Brazilian minister of Transparency shows skepticism of plug'n'play compliance programs

Wagner de Campos Rosário, head of the Brazilian Ministry of Transparency and Comptroller- General of the Union, said he is skeptical about how well "plug’n’play" compliance programs can meet individual companies' needs. 

In an exclusive interview with MLex, Rosário said the biggest challenge when implementing a compliance program is designing one that directly addresses the risks and challenges a particular company faces, as well as the market in which it operates. Rosário also discussed the need to coordinate in Brazil among different agencies that investigate corruption. 

“The compliance plan should relate to the companies’ [specific] problems. It shouldn’t be a shelf document with generic risks," Rosário said. "For example, you have a company where 80 percent of its revenue comes from contracts with governmental agencies, but its compliance document identifies problems arising from contracts with the private sector. It clearly misunderstands its business strategy, which isn’t contemplated by the compliance plan [that is] focused on the wrong risks." 

"What ultimately matters is the correct identification of the risks for the activities of the company," he said. "Ready-made solutions are useless, because compliance needs to be incorporated into the company’s culture, and upper management needs to see the compliance plan as something that provides results." 

The Ministry of Transparency and Comptroller-General of the Union, or CGU, has gained significant experience in analyzing compliance strategies since 2015, when the agency launched a yearly accreditation program recognizing companies that show they have effective mechanisms for preventing, detecting and mitigating corruption and fraud.

So far, the program has recognized 19 companies out of 95 applicants in 2015, 25 companies out of 195 applicants in 2016, and 23 companies out of 375 applicants in 2017. 

Rosário said it’s easy to spot a weak compliance strategy that is obviously "a mere formality." 

"A good strategy takes time to mature. Some ambitious compliance initiatives weren’t recognized by the CGU not because of bad plans, but because they still needed to be put to the test to show that they're working properly," he said. 

Leniency coordination

Currently in Brazil, a company can reach a leniency agreement with one agency, only to have it undermined or invalidated by another agency. Companies operating in Brazil have frequently criticized this lack of finality of settlements that don't involve all of Brazil's anticorruption agencies. 

The problem is that under the Brazilian statutory anticorruption law, only the CGU is entitled to reach settlements in administrative probes. However, Brazilian courts have held that federal prosecutors are authorized to sign leniency agreements in criminal cases. This means that a settlement a company reaches with the CGU doesn't have to be honored by the Federal Prosecutors' Office, or vice versa. 

In addition, the Attorney General’s Office and the Federal Court of Auditors can ask for debarment of companies that engage in corrupt practices. The possibility of debarment puts a leniency agreement at risk when a company is seeking to resolve all of the issues associated with an offense. 

"Could CGU by itself strike a deal that gives legal certainty to the companies? The answer is no," Rosário said. "Other agencies have the capacity to invalidate our settlements. This is why we have to bring all agencies to the table, so that a company can leave our office saying that the conversation is over." 

Rosário told MLex that the country's various anticorruption agencies are getting closer to developing a unified approach to settlements. For example, in December 2016, the CGU reached an agreement with the Attorney General’s Office under which the two agencies would work together on settlements. 

However, there is no similar agreement yet with federal prosecutors and auditors. Rosário said prosecutors have been too busy with Lava Jato investigations of corruption at state- controlled energy company Petrobras to discuss working more closely with other agencies on settlements, and the court of auditors would rather review settlements than help negotiate them. 

The minister said a recent leniency agreement signed with two advertising companies is a 

good example of the cooperation he wants to see more of. The settlement with MullenLowe Brasil and FCB Brasil, units of the global Interpublic Group, was the first to be signed by all four anticorruption agencies — the GCU, Federal Prosecutors' Office, Federal Court of Auditors and Attorney General's Office (see here).