Establishing Effective Compliance Regimes

In June 2013 Brazil erupted in protests that gathered vast crowds in several cities across the country, with claims that varied in scope. One claim, however, was widely heard in unison: 'stop corruption!' was a mantra insistently repeated by protesters, putting politicians from across the political spectrum under an uncomfortable spotlight.

It was a surprising wake-up call. The matter was subject to heated debates for months during presidential elections in 2014 and climaxed with the Lava Jato operation of the Federal Police, which uncovered a large corruption scandal involving civil construction companies and politicians at the heart of a company which once made Brazilians proud: Petrobras. .

The public desire for ethics and compliance loudly voiced in the streets is certainly not to be understood as confined to politics and public servants. Corporations must hear the call and act accordingly. As senior politicians face jail sentences, detection mechanisms become more sophisticated and legislation becomes more effective and enforceable, a culture of compliance is starting to replace the long-standing perception of impunity that has contaminated the business environment.

One reason in particular must drive this new mindset: it always takes two to tango. If someone was bribed, someone had to pay.

Compliance programmes are not designed to make regulators happy. They make sure people follow the legal rules of a certain jurisdiction while they preserve the company's culture and values no matter where they are doing business. Effective risk management is highly dependent on the company's success in doing both.

A strong compliance programme allows people to identify when boundaries are crossed, alert management and respond to breaches appropriately. This is certainly a challenge in every jurisdiction and no less in a changing environment such as Brazil. Brazilian laws and case law have not provided much guidance so far with respect to the satisfactory content of compliance and ethics programmes.

Antitrust regulators tried unsuccessfully to introduce a certified compliance programme in 2004. More recently, compliance programmes have gained a lot of attention in light of the recent Anti-Bribery Law, enacted in the midst of the protests of 2013 and which came into force on 29 January 2014.

The new Anti-Bribery Law establishes that an effective compliance programme will be taken into account for the purpose of the reducing penalties in the case of...