Roberto Abdenur is Former Brazilian Ambassador to the United States, China and Germany. Most recently, he served as CEO of ETCO, the Brazilian Institute for Ethics in Competition, a Non-Governmental Organization that works with corporations and associations to promote responsible business practices.
Pamela Passman is President and CEO of the Center for Responsible Enterprise and Trade (CREATe.org), a global nongovernmental organization dedicated to helping companies and third parties implement leading practices for preventing corruption and protecting intellectual property including addressing trade secret theft, counterfeits and piracy. More on these authors below.
Companies Need to Step Up to Ensure True Reform
Given the daily news unfolding from Brazil, it may seem inconceivable to consider that the country is moving from laggard to leader in anti-corruption. However, it is worth noting that while some political entities are crumbling, others are functioning well and the fight against corruption forges on.
In unprecedented moves that have gained worldwide attention and given its citizens renewed hope for change, Brazil has launched an anti-corruption probe that has touched the highest levels of political office and several of the country’s biggest and most powerful companies.
Thus far, the former treasurer of Brazil’s governing Workers party and several of the most senior executives of Petrobrás have been sentenced to prison terms. Brazilian construction mogul Marcelo Odebrecht was also sentenced to 19 years imprisonment for his payment of over $30 million to Petrobrás executives in exchange for winning contract bids. As of early 2016, ten companies implicated by the scandal have commenced the negotiation of leniency deals with the Brazilian comptroller general’s office.
Brazilian prosecutors also have charged the former CEO of Eletronuclear, a subsidiary of Brazil´s largest power utility, with accepting bribes from construction companies that were part of the consortium building the third reactor at its Angra nuclear power plant.
Leveling charges against two major state-owned corporations, Petrobrás and Eletrobrás, and high-profile political figures is a bold message that has taken many Brazilian supporters and country watchers by surprise.
It has taken nearly three decades for the U.S. to move from adoption of the FCPA in the late 1970s to active enforcement efforts in the early 2000s. In contrast, Brazil appears to be moving more quickly. Brazil passed its new foreign bribery law, the Clean Company Act, in 2014. The Act holds companies responsible for the corrupt acts of their employees and third parties, and notably introduces corporate liability. A year later, Brazil issued guidance on what constitutes effective compliance under the Brazil Clean Company Act in order to qualify for leniency.
In Brazil, the foundation is in place for meaningful progress on corruption. New laws enacted in the past few years – addressing fiscal responsibility, transparency and anti-corruption – have established a new legal framework to tackle corruption and misdeeds by officials, executives and politicians alike. More recently, new legal mechanisms have begun playing a vital role in uncovering misdeeds, akin to the plea-bargain procedure used in the USA.
Also important, new legal entities and institutions have been endowed with the authority to act with independence from government. These include the new Ministry of Transparency, Monitoring and Control (including the former “Controladoria-Geral da União”), several instances of the “Procuradoria da República,” new administrative resources in the hands of the “Receita Federal,” the various offices dedicated to the tracking of illicit financial transactions, and an autonomous Federal Police.
Brazil is also reaching beyond its borders for investigations and information exchange between the investigative teams in Brazil and their counterparts in other countries through whose financial systems dirty money has been moved, including the USA, France, Switzerland and others.
Equally important, there is a resounding demand for transparency and accountability by Brazil’s vibrant civil society; its free, active and investigative media; and highly engaged, social media savvy citizens.
These remarkable changes in governmental institutions must be accompanied by actions from private companies. To fully realize this future, however, companies must also take steps to mitigate corruption within their organizations and networks. Chief among those efforts is the need to implement strong internal anti-corruption compliance programs and then do more to help ensure that business partners adhere to the same or similar rules. These efforts are vital if lasting change is to take place in Brazil and elsewhere.
Actions by the government and its legal system, coupled with continued movement by civil society, corporations and citizens will help Brazil to emerge out of the serious economic and political crises it now faces as a stronger democracy, a better society, and, not least, also as a better place for business and economic development.
Ethisphere’s 2016 Latin America Ethics Summit is happening on June 8-9 in Sao Paulo, Brazil. Meet and network with industry leaders along with members of the C-suite, who will gather to discuss and promote corporate integrity and performance. For more information about this exclusive event and to register, click here.
Roberto Abdenur is Former Brazilian Ambassador to the United States, China and Germany. Most recently, he served as CEO of ETCO, the Brazilian Institute for Ethics in Competition, a Non-Governmental Organization that works with corporations and associations to promote responsible business practices. He has also served as Deputy-Foreign Minister and is a member of CEBRI- the Brazilian Center for International Relations and GACINT, a forum for the analysis of major foreign policy issues at the University of São Paulo.
Pamela Passman is President and CEO of the Center for Responsible Enterprise and Trade (CREATe.org), a global nongovernmental organization dedicated to helping companies and third parties implement leading practices for preventing corruption and protecting intellectual property including addressing trade secret theft, counterfeits and piracy. Prior to founding CREATe, Passman spent 15 years in leadership positions at Microsoft and was the Corporate Vice President and Deputy General Counsel, Global Corporate and Regulatory Affairs, Microsoft Corporation.