Financial Crime World

Brazilian Companies Must Prioritize Anti-Corruption Efforts

Crackdown on Corruption in Brazil

São Paulo, Brazil - As the Brazilian government continues to crack down on corruption, companies operating in the country are being urged to prioritize anti-corruption efforts and implement effective compliance programs.

Decree Requirements

According to a recent decree, legal entities in Brazil must conduct proper due diligence prior to engaging with third parties, such as:

  • Suppliers
  • Service providers
  • Intermediaries

This includes verifying the integrity of these parties and monitoring their activities to prevent corruption. Additionally, companies must ensure transparency surrounding donations to candidates and political parties made by companies.

Importance of Compliance Programs

While some companies may think they do not need a compliance program, experts warn that this is a misconception. “There are no ‘off the shelf’ solutions,” said Leopoldo Pagotto, partner at FreitasLeite Advogados. “Companies must understand their unique risks and implement a programme that addresses those risks.”

Creating an Effective Compliance Program

To create an effective compliance program, companies must:

  • Conduct a risk assessment to identify potential vulnerabilities
  • Review documents and interview relevant employees to understand the company’s internal risks
  • Implement adequate policies, procedures, and controls to prevent corruption
    • Promote a culture of integrity throughout the organization
    • Provide education on anti-corruption laws and regulations

Monitoring Mechanisms

Monitoring mechanisms are also essential for ensuring compliance. Companies must:

  • Regularly audit their compliance programs
  • Respond promptly to any breaches or irregularities

Understanding Local Legislation

In Brazil, managing anti-corruption risks requires knowledge of local legislation as well as an understanding of the nuances of compliance in the country. Experts warn that companies cannot simply adopt a global program and expect it to work in Brazil.

Compliance Program Registration

Several large companies have already registered their compliance programs with the Comptroller General of the Union (CGU), including:

  • Siemens
  • Santander
  • EDP
  • Johnson Controls Building Efficiency

By registering their programs, these companies demonstrate their commitment to ethics and transparency.

Conclusion

While implementing an anti-corruption program may seem daunting, it is essential for companies operating in Brazil to prioritize this effort. By understanding the risks they face and implementing effective measures to prevent corruption, companies can mitigate potential fines and reputational damage.