On July 18, 2022, Decree N. 11,129/2022 came into force, revoking Decree N. 8.420/2015 and providing a new regulation to Federal Law N. 12,846/2013, known as the Brazilian Anti-Corruption Law (LAC). In general, the new federal Decree revokes Decree N. 8420 of March 18, 2015, which regulated the matter previously, provided that the acts performed before its effectiveness remain valid and it will be immediately applicable to ongoing proceedings, besides incorporating provisions already adopted by normative acts and internal understandings of the Office of the Comptroller General (CGU) and the Office of the Attorney General (AGU).
In this sense, integrity programs were regulated in articles 56 and 57, receiving special emphasis from the new regulation. The new regulation changed relevant parameters for the evaluation of integrity programs, which are taken into consideration in the application of sanctions imposed by LAC, according to Article 7, item VIII of the Law N. 12,846/2013.
A relevant aspect was the increase of benefits for legal entities that adopt an effective integrity program, capable not only of detecting and correcting, but also preventing deviations, frauds, irregularities, and illicit acts committed against the national or foreign public administration. Among these benefits, it should be highlighted the increase from 4.0% to 5.0% of the maximum percentage of reduction of the fine that can be granted if the legal entity demonstrates it has a robust integrity program prior to the violation.
Decree N. 11,129/2022 also emphasized, in its Article 56, item II, that the compliance programs should be used as a means to foster and maintain a culture of integrity in the organizational environment. In this regard, it is worth noting that Article 57, item IV, reinforces the importance of communication and training on the integrity program, fundamental tools for disseminating the organizational culture within companies.
Furthermore, the new LAC regulation, in accordance with Article 57, sought to reinforce the criteria for the analysis of the effectiveness of the integrity program, making them stricter and more robust. Among the parameters for evaluating the effectiveness of the integrity program, the following criteria were included, capable of reducing sanctions applied to legal entities that adopt efficient integrity programs: (i) the allocation of adequate resources as evidence of the commitment of the legal entity’s top management; (ii) periodic communication actions regarding the integrity program; (iii) adequate risk management, including analysis and periodic reassessment to carry out necessary adaptations to the integrity program and the efficient allocation of resources; (iv) mechanisms for handling reports; and (v) risk-based due diligence for hiring and supervising brokers, consultants, commercial representatives, among other third parties, as well as politically exposed persons (PEP) and their families, close collaborators and legal entities in which they participate, and for carrying out and supervising sponsorships and donations. It is worth pointing out that these parameters vary according to the number of employees and collaborators, the revenue, the corporate governance structure, and the complexity of the internal units or the economic group structure.
Concerning the destination of proper resources as evidence of the commitment of the top management of the legal entity, this parameter aims to reinforce the importance of top management’s commitment to the integrity program, not only providing visible and unequivocal support for the program (“tone from the top”), but also demonstrating this commitment by allocating financial, technological and human resources which allow the implementation of an effective integrity program. In this way, the new Decree demands a coherence between the volume of resources allocated to the implementation of the integrity program and what is effectively executed for the mitigation of risks of potential harmful acts. Furthermore, it also reinforces the concept that a formal commitment is not enough, being also necessary the material commitment in order to build an integrity culture, a true pillar of an effective integrity program.
Concerning the mechanism to handle complaints, the new Decree provides that, in addition to the reporting channel, mechanisms must be implemented for the effective handling of complaints. Thus, the Decree confirms the idea that besides offering an e-mail or a hotline to register complaints, the company must advance in the implementation of a whistleblowing policy to report irregularities, in order to regulate the processing of these complaints in compliance with the international legislation, such as Loi Sapin II in France. This tends to cause an increase in the companies’ internal compliance investigations, and it is expected that the companies will be increasingly proactive and efficient in the verification and punishment of irregularities.
Moreover, Decree N. 11,129/2022 provides that the CGU shall issue complementary guidelines, norms, and procedures on the evaluation of the integrity program, including a simplified form of evaluation in the case of micro and small enterprises.
Finally, it should be noted that the new federal Decree maintained other minimum parameters for evaluating integrity programs that were already adopted under the previous Decree, not introducing changes on this point. In this sense, it is worth mentioning as examples the adoption of (i) standards of conduct, code of ethics, integrity policies and procedures, applicable to all employees and administrators, regardless of their position or function, as well extended, when necessary, to third parties, such as suppliers, service providers, intermediary agents and associates; (ii) accounting records that fully and accurately reflect the legal entity’s transactions; and (iii) internal controls that ensure the elaboration and reliability of the legal entity’s reports and financial statements; among others.
Nonetheless, the changes introduced by Decree N. 11,129/2022 reinforce the fundamental role of the internal compliance programs as governance instruments indispensable for the assurance of a healthy public-private relationship, confirming the tendency that the companies’ compliance programs must advance each time further from formality to effectiveness.
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