Embraer's compliance team working to change employees' vigilance, executive says
17 May 2018. By Rodrigo Russo.
Brazilian aerospace conglomerate Embraer is determined to improve the vigilance of its employees in order to prevent unlawful and corrupt practices.
In an interview with MLex, Fabiana Leschziner, the group’s executive vice-president, general counsel and chief compliance officer, said this change of approach goes as far as changing job descriptions.
“We want a strong gatekeeping mentality. For instance, if you work in the accounts payable department, we want the description to make clear that your job entitles you to reject a payment order if you see any potential concerns in that transaction," Leschziner said.
"You could then resubmit it to the department that requested this payment, and they should reexamine the issue," she said. "That’s part of the job; you’re not there merely to obey orders."
In addition to that, the executive said that each department now has one formally designated gatekeeper for compliance matters.
Leschziner joined Embraer in June 2016, following a four-year stint as DuPont’s legal director for Brazil and the Andean Region.
A few months later, in October 2016, Embraer became the first Brazilian company to reach a deferred prosecution agreement with US authorities for violations of the Foreign Corrupt Practices Act. The company acknowledged irregularities in four transactions involving the sales of 16 aircraft between 2007 and 2011 in Saudi Arabia, India, Mozambique and the Dominican Republic.
Under a joint resolution with the US and Brazilian authorities, Embraer agreed to pay a total of $205.5 million. In another first for Brazilian companies, it also agreed to be examined by an external and independent monitor for three years. Alexandre Rene, partner at law firm Ropes&Gray, was picked by the US Department of Justice to lead the monitorship.
“Our focus is to satisfy the monitor’s recommendations and to extend the compliance culture within the group. We don’t want only to be in accordance with the laws, we want this compliance culture to be part of our DNA,” Leschziner says.
Embraer provided evidence of its commitment to a compliance culture when, around 2014, the company decided that it would no longer operate through agents in the defense and security unit.
“As a result, we no longer could enter into defense bids of countries such as Indonesia and Japan, because they demand all sales should go through agents. But we know from public figures that almost 70 percent of all FCPA enforcement actions are connected with agents,” Leschziner said.
Know-your-customer checks, which allow the company to identify red flags in potential transactions, are also under continuous improvement, the executive said. “A compliance program is a living organism, and it is constantly being reviewed and polished.”
Internally, Embraer has strengthened its ethics hotline, which is managed by the independent firm ICTS International and assures the confidentiality of whistleblowers. In 2017, it changed the name of the helpline to Whistleblowing Channel, making its purpose clearer to employees.
This year, the company launched an internal campaign with interactive videos that reproduced negative situations experienced before, to highlight that employees could and should report this kind of conduct.
The following month, Leschziner said, Embraer’s Whistleblowing Channel received 103 percent more reports than in the month before the campaign was launched.
“We can measure the success of an ethics hotline by the number of reports filed through it. The higher the volume, the better for the company, as it shows that people trust we’ll investigate and sanction wrongdoings when appropriate. And I’m pleased to tell that until the end of April, we already have more than 50 percent of the reports filed during the entire year of 2017,” Leschziner said.
The compliance department of Embraer currently has 20 people on board. Most of them are located in Brazil, where the team has 15 employees. In the US, there are three people working on the department, which also has one officer in Amsterdam and is in the process of hiring one representative for China.
The department also uses a network of 250 compliance agents located across the company. They are employees from various departments, in several jurisdictions, who act to multiply Embraer’s compliance and ethics efforts. Leschziner said that 35 percent of the bonuses these employees receive comes from reaching compliance goals.
“We have a code of conduct, an anticorruption policy and an anti-money laundering policy which go beyond what countries require in their legislation. The monitor has recognized that our compliance program is very advanced in his year-one report, and Brazilian companies are constantly looking at our initiatives to update their compliance policies,” Leschziner said.