It is necessary to review Lava Jato agreements, says Rafael Mendes – 03/16/2024 – Market

The review of the leniency agreement signed by the former Odebrecht, now Novonor, with the CGU (Comptroller General of the Union) in 2018 is necessary to reflect the current situation of the company, which currently earns 10% of what it earned before Operation Lava Jato.

This is what Rafael Mendes, director of Integrity and Risks at the company, defends in an interview with Sheet. A decade after the start of the operation, the construction companies most involved in the corruption scandals are in Brasília trying to renegotiate their fines. Novonor, for example, in judicial recovery, paid only R$172 million of the R$2.7 billion agreed with the agency six years ago.

He directs the company’s praised compliance program, adopted after the company admitted blame for the scandals in 2016, which has already cost more than R$500 million, he says. Among the systems adopted by the company, there is even one that analyzes executives’ Outlook agendas to check whether a meeting with a public agent has not been registered in the system reserved for that purpose.

LENIENCE AGREEMENT REVIEW

It is one of the first leniency agreements in matters of corruption signed in the history of Brazil. Brazilian institutions have been going through a great deal of learning.

You look at a company that has 180,000 employees, which as a group earns R$100 billion, and calculates a fine. But the company, as a result of this entire process, now has 13 thousand employees and revenues of R$5 billion. Are these fines you have set realistic? Or will they end up destroying the company, which is in no one’s interest? One of the principles of the leniency agreement is the preservation of the company.

GLOBAL SCANDALS

We analyzed the biggest cases of corruption and business crimes. Volkswagen, Airbus, telecommunications companies have had some very big cases, Ericsson [telecom sueca]Veon [holandesa]Telia Sonera [sueca]Siemens [alemã]. Companies that paid more than $1 billion in settlements. All had revenues above sea level [maiores do que quando o escândalo foi revelado]. Our revenue drops to less than 10% [do que era antes].

None of these other companies suffered such an impact from a corruption law enforcement action as the Novonor Group and OEC did. They are neither bases nor comparables. Maybe walk sideways there for a year, two years, and then it grows.

They all had their adventure with the Department of Justice [dos EUA], with European authorities, paid heavy fines, but the principle of preserving the company was respected. It must be punished, but not destroyed.

OTHER NOVONOR GROUP COMPANIES

OEC is today our main strategic axis for the company’s continuity. Many companies [do grupo]over these years, all transport, infrastructure and sanitation assets had to be disinvested and sold.

[Como] Atvos, which was a formidable agro-industrial company. More recently, Ocyan, which was an oil and gas arm, which has offshore drilling services, which had two oil production platforms and offshore maintenance services. We had to sell precisely because of the situation that was left for the company, combining a very large debt.

We are still legally the holders of the shares that give control of Braskem, they are all given to creditors as collateral. There is a mandate to sell, and the proceeds of the sale go to creditors. Then it stops being a group company.

FUTURE PROJECTS

Our strategy is precisely to go where we understand, with our engineering capacity and to deal with complexity, be it relevant, local communities, climate challenges, challenges of how to mobilize teams. Including how to take care of teams in inhospitable places such as the middle of the jungle, the desert, the Andes.

Simply contracting work that is a simple, flat road, from point A to B in 30 km, is not the type of work that OEC wants. The numbers and sizes and magnitude and complexity of what we are capable of doing are few.

We are carrying out work on an oceanic fuel, gas and oil terminal in Angola, which was abandoned midway by a contractor from another country, who was unable to deal with the complexity of Angola.

We’ve been there for 40 years. We are hired because there is an understanding from Sonangol, the Angolan oil company, that we are capable of doing it. It’s a pharaonic business in terms of size. A 60 meter high cliff. We had to bring 34 tanks of liquefied petroleum gas from China, each one the size of a submarine, and they had to climb 60 meters of cliff to be accommodated there to store the gas.

These are projects that have a deadline or engineering challenge, which very few companies are capable of doing.

INVESTMENT IN COMPLIANCE

From 2015 to 2022, we invested more than R$500 million considering the cost of independent external monitoring, law firms, companies specialized in the “big four” [EY, PwC, Deloitte e KPMG]consultancies specializing in forensic accounting, reporting channel, compliance training, due diligence [investigação] of third parties.

INTERNAL CONTROLS

Our financial controls and integrity program are centralized and cover all of our operations, business units and group companies worldwide.

It doesn’t make much difference if you are in Peru, Brazil or Panama, you will have to approve the third party that will receive any type of payment using the same “due diligence” process that is carried out by my team.

We have a reporting channel in three languages, available everywhere we operate.

We monitor eight types of transactions that we consider to be risky, which traditionally indicate that you should take special care, such as hiring third parties, interactions with public agents, offering or accepting gifts and gifts and hospitality.

We have specific rules to account for all the costs of a given project within the same cost center, so you can reconstruct the history of that project, say how much you spent, who you paid for, for what purpose.

We cross-reference information from our purchasing systems with our expense reimbursement system, with our travel approval system, with email and Outlook, people’s calendars.

A meeting with a mayor needs to be registered in the little system we have for interactions with public agents. We search our calendars for the meeting they forgot to announce.

COMPLAINTS

From January 2016 to now, it has been eight years since we have heard of any new facts related to potential involvement, investigation, complaint itself by the Public Prosecutor’s Office or whatever, investigations that have been opened that concern acts of corruption carried out by the company . Eight years since we even have news of an investigation. Sometimes we see headlines: ‘new Odebrecht scandals in Mexico’. You will see it is from 2008.

RENOVATION

We did a very deep renovation. Around 240 people held top-line positions, executive management and group management advisors in 2014 to 2015. 217 of these executives and advisors have since left the company.