International Finance

Odebrecht’s move towards integrity

The Odebrecht Group’s process of transformation in the areas of governance and compliance over the past 12 months clearly reflects its commitment to ethics, integrity and transparency. The decision to turn over a new leaf and leave behind its publicly acknowledged mistakes and actions inconsistent with best business practices has led to changes based on the implementation of new policies, controls and ongoing monitoring.

The point of departure for this process was the shareholders’ conviction and the organisational leaders’ commitment, which were decisive in mobilising all areas and thus creating the conditions necessary for the ‘revolution’ that the group is currently undergoing. This endorsement can be seen in agile decision-making and in an internal atmosphere aimed at promoting a culture of compliance.  These are strong, positive signs of the new trail that we are blazing.

In April 2016, important changes were adopted to strengthen governance. The first of these was the decision to create a board for each of the group’s businesses. In addition, a growing number of independent board members have been named to promote diversity and reinforce transparency and the capacity for independent judgment. While there were six positions for such board members in 2015, there were 13 by the end of March 2017 and that number is expected to increase to 23 by the end of the year. The new council members are experts that add knowledge and value to the businesses.

The third measure adopted was the creation of a compliance committee comprising members of the administrative council. This body is often known on the market as an oversight and audit committee. To support the compliance agenda, the committee was structured with a 100% dedicated team offering know-how and experience in activities inherent to this area, e.g., auditing, risk analysis, control and investigation.

Odebrecht S. A., the holding company, and all of the group’s companies have also appointed a Chief Compliance Officer (CCO). This position already existed in the companies but with attributions in the legal area and subordinate to management. Recent changes and improvements called for better specifying the profile for this position in terms of compliance issues, and for having the CCO report to the respective administrative council, thus giving him greater autonomy and independence.

The new governance practices that have been implemented are internationally recognised good practices for the market and are characteristic of companies with shares traded on stock exchanges,not family-owned businesses, such as the Odebrecht Group companies. The company aims to run the group in keeping with world standards.

Currently, the group has nine compliance officers, all hired within the last 10 months. Many of them came from the market and brought with them experience and knowledge from their former companies. Their contribution has therefore been very significant for the group at this time.

In order to guarantee uniform procedures, we have an Integrated Compliance Committee comprising all the CCOs, who meet monthly to share experiences, accelerate the implementation of new policies and ensure the effectiveness of ethical practices. This leadership group is supported by a team that now has nearly 50 professionals and the number is expected reach 60 by the end of 2017.

To guide the behaviour and actions of all staff members, a Compliance Policy was approved at the end of 2016. It is an evolution of the former Code of Conduct, which was replaced by the Commitment to Acting Ethically with Integrity and Transparency.This is a more modern proposal that better responds to current issues such as anti-corruption practices, money-laundering, conflict of interest, public sector-private sector relations and relations with suppliers and shareholders.This policy provides clear, objective rules that leave no doubt when decisions are to be made.

The policy has also established the structure of a Compliance System, divided into three pillars: i) prevention, ii) detection and iii) remediation. These are covered through 10 different elements, a good number of which refer to prevention because prevention is always better and less expensive than remediation.

Nevertheless, regardless of how good prevention is, it can be insufficient to eliminate risks. That is why detection and remediation measures exist. Once exposure to risk has been detected, it must be addressed quickly as a function of its nature and seriousness.

Among the prevention measures already implemented are the definition of compliance governance, the preparation of policies and guidelines, the assessment of risks and controls, communication campaigns and training.An important component in the process of societal learning is the commitment to collective actions, since they are an important way to become aware of and share experiences.

The current system, which is functioning fully both in the holding company and in the various businesses, is structured from the perspective of continuous improvement, i.e., excellence in compliance must be monitored continuously in order to be in sync with the dynamics of the markets and their legislation.

All of these measures were prepared and implemented within one year and show the vigour of the Odebrecht Group’s determination to write a new chapter in its history. Changes of this size and speed are difficult to find in the corporate world.

Eventually, we believe that our efforts will come to be recognised by society at large and especially by the public with which we interact: clients, governments, non-governmental organisations and the media.

We are engaged, motivated and determined to be recognised as a role model for ethical, upstanding and transparent operations, and our internal and external relations will undoubtedly mirror these attitudes.

Olga Pontes is Compliance Officer of Odebrecht S.A.

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