandro Guimarães

Evandro Guimarães, CEO of ETCO
Evandro Guimarães, CEO of ETCO

In a gesture awaited 14 months ago, President Dilma Rousseff signed on March 18 the decree that regulates Law nº 12.846 / 13, the Clean Company Law or Anticorruption Law. With the regulation, which defines responsibilities in the application of the law, States and municipalities that awaited this definition will finally be able to adopt its parameters. As a result, the law will be in force throughout the national territory.

In January 2014, the business market was agitated with the entry into force of this law. The biggest concern for entrepreneurs was understanding how to put a compliance program into practice - either corporate integrity or compliance. Much has been discussed about which measures could be most effective, as the law holds corporations accountable for acts of corruption by their employees.

The processing of the bill was fast, considering the average time of this process in Brazil. Its promulgation by the president, in August 2013, also followed this pace. And the entry into force, on January 29, 2014, took place as scheduled.

There was some international pressure to pass the law, after the creation of the United Nations Global Compact and the convention of the Organization for Economic Cooperation and Development (OECD). Brazil should follow the example of other countries and begin to financially punish companies that tolerate acts of corruption in their staff, before the World Cup.

Brazil took care of all that. The regulation of the law fell to the municipalities, the States and the Union. The State of São Paulo, like that of Rio Grande do Sul, published a regulatory decree on January 29, 2014. The City of São Paulo, on 13 of May. Some states and many municipalities, however, were awaiting federal regulation, even to be able to follow the same parameters.

Federal regulation was essential to avoid leaving legal gaps that would hinder its implementation. In view of the delay in federal regulation, six entities sent a letter to President Dilma Rousseff, on January 28, reinforcing the importance of publishing the decree. ETCO, Ethos Institute, BM&F Bovespa, Brazilian Institute of Corporate Governance (IBGC), Group of Foundations and Companies Institutes (GIFE) and Brazilian Business Council for Sustainable Development (CEBDS) highlight, in the document, the importance of showing society that it exists effort to reduce corruption in the country. But it was only after the March 15 demonstrations that the president signed the regulatory decree, as part of the anti-corruption package announced on the 18th.

The decree gives the Federal Comptroller General (CGU) exclusive competence to institute, investigate and judge acts that are harmful to the public administration; establishes assessments on the effectiveness of compliance programs; defines conditions for leniency agreements and determines the financial punishment of the convicted company. The fine will never be less than the value of the benefit earned and its limits are 0,1% to 20% of the gross revenue of the last year (if it is not possible to evaluate the company's gross revenue, the amount will be limited between R $ 6 thousand and R $ 60 million).

It is now up to companies and all Brazilians to persistently mobilize to comply with the Clean Company Law.


*Evandro Guimaraes is Executive President of the Brazilian Institute of Competition Ethics (ETCO)

Submission of leniency agreements to TCU needs clarification

On February 11, the Federal Audit Court issued a normative instruction (IN 74/2015) making it mandatory for the prior submission, to TCU itself, of leniency agreements entered into within the scope of the Federal Public Administration by the Federal Comptroller General, under terms of Law 12.846 / 2013, the already known anti-corruption law. Considering that the TCU, with limited human and technological resources, is already in charge of an enormous amount of work - supervising the use of all federal public resources -, it is not uncommon, even, that criticisms are directed to him for the slowness of his ordinary office , for what reasons should this function be attributed more to TCU?


Source: Conjur (23/02)

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By the regulation of the Clean Company Law

Six entities, including ETCO, sent a letter on January 28 to President Dilma Rousseff, reinforcing the importance of the federal regulation of Law 12.846 / 2013, the so-called Clean Company Law or Anti-Corruption Law, which holds legal entities responsible for acts of corruption.

In addition to ETCO, the letter signed by the Ethos Institute of Companies and Social Responsibility, BM&F Bovespa, the Brazilian Institute of Corporate Governance (IBGC), the Group of Foundations and Companies Institutes (GIFE) and the Brazilian Business Council for Sustainable Development ( CEBDS).

“We recognize that Brazil has made great strides in recent years in improving its integrity system, which prevents and combats corruption. As an example, we can mention the creation of the Comptroller General of the Union and the promulgation of the laws on the Transparency Portals, the Clean Sheet and Access to Information ”, says the letter, remembering that the Clean Company Law came into force on 29 January 2014. Its regulation by the Presidency of the Republic “is fundamental to avoid leaving legal voids that hinder its implementation”.

In the letter, the entities highlight the importance of clarifying the parameters that will be used to assess the effectiveness of companies' compliance programs; to define the responsibilities of each federative entity in the processes; to determine the parameters for leniency agreements and to communicate to society its effective implementation.


Entities demand urgency in the regulation of the Clean Company Law

Six of the most influential civil society organizations in the country signed and sent a letter to the Presidency of the Republic addressing the importance of the federal regulatory decree of the Clean Company Law, which holds corporations accountable for corruption.
In the document, the signatories recognize the advances made in the public administration's integrity system in recent years, with the approval of the Clean Company Law (LEL) being one of the most important milestones in this process. However, the organizations warn that LEL needs to be regulated, so as not to leave legal loopholes that make it difficult, for example, to impose fines, adopt compliance by companies and enter into leniency agreements.
At the end of the letter, the entities also affirm that the promulgation of the decree will “unequivocally communicate to society and the market that the Presidency of the Republic gives fundamental relevance to the most important phase of any law: its effective implementation”.


This is the full text of the letter:
São Paulo, January 28, 2015.
To Her Excellency Dilma Rousseff,
President of the Federative Republic of Brazil
Ref. Regulation of Law No. 12.846 / 2013
Your Excellency, President of the Republic,
Our organizations, in a collaborative way, come through this letter to reinforce the importance of the federal regulation of Law nº 12.846 / 2013, the so-called Clean Company Law, which holds legal entities responsible for acts of corruption.
We recognize that Brazil has made great progress in recent years in improving its integrity system, which prevents and combats corruption. As an example, we can mention the creation of the Federal Comptroller General and the enactment of the laws on Transparency Portals, the Clean Record and Access to Information.
The approval of the Clean Company Law, which holds corporations accountable for acts of corruption, was another milestone in this process. However, since the entry into force on January 29, 2014, the law has not yet been regulated by the Presidency of the Republic, which is essential to avoid leaving legal gaps that hinder its implementation, due to the following aspects:
• Clarify the parameters that will be used to assess the effectiveness of companies' compliance programs. This item is essential because it can be a mitigating factor or an aggravating factor for the application of fines to the companies responsible.
• Define the responsibilities of each federative entity, and of their respective public agents, in establishing investigative and administrative processes, as well as the approach that will be taken at the state and municipal levels.
• Define the parameters for entering into leniency agreements, considering the involvement of all competent authorities, to avoid situations in which one authority does not honor the leniency of another.
• Communicate, unequivocally, to society and the market the relevance it gives to the most important phase of any new law: its effective implementation.
For our part, we will continue on our mission to promote the improvement of the national integrity system and to stimulate changes in business behavior towards transparency, integrity and the fight against corruption.

Best Regards,
BM & FBOVESPA - Edemir Pinto (Chief Executive Officer)
Brazilian Business Council for Sustainable Development (CEBDS) - Marina Grossi (President)
Brazilian Institute of Competitive Ethics (Etco) - Evandro Guimarães (Executive President)
Ethos Institute of Business and Social Responsibility - Jorge Abrahão (Chief Executive Officer)
Group of Foundations and Companies Institutes (GIFE) - André Degenszajn (Secretary-General)
Brazilian Institute of Corporate Governance (IBGC) - Heloisa Bedicks (General Superintendent)

Three questions for Gustavo Ungaro

Gustavo Hungaro, President of the São Paulo State Internal Affairs Department and the National Council for Internal Control (Conaci)
Gustavo Hungaro, President of the São Paulo State Internal Affairs Department and the National Council for Internal Control (Conaci)

What is the importance of combating corruption, especially given the scenario of high impunity in which we currently live?

 Impunity is certainly a stimulus to corruption. Therefore, it is necessary to adopt measures from governments and civil society to reduce situations in which deviations may occur. In this sense, the new Anticorruption Law [Law 12.846 / 13] represents an extremely relevant instrument. The rule brings the possibility of financially punishing companies that maintain improper relations with the State and discourages undue actions in the business environment. It also applies to civil society entities. Therefore, it is a large universe of institutions that is covered by the new law. Another important point is that the rule can be put into practice within the scope of administrative law, without the need for judicial measures, and provide a result with more speed and simplicity. And, if there is an inappropriate situation in the administrative sphere, nothing prevents the correction from being made in the judicial sphere. The Anticorruption Law is in line with society's expectations. The internal control bodies are preparing to apply it. The State of São Paulo has already regulated the provision and the Internal Affairs Department of Administration is already prepared to apply it.


Companies are a little afraid of the possibility that the standard will eventually be misused and generate new situations of corruption. How do you see this issue?

 I want to believe that we live in a democratic rule of law, that has mature and strong institutions, zealous for legal security, and that all this can generate a favorable scenario for the application of the law, without injustice, persecution or misuse of the rule. Brazil has an important precedent in this regard. Since the 90s, the General Bidding Law has empowered the administrative sphere to apply sanctions against companies, which can go five years without making new contracts with the public administration throughout Brazil. This has been in place for more than 20 years, without, however, actually having a problem. Therefore, this is a favorable and optimistic precedent for the application of the Anti-Corruption Law. However, we must be grounded and clear that the law is not so attractive to anyone who wants to confess to an unlawful act, as is, for example, the Law on Defense of Competition. This rule provides for immunity from the penalty provided for companies that voluntarily report deviations from authority, through a leniency agreement. In the case of the Anti-Corruption Law, there is no immunity as a result of this type of agreement. There is only a reduction in the applicable penalty. From the point of view of morality, the solution of the Anti-Corruption Law is perhaps more appropriate. But this can, of course, make it more difficult for companies to recognize their own flaw and create a situation where law enforcement depends on investigation and complaints. This will be a challenge to the implementation of Law 12.846 / 13. But the rule already has its value in spreading a culture of ethical behavior, of integrity to avoid undue situations. In that sense it is very beneficial for society.


One of the bottlenecks of the law is the need to equip the public administration bodies responsible for its application with tools that make it possible, for example, to make investigations feasible. What do you think about that?

This is a very important aspect. The internal control bodies in Brazil need to be valued by the government, have an adequate budget, have a public tender and are prepared for the job. Considering that governments are large institutional devices, it is natural that they demand proportional control structures. I preside over Conaci, the National Council for Internal Control. Our institution has the strengthening of internal control bodies as a priority agenda. In Congress, there is a proposal for Constitutional Amendment No. 45, of 2009, which establishes that internal control is exercised by own bodies, with competitions for which they have competed. In Brazil, there are different situations, with very well structured bodies, equipped, with conditions, experience and trained people, and also organs in very precarious situations. It is in the society's interest that there is this advance in management self-control. Throughout the recent historical process of Brazilian democracy, with the Constitution of 88, there was a strengthening of external control, represented by the Public Ministry and the Courts of Accounts, which is very good for citizens. There are also good results in internal control, which should encourage institutional improvements in favor of defending legality and morality.


Pharmaceutical sector meets around the Anti-Corruption Law

Attention and urgency in the implementation of Compliance programs. These were the main points addressed by participants at a seminar held in November by the Pharmaceutical Products Industry Union (Sindusfarma) in partnership with ETCO, on Law 12.846.

In his opening lecture, the former CEO of international laboratories, Jorge Raimundo, recalled that two years ago the code of ethics for pharmaceutical companies was completed and that signing the document is a prerequisite for any company in the sector. “Companies that want to have a history of more than 100 years cannot go wrong on a daily basis. In the pharmaceutical industry, it is essential to respect ethical principles and companies have to follow codes of conduct that protect investors from illegal acts that could compromise their market value, ”he added.

ETCO's Executive President, Evandro Guimarães, highlighted the institute's objective of raising awareness and mobilizing society so that the new measure can reduce corruption among public officials. The Executive President of Sindusfarma, Nelson Mussolini, cited the allegations of corruption raised by Operation Lava Jato to illustrate the importance of a change in the attitude of companies when it comes to corruption. “When you see everything that happens in Brazil today, you understand the importance of beginning to live ethics within the country”.

During the seminar, CVS Caremark's Compliance Officer, Alexandre Serpa, pointed out that the high figures involving pharmaceutical companies and the already known modus operandi the sector puts it in the sights of the Anti-Corruption Law. He pointed out that these factors further intensify the need for companies in the industry to develop serious compliance programs that, according to the law, can serve as mitigants in cases of conviction. In addition, he added that the risks for the segment have changed in recent years, requiring a review of existing prevention actions. “Ten years ago, corruption was paying for travel and gifts for doctors. Today, it involves high-cost drugs and relationships with medical associations and the government ”.

The person in charge of Machado, Meyer, Sendacz and Opice Advogados in the Compliance area, Leonardo Machado, emphasized the importance that the segment should give to the theme. “The pharmaceutical industry has peculiar characteristics in contact with the public sector and must be aware of the impacts inherent to the new legal text. Experiences in the application of similar anti-corruption laws in other countries, make it clear that the sector is one of the ones that most draws the attention of the authorities, ”he said.

Also present at the event, the Security and Control Analyst at the Federal Comptroller General (CGU), Flávio Rezende Dematté, said that Law 12.846 came to correct a gap Brazil in relation to the liability of the Legal Entity for acts of corruption. The measure also stands out, according to him, for its focus on the economic bias of corruption by imposing high fines and the publication of the condemnation of businesses involved in illegal acts.

Adherence to good practices is a weapon against corruption

Minister Jorge hage, opening the Clean Company Law Conference at FGV
Minister Jorge Hage, opening the Clean Company Law Conference at FGV

In the face of so many facts involving the public and private sectors in Brazil, the country still needs to develop actions that place employees from both spheres alongside anti-corruption initiatives. This is the opinion of ETCO's Executive President, Evandro Guimarães, who participated, in November, in the Clean Company Law Conference, organized by the Federal Comptroller General (CGU).

The event, held at the Getúlio Vargas Foundation in São Paulo, divided the discussion on the Anticorruption Law into panels. Among other points, the impact of the measure on companies, the necessary adaptations to integrity programs, the execution of leniency agreements were addressed.

CGU Chief Minister Jorge Hage highlighted that Law 12.846, which he called the Clean Company Law, represents another step in Brazil's search for mechanisms to fight corruption. He added, however, that measures such as the end of private financing of political campaigns and political reform are essential for the country to gain a new direction on the subject.

The Anticorruption Law is the first Brazilian legal framework to provide for important punishments (up to 20% of revenues or within the limit of R $ 60 million when it is not possible to measure it) for companies that violate ethics in national or foreign public administration. Companies can also be penalized with the wide publication of the condemnatory action.

Despite the severe punishment, Brazilian corporations approve the mechanism. During the CGU event, professor at Fundação Dom Cabral (FDC) Dalton Sardenberg presented a research that shows that 50% of the companies consulted are in favor of the new legislation. Another 31% are against and 19% neutral. The understanding of the law grows with the size of the business - 70% of large corporations understand the law. In medium and small companies, the percentage drops to 39% and 37%, respectively. While 63,6% of multinationals understand the Anti-Corruption Law, the rate is 40% for family companies.

But, regardless of size, participants at the CGU event stressed the importance of all corporations developing and following a code of conduct and an anti-corruption culture. “We would like all businesses to think of anti-corruption mechanisms as they think of CIPA (Internal Commission for Accident Prevention). May compliance be the concern and pride of all employees ”, emphasized Guimarães.