As a company linked to two national governments and playing a key role in Brazil and Paraguay, Itaipu preventing corruption goes beyond a need for compliance (anti-corruption): it represents strategic aspects for the consensual management between the two countries. Since the enactment of the Treaty of Itaipu in 1973, transparency, ethics and no tolerance for legal conduct were some of the key drivers of its governance.

In the constitution of the company, an independent binational internal audit was established, which reports directly to the Supervirsory Board. Additionally, the mandatory external audit engagement was defined, which is amended every two years to verify the accounting procedures and financial statements.

Among other actions to improve internal controls and access to information, we highlight the implementation of computerized financial management systems (ERP); adherence to the provisions of Sarbanes-Oxley Act (SOX); the creation of the Brazilian and Paraguayan Ombudsman, which are also autonomous bodies reporting directly to the Supervisory Board; hiring renowned rating companies internationally to evaluate the financial strength and ability to honor debts and the provision of an [+] electronic tool for procurement of goods and services.

Once management mechanisms that made it possible to formalize the top management to ethics and transparency have been deployed, Itaipu reaffirmed its position by becoming a signatory of the UN Global Compact and joining the Portuguese project GestaoTransparent.org.

In the past two years, Itaipu has been working on formalizing a binational integrity/compliance program, which will perform integrated risk and compliance management.

Among the priority risks are those dealing with fraud and corruption. In 2015, the focus of the project was developing the mapping and evaluation methodology and evaluating identified and prioritized risks and possible action plans needed.

The objective of this program is to integrate the various existing control tools in the company to mitigate the risks of corruption, be in line with the terms of the Treaty of Itaipu and meet the essence of the national laws of Brazil and Paraguay and international standards on the theme.

Itaipu provides financial support to actions and initiatives related to energy, technology, environmental responsibility, tourism, culture, sports, regional development and other converging issues with the business mission and that will develop the relationship with the community and strengthen and enhance the corporate image. Proposals must meet the criteria set out in the [+] Sponsorship Policy and are selected after evaluation of a committee, according to budget availability.

Itaipu requires the provision of application accounts of funds transferred and if not presented or approved by the company, the recipient is required to fully repay the amount granted. The Policy was updated in 2015 to improve the criteria and procedures to assist in the management of requests and sponsorship awards during the year the Sponsorships Management System was implemented.

Another form of financial contribution practiced by Itaipu is to approach exceptional situations such as natural disasters and emergencies. Or specific initiatives related to the protection and defense of human rights, environment, income generation, promotion of culture and scientific development that do not meet the Sponsorship Policy or agreements.

Support is only granted to non-profit institutions and actions that are preferably carried out in the area of influence. As the aid has unique and occasional basis, the same institution cannot receive more than one financial contribution per year for the same purpose.

Applications undergo a technical analysis that, among other things, evaluates the way of resource utilization, the impact of the action and the number of beneficiaries, as well as the applicant’s suitability. Institutions that do not submit accountability must restore the value to Itaipu and are prevented from receiving funds for any reason, subject to appropriate legal measures.

The transfer of funds also occurs in the execution of programs, projects or actions in partnership with other organizations that have an interest in common and in mutual cooperation format. In these cases, agreements are concluded between the involved parties and there is also the obligation of accountability.

During May 2015, employees received a booklet with the latest version of the company’s [+] Code of Ethics, which had been approved in April 2013. In Portuguese and Spanish, the material shows the values, ethical principles and conduct standards that must be respected by all who have any relationship with the company, directly or indirectly.

The guidelines are simple and based on documents such as the Brazilian and Paraguayan Constitutions, the Itaipu Treaty, the Statute and Internal Regulations. The review also considered documents similar to those of other companies while respecting Itaipu’s individuality and binationality.

The Code of Ethics guides the work of the Ethics Committee, a complaint mechanism deployed in 2002. Made up of six members and two alternate members and an equal number of Brazilians and Paraguayans (appointed by the Supervisory Board and the Board of Directors) who assess possible misconduct of employees, conflicts in labor relations or human rights violations. The mandate lasts for three years and new members took over in August 2015.

In order to sensitize the group of suppliers on problems associated with the phenomenon of corruption, as well as praise ways and means to eliminate it and the advantages of implementing policies and internal and external actions to promote transparency, since March, Itaipu has been disclosing the Supplier Code of Conduct, approved in December last year.

Supported by Itaipu, the Brazilian Global Compact of the United Nation (UN) Network released the “Pact Booklet – Anti-Corruption”, which seeks to support business in the adoption and maintenance of anti-corruption and compliance systems in accordance with the legislation and internal standards. The initiative is by the Global Compact Anti-Corruption Thematic Group, which has Itaipu as a member. The publication is available for download at [+] www.pactoglobal.org.br.

The binational contributed to the dissemination of the initiative promoted by the Federal Public Ministry throughout the country. A kiosk was set up at the company’s Visitor Reception Center in Foz do Iguaçu, in order to collect signatures. The “ten steps” include 20 drafts of popular legislative initiatives and propose changes mainly in the Code of Criminal Procedure, in order to prevent corruption and stop impunity.

In 2015, five Itaipu employees attended trainings on compliance, one of which was conducted by Eletrobras for professionals in the Audit, Ombudsman and Risk Management areas. An employee of the General Board attended the course “Compliance Day” taught by LEC Publishing, which also specializes in the subject, and one professional attended the Clean Company Act Conference.

Two employees of the Financial Board attended the Corruption Risk Assessment Workshop, with a 13-hour workload. The training aimed to discuss, debate and present practical cases to the enforcement corruption risk assessment actions, based on the document “A Guide for Corruption Risk-Assessment", published by the UN Global Compact network. Specific actions on the issue of corruption were not performed with other employees and governance members.

Itaipu does not have yet a specific action to submit operations to corruption-related risk assessment. A corporate risk management project, with formal assessment for the whole company is in the final approval phase by the Executive Board of Directors. Of the 63 identified risks, one is specific to fraud and corruption and already has a project for the preparation of matrix based on the impact and vulnerability mapping and evaluation of specific controls.

In order to comply with the provisions of the Sarbanes-Oxley Act (SOX), since 2008, Itaipu has a management group to coordinate the adequacy of the work of business processes and developing internal control mechanisms for 20 risk events considered material (see below), which include the verification of possible fraud situations. Monitoring is continuous and carried out by Internal and External Audit teams.

SOX was created in the United States to set a series of measures to increase controls, security and transparency in the conduct of business and disclosure. He law also applies to foreign companies listed on the US stock exchanges.

Processes identified with material risk events:

1. Parameterization and manual entries.
2. Reconciliations and accounting provisions.
3. Preparation of financial statements.
4. Asset control.
5. Insurance management.
6. Royalties, reimbursement of administration and supervision cost, compensation for the transfer of energy and capital income.
7. Energy billing.
8. Cash management.
9. Receivables (all kinds).
10. Payables (all kinds).
11. Financial contributions.
12. Determination and accessory obligations.
13. Loans and funding.
14. Conventional procurement; supplier management; inventory management.
15. Litigation management.
16. Payroll management.
17. Operation and maintenance.
18. Information Technology - change management.
19. Information Technology - access control.
20. Information Technology - IT operations.