"Communication is key and must be transparent, always based on the truth. Even if it is hard, the truth is always our best advisor. That is the basis for maturity"

Luis Fernando Serapião,
Member of Construtora Norberto Odebrecht

The Odebrecht Group is committed to acting with ethics, integrity and transparency, in accordance with the best global governance practices and applicable laws. Effectiveness in addressing Governance and Compliance issues, especially their practice, strengthens and protects each Business and the entire Group. Odebrecht S.A. is the Group’s holding company, which consolidates all its Businesses.

The activities of Odebrecht’s Members, especially its CEO, focus on the management and assurance of the security of Shareholders’ equity; he maintenance of the philosophical and conceptual unity expressed in Odebrecht Entrepreneurial Technology, and the enhancement of the Organization’s image and the Odebrecht brand. Each of the Group’s Businesses has its own Board of Directors and an Entrepreneurial Leader (CEO) responsible for its full entrepreneurship.

Therefore, the corporate governance of each Business is independent of Odebrecht S.A. and the other Businesses, operating separately, in a decentralized manner.

The commitment to working with ethics, integrity and transparency begins with the Board of Directors of Odebrecht S.A. and must extend to all Members of the Group.

Policy on compliance in acting ethically with integrity and transparency G4-56Click for more information on this aspect in the GRI Content Index

Odebrecht S.A. and all the Businesses are deploying a new Policy on Compliance. Derived from the Principles and Concepts of the Odebrecht Entrepreneurial Technology (TEO), it aims to guide the behavior and internal and external relationships of Group Members in all their roles and responsibilities. This Policy contains specific guidelines on implementing the Compliance System consistently and with conceptual unity throughout the Group. It also covers the responsibility of all Members for the execution, observance, dissemination and supervision of acting ethically with integrity and transparency. This commitment recognizes that individual and collective contributions will create the conditions for making the required changes in markets and spheres of activity to improve existing systems as well as preventing misconduct. Group Members must be aware that any form of misconduct, whether active, by omission or through acquiescence, is harmful to society, violates the law and destroys the Group’s image and reputation.

Board of Directors

The Board of Directors of Odebrecht S.A. is comprised of at least four and a maximum of eleven members. The appointment of the members of the Board of Directors of Odebrecht S.A. must ensure that at least 20% of its members (but not less than two) are considered “independent.” The concept of independence follows the definitions of the New Market regulations of the São Paulo Stock Exchange (BM & FBovespa). All members of the Board of Directors of Odebrecht S.A. in December 2015 were Brazilian men over the age of 50.

The presence of independent members on the Boards of Odebrecht S.A. and its Subsidiaries enhances transparency and independent judgment, including with respect to compliance issues. G4-34Click for more information on this aspect in the GRI Content Index G4-LA12Click for more information on this aspect in the GRI Content Index 

The Board of Directors of Odebrecht S.A. appoints the CEO (DP), who then chooses his Executive Directors, made up of six officers: Responsible for Functional Support (RAF) in Finance, Legal Affairs, Corporate and Fiduciary Affairs, Planning and People, Institutional Relations, and Communication and Sustainability (an area created in 2015 to reinforce the strategic role of those activities).

During a meeting at Odebrecht in São Paulo, Wesley Caixeita and Adriana Noguti (top right)

Compliance Committee

The creation of a permanent compliance committee to provide support to the Board of Directors is an internationally recognized practice that reinforces transparency in the conduct of its business.

With a view to improving the corporate governance model, a permanent Compliance Committee made up of members of the Board of Directors was created within the holding company, Odebrecht S.A. The Board of each Business began taking similar initiatives, and it is up to these Compliance Committees to provide support for their respective Boards and ensure that their conduct is based on ethical principles and values with integrity and transparency.

At Odebrecht S.A., the Committee consists of three to five members appointed by the Chairman of the Board from among the Board Members. At least one member of the Compliance Committee must be an Independent Board Member, and at least one member must have recognized experience and knowledge in the fields of corporate accounting and accounting and financial audits.

 The Committee’s duties include effectively monitoring risk exposure, internal control systems and compliance with laws, standards and regulations; conducting and/or authorizing investigations into matters within its purview; recommending the choice of external auditor of Odebrecht S.A. to the Board of Directors and following up on the auditor’s performance in the analysis and auditing of the financial statements of Odebrecht S.A. Effectiveness and independence in the handling of matters related to Compliance at Odebrecht S.A. and in each Business was broadened in 2016 to include officers Responsible for Compliance who report directly to their respective Compliance Committee.

The officer Responsible for Compliance is in charge of administering Compliance issues, including internal audits, monitoring and coordination of the identification, exposure assessment and handling of potential risks, as well as internal control systems and compliance with laws, standards and regulations. He or she is also responsible for coordinating and supervising the operations of the Ethics Line and the Ethics Committee.

Compliance System

The Compliance System provides support to Group Members to achieve effective compliance bridging the commitment and acting ethically with integrity and transparency.

The Compliance System must be implemented by each Leader in the Entrepreneurship Line within their sphere of activity, in line with the respective Compliance Committee and officer Responsible for Compliance, and must be monitored systemically by the Board of Directors.

 

The practice of the Compliance System is the responsibility of all Members, especially the Leaders, and should occur within the dynamics of the Action Program cycle, both in Odebrecht S.A. and each of the Group’s Businesses. An effective Compliance System requires continuous updating of policies, including those on Corporate Governance and Compliance, with a resulting communication and education plan to qualify all Members. No specific training on these aspects was carried out in 2015. G4-SO4Click for more information on this aspect in the GRI Content Index

Compliance System

ETHICS LINE CHANNEL

Odebrecht S.A. and each of its Businesses provide Members and third parties, on an uninterrupted basis, a channel of communication (Ethics Line) that facilitates reporting of irregularities and deviations of conduct by Clients, Members, intermediaries, suppliers, service providers, and any other third parties.

Such reports can be sent through the website (http://www.odebrecht.com/en/ethics-line) or by telephone, using toll-free numbers with strict anonymity, confidentiality and prohibition of retaliation.

In 2015, the Group’s Businesses’ Ethics Line Channels received a total of 3,014 reports on concerns related to unethical behavior, of which 23% were considered worthy of investigation. The others were considered “unfounded” because they did not present sufficient evidence for the initiation of an investigation.    G4-58Click for more information on this aspect in the GRI Content Index

Odebrecht’s Commitment

Odebrecht’s Commitment, a document that contains ten objective and essential items for day-to-day operations in the workplace, was produced and published in 2016 to guide Members in the maintenance of behavior that reflects the values of ethics, integrity and transparency. G4-DMAClick for more information on this aspect in the GRI Content Index

ODEBRECHT’S COMMITMENT
Acting with Ethics, Integrity and Transparency

This commitment is in line with the Odebrecht Entrepreneurial Technology and must be practiced with conviction, responsibility and without constraint throughout Odebrecht, without exceptions or flexibility:

01. Combat and show zero tolerance for Corruption in all its forms, including Extortion and Bribery.
02. Say no firmly and with determination to business opportunities that conflict with this Commitment.
03. Adopt principles for ethics, integrity and transparency in relations with public and private agents.
04. Never invoke cultural or common market conditions to justify improper actions.
05. Ensure transparency in information on Odebrecht, which must be accurate, comprehensive, accessible, and disclosed on a regular basis.
06. Always be aware that misconduct, whether by action, omission or acquiescence, harms society, violates the law and destroys the entire Odebrecht Group’s image.
07. Guarantee at Odebrecht, and in the value chain of the Businesses, the practice of the Compliance System, as regularly updated with the best benchmarks.
08. Contribute individually and collectively to the changes needed in the markets and environments in which there may be inducements to misconduct.
09. Incorporate into Members’ Action Programs an assessment of how well they abided by the Compliance System.
10. Have the conviction that this Commitment will keep us on the path of Survival, Growth and Perpetuity.

Political contributions

Members of the Group are prohibited from promising, offering, authorizing or giving, directly or indirectly, any kind of political contribution to political parties or candidates for public office with the resources or on behalf of the Group, in countries where that practice is banned by law. In countries where such contributions are permitted, they can only be made with the prior approval of a specific program of contributions by the Business’s Board of Directors proposed by the Entrepreneurial Leader (CEO) and should be widely publicized in a way that is accessible to all stakeholders.

No such contributions were made in 2015. Corporate contributions to politicians and political parties are still banned in Brazil in 2016 G4-SO6Click for more information on this aspect in the GRI Content Index

Indicators in 2015

In 2015, four Businesses (33% of the total) were subjected to a risk assessment regarding corruption. During that period, the Ethics Line Channel received ten reports of corruption, all involving conflicts of interest, but without reference to public officials. Those reports led to the following measures:

That same year, the Conselho Administrativo de Defesa Econômica (CADE), the Brazilian antitrust authority, began proceedings against 21 companies, including Odebrecht Industrial Engineering, to investigate allegations of cartel formation in government tenders for engineering, construction and industrial assembly services for Petrobras. The proceedings were still underway at the end of 2015. G4-SO7Click for more information on this aspect in the GRI Content Index

Operation Car Wash

Launched in Brazil in 2014, Operation Car Wash covers investigations carried out by the Brazilian Federal Police and the Federal Public Prosecutor’s Office in proceedings conducted by the 13th Federal Criminal Court in Curitiba, PR. The aim of these investigations is to shed light on the existence of a scheme for embezzling Petrobras funds by executives of that company, involving service contracts between the state-owned oil giant and companies active in the infrastructure sector, including subsidiaries of Odebrecht S.A.

In June 2015, the Federal Court ordered the arrest of five Odebrecht Group executives. In March 2016, they were convicted by a lower federal court. The decision has been appealed in the Regional Court of the 4th Region.

In December 2015, Marcelo Odebrecht resigned as CEO. On that occasion, the Board of Directors approved the appointment of Newton de Souza as CEO of Odebrecht S.A.

On March 22, 2016, the Chairman of the Board of Odebrecht S.A., Emilio Odebrecht, published a statement entitled “Commitment to Brazil” in which he sets forth the Odebrecht Group’s position and direction regarding the measures taken and changes made to bolster and improve corporate governance in the Group’s Businesses.