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CGU published a Practical Guide for Evaluation of Integrity Programs

Compliance and Corporate ethics; Administrative Law

​On September 14, 2018, the Ministry of Transparency and Office of the Federal Comptroller General (“CGU”) released a Practical Guide, describing the methodology that must be followed by federal agents when evaluating compliance programs within administrative liability proceedings (in Portuguese, processo administrativo de responsabilização or “PAR”).

By means of the Practical Guide, the CGU seeks to provide more security to the evaluation process and disclose the standards that must be considered during the evaluation of integrity practices and procedures adopted by entities. 

The evaluation of a company’s compliance program is required in order to calculate the fine applied in cases of violation of the Brazilian Anticorruption Law (Law No. 12,846/2013), regulated by Decree No. 8,420/2015 (the Anticorruption Decree). According to the Practical Guide, an integrity program will only be evaluated if it can reduce the amount of fines. Such reduction may represent a maximum discount of 4% of the company’s gross revenues.

The Practical Guide distributes the 16 (sixteen) criteria, established in article 41 of the Anticorruption Decree, among 3 (three) broad groups: (i) Corporate Culture of Integrity (COI in the Portuguese acronym); (ii) Integrity Mechanisms, Policies and Procedures (MPI); and (iii) the Entity Actions Regarding the Relevant Injurious Act (APJ). 

The authority assessing the program must consider whether the information and documents submitted by the entity are sufficient to answer the questions applicable to each evaluation item and indicate if the requirements are fulfilled, not fulfilled or partially fulfilled. The result will indicate percentages that will be granted to each of the evaluation groups and be used for the calculation of the reduction of the applicable fine, pursuant to the following formula: 

Reduction percentage = [ (COI x MPI) + APJ ]

The entity that obtains a reduction on a percentage that is equal to or greater than 1% (one per cent) will have the percentage resulting from the formula above deducted from the total  fines imposed on them. In cases when the evaluation results in a percentage lower than 1% (one per cent), the integrity program will be considered by the federal entity as merely formal and ineffective to prevent acts of corruption. In such case, there will be no discount of the fine.

The CGU also disclosed (i) profile forms and conformity reports, which must be used by entities when submitting the information regarding their integrity program, and (ii) the description of each of the questions to be asked by the evaluators, containing clarifications and suggestions regarding the documents that may be submitted to demonstrate each of the evaluating aspects.  

The Practical Guide is one more initiative by the CGU to assist on the implementation and evaluation of integrity programs adopted by public and private entities. Other documents in the CGU’s “Integrity Program Collection” are available in its website (in Portuguese only). 

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