How are Our Relations with Our Suppliers?

Fighting corruption means following rigorous criteria for relations with partner companiesceiras

What helps a company become recognized for transparency in terms of its relations with clients and suppliers? Without a doubt, it is the conduct of its professionals, who discern right from wrong. However, another aspect is also crucial, primarily for ensuring that daily decisions can be criteria-based. This aspect is associated with planning.

And this planning has a specific term: due diligence. In practice, it is the investigative process conducted to determine whether a business opportunity could present legal or reputation risks that could affect a company’s image. Although it may be conducted based on a legal obligation, due diligence normally refers to voluntary and preventive investigations.

Over recent months, all Odebrecht Group Businesses have been improving their due diligence to assess new contracts and other previously existing ones. “For us, it has been a process filled with learning that established a series of new phases that require a bit more planning from the areas,” revealed Everson Zaczuk Bassinello, Chief Compliance Officer (CCO) at Braskem. “It takes a slightly longer time to register, standardize, and approve a third party today,” he said.

The CCO explained that there was an analysis of partner companies, but that it did not explore the issue of Integrity in depth. With the reformulation of the process, some 1,300 suppliers are being evaluated based on criteria such as political affiliation, adverse media, restrictive lists, litigations, and conflicts of interest. The groups are separated by risk level – given that, at the higher levels, they may be advised to complete an audit in loco or be blocked, in the worst case scenario.

In Practice

At other Businesses, the process takes place similarly. At Odebrecht Oil & Gas, the model was initially implemented at the Business Unit – Drilling (BU-P), which concentrates 90% of the company’s contracting. The evaluation covers different groups, including consulting companies, material suppliers (such as equipment, replacement parts, and PPE), and service providers (responsible for the transport, meals, and lodging of members).

Bernardo Façanha, Head of Supply at BU-P, explained that approximately 25% of suppliers have failed, with the possibility of reincorporation if they can adjust their practices to comply with the new requirements. “Before, we just needed to have the company’s name and CNPJ (Corporate Tax ID),” said Façanha. “Now, we follow a different standard, one which evaluates, for example, attributes in the areas of health, workplace safety, and environment. Furthermore, there is no use having a technical level of excellence if the company does not correctly follow the Compliance guidelines,” he said.

For Façanha, the synergy between the different teams, such as Compliance, Financial, Sustainability, and Information Technology, has been essential. “Increasing the evaluation criteria reduced the contracting speed, but we see that this can be minimized with planning and the constant oxygenation of our registration system. “With all this effort, we will have suppliers with a higher technical level available to us. This will help shape the company’s future,” he said.

By the end of the year, the goal is for all suppliers of the Business to have passed the qualification evaluation, including those that are already partners. “Speaking from the viewpoint of someone out there on the line, someone who sees things happen and gain momentum, this adds a positive perspective for the future. “We view it optimistically, we can see that the Odebrecht Group is willing to change,” said Façanha.

In the Field

Shifting from an activity at high sea and arriving back on land, more precisely to the site where sugarcane is transformed into ethanol, electricity, and sugar, the processes continue with the same objective: to prevent illegal and corrupt acts during supplier contracting.

At Odebrecht Agroindustrial, different levels of risk were developed during the approval process: low, medium, high, and critical. At the last two levels, control mechanisms – such as on-site audits and the involvement of the Business Leader in decision making – are activated for the approval or rejection of the evaluated company.

At Agro, certain criteria are specific to the activity and chain of suppliers in the field. One of the evaluations, for example, is whether the contracted company has any history of slave labor recorded with the Ministry of Labor and Employment (MTE).

“Another risk factor that needs to be evaluated is the leasing of lands, an asset often used in illegal activities or those of a suspicious origin,” explained Felipe Cabral, CCO of Odebrecht Agroindustrial.

Cabral emphasized that the evaluation of the partners has been a differential for the Business, which has applied the due diligence concepts more intensely since 2015 and has had a specific Code of Conduct for suppliers. The CCOrecalled that the role of the Compliance area is to indicate the risk, and that the operational areas have the decision-making power. Currently, 52% of suppliers have been approved. The others are undergoing different phases of analysis.

“It makes no sense to say that we have a process of due diligence if none of the suppliers are familiar with this process,” he said. “When they understand it and believe it is efficient, they end up publicizing it through their social relations, primarily if they were affected in some way,” he said, summarizing the current moment in two phrases: “It is not enough to just talk about Compliance. It is necessary to implement Compliance.”