This is certainly a question that concerns many managers and even many compliance officers or even those responsible for providing guidance within an organization.
The payment or benefit made to a Government official currently in Brazil, is no longer a local problem, considering the extraterritoriality of the different anti-corruption laws, worldwide. Therefore, a potential act of corruption here does not have consequences only here in Brazil, but in several other countries as well, if and depending upon its extraterritoriality, that company is subject to punishment.
As a result, the purpose of this article is to suggest guidelines for prior assessment and approval prior to the payment or benefit accomplishment:
- Is the payment for the benefit of the Government official or the Government? Obviously, if, at the end of the day, the Government is the beneficiary, that payment has a much lower risk. However, if it is for a Government official, the questions below need to be clarified;
- Do local laws, the codes of conduct of associations that self-regulate the sector and your company's internal policies and procedures allow for payment? If it is expressly permitted by one of them, even if it is omitted in the others, the risk is also minimized. If there are any written prohibitions in any of them, the intention to make the payment or benefit must be discontinued. If the documents are not referencing as to whether or not you can make the payment or provide the benefit, go ahead in this article; after all, it is not because “others do” that this exempts you from your responsibility to do the right thing;
- Does the payment have the purpose of influencing the Government official under his / her public function to benefit the company? If so, the payment must be immediately rejected. If not, move to the rest of this article;
- Could the payment be perceived as an act of corruption, as it is not modest, or is it not clear the legitimate purpose for the company? If so, the payment must be immediately rejected. If not, move to the rest of this article;
- Is the payment made due to any service provision contract with the Government official? If there is a contract between the company and the Government official, the risk is minimized, but as long as some precautions have been taken, such as: (i) Does the Government official hold the expertise that the company needs ?, (ii) Will the Government official not need to rely on his / her public function or information from the Government, or even cause any damage to Government to perform its service ?, (iii) The Government official does not exercise an incompatible function with the services, for which conflict of interests may not be mitigated; eg: secretary of transportation providing services to a bus company, (iv) the Government official will receive a fair market value for the services and (v) as it is not a common practice in Brazil, as the authorities feel uncertain in authorizing a Government official to provide a service to someone from the private sector, even if he / she is a professor, doctor, etc ... stipulate a clause in the contract, in which the Government official undertakes to inform the head of the Government about the contract;
- Is the payment made due to a meeting about something related to the company's business? If so, it is necessary to observe the Joint Normative Guideline CGU-CEP 1/2016, with the following rules in effect: (i) the general rule is for the Government official to have the expenses borne by the Government, but exceptionally the company may do so with respect to expenses related to transportation, food, accommodation and even registration, with no payment remunerating his / her presence, if his / her presence is because of his / her public function, (ii) meals should not involve luxury items, such as excessively expensive drinks and food , (iii) the invitation must be forwarded to the highest authority of the department who will designate the Government official to be present, (iv) the Government official is prohibited from receiving invitations or tickets to concerts, presentations and sports activities;
- Will the payment be transparently recorded in the company's books and records? If not, the payment must be rejected. If so, move forward;
- Considering all above questions, if the situation is covered by them or by a legal authorization expressed in the law, codes of conduct of associations or policies and procedures of the company, but there is a legitimate business need and compliance, legal and finance areas are aware of the fact and outlining the pros and cons, especially the risks of corruption or perception, approve the payment? In situations like this, the ideal would be an external expert opinion, even as an affirmative defense of the company, demonstrating that it has taken all precautions to avoid the risk of corruption or perception of corruption. However, the consensus of the 3 areas obviously already shows a favorable tendency for payment to be made, as well as the refusal of one of the areas, should already be considered as a prohibition for making the respective payment.
It is very important that company employees have the exact dimension of what a simple promise of an act featured as corruption can cause. If in Brazil the enforcement of the law is still weak but in other countries it is much more strongly enforced, you could be putting yourself in harms way for actions that happened right here in Brazil.
