Effective compliance
Article in 'O Tempo', of 23/07/2019, on compliance as an instrument of management self-control to mitigate business risks.
Translated from the original.
Compliance can be understood as an instrument of management self-control, increasingly necessary to mitigate risks for domestic and foreign companies, which have invested heavily in these mechanisms for protecting the integrity and morality of business, since it is a global requirement. Such programs are dynamic in nature and need to be constantly reviewed and updated.
At the same time, efforts are made to combat the so-called “window-dressing compliance industry” in Brazil and around the world, a spurious situation characterized by self-control programs that merely mask the company’s real problems, generally superficially.
The trend, in this context, is for integrity programs to come under oversight by bodies such as the Public Prosecution Service, the Office of the Comptroller General of Brazil, the Courts of Accounts and Public Law Offices. Hence the importance of spreading, among companies and entities, the importance of implementing so-called effective compliance.
One must always focus on prevention, diagnosis, investigation and solutions to the problems that are the object of a dynamic compliance program. The transnational character of the program is mandatory for companies and entities that have even minimal dealings with the foreign market, because Brazilian rules have extraterritorial reach and, in addition, foreign legislation also reaches acts committed in Brazil.
The damage to a company’s image resulting from sanctioning proceedings, whether judicial or administrative, is irreversible. To avoid proceedings, it is necessary to bet on prevention and self-regulation, with risk mitigation taking place with greater intensity.
When there is an accusation of unlawful practices, the legislation always authorizes good faith and the lawfulness of the conduct as an exclusion. In this sense, the company will be immune before the external regulator if it demonstrates that it has effective compliance and that its organization is not inadequate, because the legal entity may be held liable for a kind of culpability for defective organization, in light of Law 12,846/13 (Corporate Anti-Corruption Law).
There is no doubt that effective compliance can function, at the limit, as an excluder of culpability itself and as an eliminator of causality between the conduct and the harmful result. Residually, compliance can not only mitigate sanctions on the legal entity, but also avoid the involvement of the company’s executives and employees.
The managers of entities and companies with effective compliance benefit, directly and indirectly, from the culture of integrity and risk prevention. In this sense, robust self-control avoids the rigors and excesses of external regulation, and may even serve as a parameter to mitigate legal sanctions, by revealing the good faith of directors and employees, since one must always remember that this type of legislation imposes public duties on the private sector.
Fábio Medina Osório is a lawyer and former minister of the Office of the Attorney General of the Union