For almost five years, Brazil has been engaged in one of the world’s largest anti-corruption probes — known as Operation Car Wash. What began as a small investigation in a southern city in Brazil soon led to a transformative moment for the entire country, with far-reaching implications for public and private sector business communities, the legal system, and for society at large. The investigations revealed a myriad of schemes perpetrated by some of the country’s most respected businesses and people. Billions of dollars were being diverted from Brazil’s state-owned energy company Petrobras through bribe payments and overpriced contract work. Several billion dollars were paid in bribes by construction giants, including Odebrecht, Andrade Gutierrez, Camargo Corrêa, and others. More than 1,000 politicians were involved in a scheme involving a meat-packing company called JBS. At least 50 congressmen were formally accused of corruption. And four former presidents were investigated with one landing in jail.
The magnitude of the corruption scandals and Operation Car Wash was such that it was felt beyond Brazil’s borders and gave cause to investigations initiated by the U.S. Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC).
State-controlled entities and private businesses alike are confronting “life after Car Wash.” And those that are doing so responsibly are trying to build a culture of compliance. Few companies have experienced this shift as intimately as Eletrobras, Brazil’s state-owned power utility company, which is the largest power utility in Latin America and 10th largest in the world. This is because over the last several years, Eletrobras and certain subsidiaries were investigated as part of Operation Car Wash and by the U.S. authorities for alleged corruption and cartel schemes. In the midst of these government inquiries, Eletrobras proactively conducted an internal investigation to determine facts and address any potential issues. The company also created an autonomous compliance department and, under the guidance of its newly appointed Chief Compliance Officer Lucia Casasanta, overhauled its compliance program.
These are exciting times for the country and for professionals in the compliance field. How does it feel to be at the epicenter of this cultural change? What were some of the most significant changes you noticed as a result of Operation Car Wash?
This is truly a historic moment for Brazil and a defining period in the country’s history. It has been amazing to see and experience these cultural changes in Brazil, which, until a few years ago, were almost unthinkable due to the engrained corruption and lack of accountability of those in power. One of the most unexpected or surprising factors has been the courage the authorities have shown in undertaking such a massive endeavor and facing head-on some of the country’s most powerful executives and politicians. Support from the media and the population has been impressive and essential, as never before have we seen such prominent individuals being investigated, charged and, more importantly, convicted. We now see and feel that politicians are actually concerned with the possibility of being held accountable for wrongdoing.
Do you believe part of the success of Operation Car Wash relates to the fact that the Clean Company Act (CCA) also came into force in 2014? Has other legislation had a similar effect?
No — I actually think it is quite the contrary. It is embarrassing to say, but Brazil has an unwritten tradition, or habit, in which the country waits to see if a law will “catch-on” and be applied by the courts. In that sense, I believe the CCA became an efficient tool in the fight against corruption because of the success of Operation Car Wash, which created an anti-corruption environment that gave the new law momentum and “legitimacy.” Companies have now seen first-hand that failure to have appropriate corporate governance structures or to comply with the law generates very real and serious consequences.
In addition to the CCA, the Brazilian State-Owned Companies Law has also been a key piece of legislation, as it provides significant support for state-owned entities to implement compliance programs and take certain measures that previously could only be established as part of internal policies.
You became Eletrobras’ chief compliance officer in 2016, a turbulent time for the company given the spotlight created by Operation Car Wash and the complex internal investigation. What made you take such a challenge? What main short and long-term goals were set for the company?
The position felt right and the timing was perfect. I have always thought of myself as a brave person — someone willing to take risks. Therefore, when I was contacted regarding the selection process at Eletrobras, I jumped at the chance, as this was one of those opportunities that show up once in a person’s career.
Working for a state-owned entity has different layers of complications, as it entails professional challenges as well as political considerations and a series of legal constraints. Despite my eagerness to accept the job, I never thought it would be devoid of challenges — several of which I discovered the hard way [laughs]. Nevertheless, I am confident in our strategy and have not been afraid to make tough decisions or try new solutions, given that the ultimate goal has always been to improve the company’s situation.
With regard to the short-terms goals, my main objective was to overhaul and consolidate the company’s existing compliance program and establish a robust framework. As for the long-term goals, I would like Eletrobras to continue to promote compliance as a core value for the company and to always seek manners to perfect its compliance program to stay ahead of the curve.
After joining Eletrobras, you and your team restructured the company’s compliance program. What steps were taken by Eletrobras to comply with the recent laws? What sets Eletrobras’ compliance program apart?
We are very proud of Eletrobras’ compliance program, given that in a very short period of time it produced impressive results and has been recognized and applauded by respected institutions in Brazil and abroad. When we restructured the program, we did not reinvent the wheel. We evaluated the compliance structure that existed at Eletrobras and then implemented best practices based on guides published by the Organization for Economic Co-operation and Development and the Brazilian Comptroller General (Controladoria Geral da União). We used both domestic and international sources as a basis for the program, as this would provide comfort to our business partners, investors, and regulatory agencies. Compliance with the recently enacted laws came almost as a consequence of having a well-structured program.
There is no real secret when it comes to compliance programs — just hard work [laughs]. I believe what sets Eletrobras’ program apart is that we took a simple approach, focused core issues, and invested heavily in ensuring that steps were appropriate and effectively implemented.
Eletrobras recently underwent an internal investigation, which had positive results with the Brazilian and U.S. regulators. What are some of the main challenges and how did you approach them? How were Eletrobras’ interactions with the external regulatory agencies?
The main challenge was understanding the depth of the issues that were identified and addressing them within a short period of time. Due to the size of company and the seriousness of the allegations, the investigation needed to be very thorough. Consequently, there was a constant inflow of complex issues that needed to be resolved and reported to the regulatory agencies.
Given our relative inexperience with investigations, our approach was to rely heavily on our outside counsel to develop a detailed strategy and conduct the internal investigation. Their familiarity with the issues gave us confidence when dealing with the regulatory agencies.
As for the interactions with the regulatory agencies, cooperation and honesty proved the best approach, as we were able to have candid discussions with the authorities and work together to address issues. Eletrobras never denied its shortcomings or issues. The company actually went one step further and viewed the investigation’s findings and the agencies’ suggestions and inquiries as opportunities to improve.
The Brazilian authorities welcomed Eletrobras’ contributions to the government investigations and have seen the company as a victim of wrongdoing. DOJ declined to prosecute the company and the SEC applied a sanction that Eletrobras deemed reasonable. We really could not have hoped for a better outcome.
President-elect Jair Bolsonaro recently appointed Judge Moro, the head of Operation Car Wash, as the Minister of Justice. How do you see the country’s continued battle against corruption? What is your outlook in terms of compliance activity in Brazil in 2019 and the next few years?
I understand that by appointing Moro as Minister of Justice, President Bolsonaro sent an important message to Brazil and to the market. Although it remains to be seen if Moro’s notorious competence as a judge will translate well to his role as minister, the incoming government has shown that it takes compliance seriously and that it will continue to take active steps in the fight against corruption. This is not a subliminal message — it is a clear indication of the government’s goals moving forward and an important form of validation for those of us invested in matters of compliance and corporate governance.
The current political scenario will certainly create new challenges and adverse situations for the incoming government, and they will need to have a defined strategy on how to address these issues consistently. In other words, they will need their own “compliance program” [laughs]. In any case, having a competent team is a great starting point.
I am an optimist and I believe that, despite the impacts to the Brazil economy, Operation Car Wash was long overdue and will greatly benefit the country moving forward. These recent events have been crucial in forcing companies to review and overhaul their corporate governance structure and compliance programs. Compliance will continue to be an important factor for domestic companies as well as foreign investors wishing to invest in the country. Brazil will emerge stronger from this experience, and we will be here, doing our part.
 Casasanta was a partner at Arthur Andersen and Deloitte, where she accumulated over 30 years of experience in auditing and consulting, mostly regarding risk and process management across various industries. She is certified by the Brazilian Corporate Governance Institute and is one of the institute’s coordinators at the Rio de Janeiro chapter.