Improvements in compliance programs according to the OECD
August 8, 2023
Founded in 1961 and headquartered in Paris, the Organisation for Economic Co-operation and Development (OECD) economic organization composed of 38 member countries. Its goal is to stimulate global economic progress and facilitate world trade.
Currently, the following countries are OECD members: Germany, Australia, Austria, Belgium, Canada, Chile, Colombia, South Korea, Costa Rica, Denmark, Slovakia, Slovenia, Spain, United States, Estonia, Finland, France, Greece, Netherlands, Hungary, Ireland, Iceland, Israel, Italy, Japan, Latvia, Lithuania, Luxembourg, Mexico, Norway, New Zealand, Poland, Portugal, United Kingdom, Czech Republic, Sweden, Switzerland, and Turkey.
Brazil notably is not part of this select group, although political reasons are an important variable that still prevent its entry. However, the OECD establishes guidelines to be followed by member countries. This, in turn, encourages similar standards to be required of those with whom they do business.
The OECD published the 2021 Anti-Bribery Recommendation to improve the fight against bribery of foreign public officials in international commercial transactions. In summary, the following highlights are listed below:
HIGHLIGHTS FROM THE 2021 OECD ANTI-CORRUPTION RECOMMENDATION
1. Require that member countries encourage the development of compliance programs, both in the context of its application and in the participation of companies in government purchases or when receiving other public benefits.
2. Require a level playing field between state-owned companies and private companies, subjecting state-owned companies to the same compliance expectations and standards than private ones.
3. Ask countries to remove obstacles to effective due diligence and other compliance practices presented by data protection regimes.
4. Emphasis on accounting standards and internal auditing.
5. Encourage reporting and protection of whistleblowers.
6. Improve and update OECD guidance on internal controls, ethics and compliance, guidelines which influence standards imposed by the United States and other law enforcement authorities in countries that participate in the OECD and are party to the Anti-Bribery Convention.
The document titled Annex II – Good Practice Guidance on Internal Controls, Ethics and Compliance focuses on companies, business organizations, and professional associations. It is divided into two distinct sections and has been substantially updated, as can be seen in the table below:
TOPIC
IMPROVEMENTS MADE TO ANNEX II
Commitment with Compliance
A.1. – There must be unconditional support and commitment
from the board or corresponding managers (in addition to
the general manager),view to implementing a culture of
ethics and compliance.
A.16. – Establish a new expectation in the external
communication of the company's commitment with
compliance.
Policies and Procedures
A.2. – Recommend that companies' anti-corruption policies
must be easily accessible to employees, relevant third
parties, and subsidiaries and should be translated into
the language of the country, where necessary.
A.5. – Expands the list of areas that must be covered by
the compliance policies and procedures: conflicts of
interest, recruitment and selection processes, risks
associated with the use of third parties, and clear
processes for participating in bidding processes.
Internal Monitoring and Autonomy
A.4. – Emphasizes that compliance officers responsible
for monitoring compliance programs must have an
appropriate level of experience and qualifications, as
well as access to relevant data sources.
Relationship with Third Parties
A.6. – (i) there must be continuous third-party
monitoring, (ii) adds a new element with respect to
mechanisms to ensure that contract terms describe in
detail the services to be provided, which payment terms are
appropriate, that the object of the contract is
effectively performed, and the payments, in return, are
made, (iii) adds a new element to ensure the company's right
to audit third parties and to effectively exercise said
right, and (iv) adds a new element with respect to the
establishment of adequate mechanisms to address
corruption incidents abroad by contracted third parties, for
example, termination of contract.
Internal Reporting, Investigation, and Remediation
A.8. – Adds a new element with regard to internal
controls to identify patterns that indicate corruption
abroad, including the use of innovative technologies.
A.11. – Recommends that measures to address suspected
corruption cases abroad must also include (i) processes
to identify, investigate, and report misconduct and
effectively utilize the necessary resources to enforce the
law and (ii) remediation (including analysis of the
situation giving rise to the issue and identified
weaknesses).
A.13. – Clarifies that internal reporting mechanisms must
be confidential, anonymity being possible, and provide
visible and accessible channels for reporting misconduct.
Training
A.9. – Adds a new element aimed at ensuring documented
and periodic training for third parties regarding the
company's compliance and anti-bribery program.
A.12. and A.13. – Adds new expectations to ensure that
whistleblowers do not suffer retaliations.
Incentives and Disciplinary Measures
A.10. – Encourages appropriate incentives for meeting
compliance standards, including ethics and compliance in
human resources processes.
A.11. – Clarifies that disciplinary measures must be
consistent, appropriate, and properly communicated to
ensure employee awareness.
Periodic Reviews, Monitoring, and Testing
A.14. – Clarifies that periodic tests and reviews must be
regularly conducted and target specific developments,
operational, and structural changes, monitoring and
auditing results and “lessons learned” from potential
misconduct occurring in the company itself, as well as
from other companies facing similar risks.
Mergers and acquisitions
A.15. – Adds a new element providing for the absolute
necessity of risk-based due diligences prior to mergers
and acquisitions, and incorporation of the new company into
the compliance program and internal controls, carrying
out all necessary training and audits.
It is important to note that all recommendations will be observed within the monitoring program carried out by the OECD Anti-Bribery Working Group.
Founded in 1961 and headquartered in Paris, the Organisation for Economic Co-operation and Development (OECD) economic organization composed of 38 member countries. Its goal is to stimulate global economic progress and facilitate world trade.
Currently, the following countries are OECD members: Germany, Australia, Austria, Belgium, Canada, Chile, Colombia, South Korea, Costa Rica, Denmark, Slovakia, Slovenia, Spain, United States, Estonia, Finland, France, Greece, Netherlands, Hungary, Ireland, Iceland, Israel, Italy, Japan, Latvia, Lithuania, Luxembourg, Mexico, Norway, New Zealand, Poland, Portugal, United Kingdom, Czech Republic, Sweden, Switzerland, and Turkey.
Brazil notably is not part of this select group, although political reasons are an important variable that still prevent its entry. However, the OECD establishes guidelines to be followed by member countries. This, in turn, encourages similar standards to be required of those with whom they do business.
The OECD published the 2021 Anti-Bribery Recommendation to improve the fight against bribery of foreign public officials in international commercial transactions. In summary, the following highlights are listed below:
HIGHLIGHTS FROM THE 2021 OECD ANTI-CORRUPTION RECOMMENDATION
1. Require that member countries encourage the development of compliance programs, both in the context of its application and in the participation of companies in government purchases or when receiving other public benefits.
2. Require a level playing field between state-owned companies and private companies, subjecting state-owned companies to the same compliance expectations and standards than private ones.
3. Ask countries to remove obstacles to effective due diligence and other compliance practices presented by data protection regimes.
4. Emphasis on accounting standards and internal auditing.
5. Encourage reporting and protection of whistleblowers.
6. Improve and update OECD guidance on internal controls, ethics and compliance, guidelines which influence standards imposed by the United States and other law enforcement authorities in countries that participate in the OECD and are party to the Anti-Bribery Convention.
The document titled Annex II – Good Practice Guidance on Internal Controls, Ethics and Compliance focuses on companies, business organizations, and professional associations. It is divided into two distinct sections and has been substantially updated, as can be seen in the table below:
TOPIC
IMPROVEMENTS MADE TO ANNEX II
Commitment with Compliance
A.1. – There must be unconditional support and commitment
from the board or corresponding managers (in addition to
the general manager),view to implementing a culture of
ethics and compliance.
A.16. – Establish a new expectation in the external
communication of the company's commitment with
compliance.
Policies and Procedures
A.2. – Recommend that companies' anti-corruption policies
must be easily accessible to employees, relevant third
parties, and subsidiaries and should be translated into
the language of the country, where necessary.
A.5. – Expands the list of areas that must be covered by
the compliance policies and procedures: conflicts of
interest, recruitment and selection processes, risks
associated with the use of third parties, and clear
processes for participating in bidding processes.
Internal Monitoring and Autonomy
A.4. – Emphasizes that compliance officers responsible
for monitoring compliance programs must have an
appropriate level of experience and qualifications, as
well as access to relevant data sources.
Relationship with Third Parties
A.6. – (i) there must be continuous third-party
monitoring, (ii) adds a new element with respect to
mechanisms to ensure that contract terms describe in
detail the services to be provided, which payment terms are
appropriate, that the object of the contract is
effectively performed, and the payments, in return, are
made, (iii) adds a new element to ensure the company's right
to audit third parties and to effectively exercise said
right, and (iv) adds a new element with respect to the
establishment of adequate mechanisms to address
corruption incidents abroad by contracted third parties, for
example, termination of contract.
Internal Reporting, Investigation, and Remediation
A.8. – Adds a new element with regard to internal
controls to identify patterns that indicate corruption
abroad, including the use of innovative technologies.
A.11. – Recommends that measures to address suspected
corruption cases abroad must also include (i) processes
to identify, investigate, and report misconduct and
effectively utilize the necessary resources to enforce the
law and (ii) remediation (including analysis of the
situation giving rise to the issue and identified
weaknesses).
A.13. – Clarifies that internal reporting mechanisms must
be confidential, anonymity being possible, and provide
visible and accessible channels for reporting misconduct.
Training
A.9. – Adds a new element aimed at ensuring documented
and periodic training for third parties regarding the
company's compliance and anti-bribery program.
A.12. and A.13. – Adds new expectations to ensure that
whistleblowers do not suffer retaliations.
Incentives and Disciplinary Measures
A.10. – Encourages appropriate incentives for meeting
compliance standards, including ethics and compliance in
human resources processes.
A.11. – Clarifies that disciplinary measures must be
consistent, appropriate, and properly communicated to
ensure employee awareness.
Periodic Reviews, Monitoring, and Testing
A.14. – Clarifies that periodic tests and reviews must be
regularly conducted and target specific developments,
operational, and structural changes, monitoring and
auditing results and “lessons learned” from potential
misconduct occurring in the company itself, as well as
from other companies facing similar risks.
Mergers and acquisitions
A.15. – Adds a new element providing for the absolute
necessity of risk-based due diligences prior to mergers
and acquisitions, and incorporation of the new company into
the compliance program and internal controls, carrying
out all necessary training and audits.
It is important to note that all recommendations will be observed within the monitoring program carried out by the OECD Anti-Bribery Working Group.
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Licks’ Blog provides regular and insightful updates on Brazil’s political and economic landscape. The posts are authored by our Government Affairs & International Relations group, which is composed of experienced professionals from different backgrounds with multiple policy perspectives.
Licks Attorneys is a top tier Brazilian law firm, speciallized in Intellectual Property and recognized for its success handling large and strategic projects in the country.
ABOUT US
Licks Attorneys Compliance’s Blog provides regular and insightful updates about Ethic and Compliance. The posts are authored by Alexandre Dalmasso, our partner. Licks Attorneys is a top tier Brazilian law firm, specialized in Intellectual Property and recognized for its success handling large and strategic projects in the country.
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O blog Licks Attorneys Compliance fornece atualizações regulares e esclarecedoras sobre Ética e Compliance. As postagens são de autoria de Alexandre Dalmasso, sócio do escritório. O Licks Attorneys é um escritório de advocacia brasileiro renomado, especializado em Propriedade Intelectual e reconhecido por seu sucesso em lidar com grandes e estratégicos cases no país.
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