The covid-19 pandemic has changed the entire corporate dynamic, with impacts on relationships among stakeholders and interactions with the government. In times of crisis, more than ever, corporate integrity systems need to function quickly and flexibly, without, however, losing their effectiveness. The many emergencies and exceptional situations that companies face create openings for irregularities and generate great pressure for their officers and directors, employees, and business partners. In these times, it is necessary to stick to the processes and procedures previously delimited.
In September of 2015, the Brazilian Comptroller General's Office (CGU) released its guidelines for the division of the integrity program of private companies into five pillars, to be observed at the time of development and implementation. They are: (i) commitment and support from senior management; (ii) board responsible for the integrity program; (iii) profile and risk analysis; (iv) structuring of rules and instruments; and (v) continuous monitoring strategies.
Covid-19, however, has the potential to destabilize the routine of companies, which also includes their integrity programs. This is because the consequences of the current pandemic may affect market conditions and competition, the financial situation, the corporate day-to-day, and the regulatory environment, with the emergence of various transitional rules to deal with emergency situations, such as Executive Order No. 926/20 (which relaxed public procurement procedures), increased demand for donations out of solidarity by companies, and the forecast of an economic crisis to be faced by Brazil and the world.
Survey conducted by the Fipe Center for Capital Markets Studies (Centro de Estudos de Mercado de Capitais da Fipe - Cemec-Fipe) indicates that around 23% of the 245 Brazilian publicly-traded companies covered by the study may have negative cash in the first 30 days without revenue.
It is natural, therefore, that at this time of crisis there should be a shift in business focus onto other priorities. Amidst the sense of urgency that covid-19 has on so many fronts, it is possible that business integrity programs and systems will not receive the proper attention and budget. In addition, the relaxing of pre-established processes and procedures, if done in an unsuitable manner, may jeopardize the effectiveness of corporate integrity programs.
It is not recommended, of course, that one approach the current situation with total inflexibility, ignoring the extraordinary situation brought about by the pandemic. Ideally, an effort should be made to ensure that the processes carefully determined by corporate integrity programs are not overlooked at a time of uncertainty and high-risk exposure.
Therefore, the integrity program should be seen as an ally in this time of crisis. Its adoption may not only standardize behaviors, which favors predictability of actions by a company’s employees, but also avoids greater damage resulting from this atypical situation, which could lead to breach of the Anti-Corruption Law, for example. It is important to confirm the independence of and allocate an adequate budget to the compliance area in order to maintain internal governance in the face of the challenging and changing scenario companies face.
Guidelines on the relationship with the Government are even more necessary in an environment of relaxation of rules established by the State. They must therefore be reiterated and adapted to remain effective:
- Meetings, even if virtual, should continue to be held with integrity and transparency, maintaining prior schedules and agendas, in addition to participation, as good practice, by at least two company employees.
- Records in minutes should continue to be made after a meeting with representatives of the Government, even if it was held remotely. Also, many tools available today, such as Microsoft Teams and Zoom, allow recording of the meeting, a good practice that can also be adopted by the company.
- Relations with the Government should continue to be conducted in writing (via e-mails), following the best practices and with the greatest possible clarity regarding the purpose of the communication. Times of urgency and the need for rapid communication may lead to lack of attention to written communication; it is vital that this be monitored in interaction with public agents to avoid questionable writing.
- Donations, growing during this time of solidarity, must be carefully recorded and sent directly to the beneficiary, without intermediation from third parties and with a clear and lawful purpose, in order to maintain and strengthen compliance with internal policies and applicable laws and regulations. Donations must not be made with demands for or expectations of benefits or consideration from the Government, under penalty of distorting the legal nature of the donation and violating anti-corruption and public procurement laws.
- A company's integrity program should remain visible and operational during this moment of crisis, despite the remote work and decrease in direct contact between the compliance area and other departments of the company. The dissemination of policies and procedures should be done constantly, either by forwarding e-mails or by sending direct messages to employees via other applications. In addition, since internal policies are often concentrated within the intranet, it is recommended, if this environment is inaccessible outside the company, that a folder be created for remote access, for example through sharing and cloud storage.
- The training cycles of integrity programs should not be interrupted. On the contrary, it is recommended that they be intensified in order to ensure that the team is informed and trained on relaxation in the compliance program to face exceptional and emergency situations. The technology, in this sense, should be used in favor of the program, adapting in-person training to a remote form, creating or adapting direct channels to the compliance area to resolve issues, and disseminating reminders regarding rules with more extensive supporting documentation at the time of crisis.
- Maintaining the reporting/communication channel as an open channel for communication between company and employee is essential to detect disruptive behavior. This channel must remain active, available, and managed at the same or a higher intensity than before. Many industries are going through a time of contingency reinforcement, in order for there to be no shortage of food and medicine in stores and pharmacies around Brazil. This makes the work routine more intense. Stressful situations eventually lead to the use of the communication tool, and management of this demand must be conducted with care in order to avoid problems that may affect other spheres, such as labor.
- With regard to donations to non-governmental organizations and third sector entities that propose to fight the covid-19 pandemic, it is recommended that the same verification and validation process be maintained, more quickly if possible, but with the same level of caution and depth. Previous efforts to verify good legal standing, certification status, reputational track record, and checks for adverse news reporting, more than ever, continue to be recommendable during this time of crisis.
The best way to avoid future integrity problems is to maintain and update behavioral guidelines, records of initiatives, and promulgation of internal communication. One should remember that in a few months the routine will return to normal and any misconduct during the pandemic could have consequences.
CGU, in its guidelines, establishes that it is the company's role to adapt the integrity program to its reality. Now, in the reality of covid-19, it is up to companies to ensure that their program is not discontinued or neglected, but rather used in a manner suited to the current situation, demonstrating commitment to Brazilian rules of integrity.