On September 10, 2015, Joint Ordinance No. 2,279, of September 9, 2015 (“Ordinance”) was published and jointly submitted by the Office of the Comptroller General (“CGU”) and the Office of Micro and Small Businesses (“SMPE”). The Ordinance governs the standards for anti-corruption compliance – or integrity – programs and the assessment of such programs with respect to micro and small businesses (“MSB”), for the purposes described in Federal Law No. 12,846/2013 (“Anti-Corruption Statute”) and the corresponding regulations set out in Federal Decree No. 8,420/2015.
The Ordinance applies to MSBs and was issued with a view to achieving greater simplification and less formality. Nevertheless, the Ordinance provides clarification and examples of minimum integrity measures, which are recommended by CGU achieving a greater degree of compliance effectiveness. Such clarification and examples can be helpful in the interpretation of Brazilian anti-corruption standards for non-MSB companies and organizations.
The clarifications provided in the Ordinance may signal what the CGU expects when assessing compliance programs of companies of any size. However, it is important to keep in mind that larger companies shall be required to have a more sophisticated compliance program than that contemplated in the Ordinance.
For informative purposes, we describe below a non-exhaustive list of clarifications and examples provided by the Ordinance relating to the standards of integrity programs:
- Commitment of the senior management: senior management is not solely limited to management and shareholders. It also includes managers or other leaders, who must disseminate the integrity culture, using, for this purpose, various medias such as e-mails, social networks, posters and so on;
- Standards of conduct, code of ethics, policies and procedures: the code of ethics of a company must be a source of information, and senior management shall be obligated to review and update it when new business is concluded;
- Periodic training: the training must cover the principles of the code of ethics, explain the risks arising from the company’s activities, and can be provided in person or through distance training. The company can encourage the direct participation of management and employees in in-person or distance courses on ethics, integrity, public bid processes and agreements entered into with the government;
- Accounting Records: the Ordinance recommends registering all transactions and preserving the relevant records, adopting electronic systems for accounting records, and ensuring that accounting is undertaken performed by a professional qualified to do so;
- Internal controls: are described as preventive procedures that permit verification of whether the transactions, purchases, sales, inventory control and payments, among others, are being made correctly and in accordance with the instructions of management. The Ordinance recommends establishing the responsibilities of employees, reconciling revenues and expenses paid with the accounting records, establishing rules as to the need for approval and specific authorization for high value, high risk or government-related payments, among other recommendations;
- Procedures to prevent irregularities in interactions with the government: the Ordinance recommends the approval of clear rules for the interactions of employees and officers with public agents, such as a rule stating that interactions with public agents should be carried out by at least two representatives of the company, rules about the offering of gifts or presents to public agents, and the hiring of current and former public agents;
- Disciplinary measures: the Ordinance mentions ordinary consequences under labor and employment legislation, such as warnings, suspension and termination. It also recommends that the consequences for non-compliance should be described in the code of ethics of the company;
- Procedures to interrupt irregularities: the Ordinance recommends that more than one representative of the company should supervise material transactions or activities, such as high value transactions or interactions relating to the government. It also recommends investigation of inappropriate situations or behavior;
- Transparency as to political donations: the Ordinance clarifies that the idea of transparency is not limited to the keeping of electoral receipts. Donations to candidates and political parties must be disclosed and, if the company does not make donations, it should also disclose this fact. In addition, the Ordinance recommends that the company should establish who can approve a donation on behalf of the company.