Compliance Programs and Covid-19

Gabriela de Ávila Machado
Lawyer at Marcos Martins Advogados

Everyone knows that the crisis brought on by the COVID-19 pandemic has had, and could still have, insurmountable effects on people and organizations. We have to bear in mind that, even after the pandemic, with the advent of the vaccine, society as a whole will still feel the effects of the crisis. It’s also important to note that the crisis has brought about significant changes in various regulations, whether they are temporary, experimental or permanent. We must find ways to deal with the new economic and legal scenario.

In this article, we intend to briefly address howcompliance programs , or “Integrity Programs”, can prove to be an effective measure to help during and after a crisis.

Understood as the duty to comply with acts, norms and laws, the term “compliance” is actually even broader. It encompasses a question of ethics and integrity. If a company neglects integrity, it could face huge fines and, of course, incalculable damage, including to its image.

Decree 8420/2015, which regulates law 12.846/2013 – known as the Anti-Corruption Law, establishes the “Integrity Program”, which is nothing more than a “set of internal mechanisms and procedures for integrity, auditing and encouraging the reporting of irregularities and the effective application of codes of ethics and conduct, policies and guidelines with the aim of detecting and remedying deviations, fraud, irregularities and illegal acts committed against the public administration, national or foreign”.

An organization’s Integrity Program has the following pillars, as set out by the Federal Office of the Inspector General in its publication “Integrity Program – Guidelines for Private Companies”[1]:

1. Commitment and Support from Senior Management.
2. Creation of a body responsible for the Integrity Program.
3. Analysis of profile and risks, according to the size and specificities of the organization.
4. Structuring of rules and instruments (Code of Conduct, Policies, communication and training, whistleblowing channels, among others); and
5. Continuous monitoring strategies.

In times of crisis, however, the definition of complianceand the need for a robust program expands even further to include aspects of governance, transparency and internal controls. According to Cláudio Carneiro, President of the IAB’s Compliance and Governance Commission, the program is a good “tool for efficient management, and not simply an instrument for fighting corruption”.

Take the home office as an example. This “new” way of working should make employers more concerned about the confidentiality of information. This is just one example. We are going through a time of crisis and this means that many rules and/or procedures are being relaxed, if not forgotten.

General good practices

Therefore, other good practices must be included in the company’s daily routine, so that we can get through the crisis with as few consequences as possible:

1. Like the first pillar described above, support and true commitment from top management – known as “tone from the top”. The example comes from the top. Employees and collaborators look up to their leaders, especially at a time of crisis;
2. The crisis has led to the need for some companies to hire urgently. This does not mean that a minimum due diligence should not be carried out. We must be aware of the service provider we are hiring;
3. More constantmonitoring of risks;
4. Reviewing the Code of Conduct and institutional policies. Are they in line with our current scenario? With the scenario the company is going through?
5. New staff training on the company’s internal procedures It is important to reinforce that the rules of compliance and integrity continue to apply. Training can be carried out virtually, so don’t hesitate to apply it;
6. Home office means that employees use informal means of communication, such as WhatsApp. It is important for the company to communicate with employees so that they continue to use the corporate communication channels, which will allow a correct record to be kept of the activities and discussions that took place during the crisis period;
7. Record all decisions about exceptions to internal rules, with the reasons for them.

Another point of attention is in the case of restructuring processes and M&A operations. As Márcio Monteiro Gea and Guilherme Traub explained, the institute of due diligence in these cases is even more important, “not only to assess the company’s history of wrongdoing and violation of integrity rules, but also for a more accurate examination of the organization’s operations during the pandemic”[2].

Relationship with the Public Administration

We know that the government has been publishing laws and rules on a daily basis to assist society during this phase. Many procedures have been made more flexible, including bidding procedures and public contracts. Despite this flexibilization, minimum legal requirements are still demanded. The company that contracts with the Public Administration must be aware of changes in legislation and contracting procedures.

But it’s not just changes in legislation that we need to worry about. The crisis environment can make some people give in to the pressure of targets, for example. This can be a facilitator for irregularities and non-observance of rules. It is therefore essential that the company records all dealings with the Public Administration.

Conclusion

The Anti-Corruption Law stipulates that a legal entity can be held liable for a crime committed by its representatives, either civilly or administratively, and can suffer monetary damages.

But not only that, there is also damage to the company’s reputation, which can, in a long-term analysis, be even worse than the damage caused by an immediate fine.

Finally, prepare for the aftermath of the crisis. It’s important to think about the company’s past and present, but don’t forget to plan for tomorrow. The pandemic will end, but its effects may be felt for a long time, so it’s important to be ready for what’s to come.

Questions? Talk to our lawyers and get advice.

[1] COMPTROLLER GENERAL OF THE UNION – CGU. Integrity Program: guidelines for private companies. Brasília, September 2015. Available at: https://www.gov.br/cgu/pt-br/centrais-de-conteudo/publicacoes/integridade/arquivos/programa-de-integridade-diretrizes-para-empresas-privadas.pdf. Accessed on: Aug. 20, 2020.

[2] GEA, Márcio Monteiro; TRAUB, Guilherme. Compliance and governance measures in times of covid-19 and the emergency corporate rules of March and April 2020. Migalhas, April 21, 2020. Available at: https://www.migalhas.com.br/depeso/325121/medidas-de-compliance-e-governanca-em-tempos-de-covid-19-e-as-normas-societarias-emergenciais-de-marco-e-abril-de-2020. Accessed on: Aug. 27, 2020