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SEC Form 20-F & The Petrobrás Ombudsman

sec

Source: SEC

Document: Petrobrás Form 20-F

As filed with the Securities and Exchange Commission on April 30, 2014

Amid the media blitz unleashed by Operation Car Wash, a intensive broad based probe of corruption in the state-controlled Petrobrás.

News reporting on the case has been confusing, especially where it has to do with internal controls, a would-be whistleblower, and CEO Graça Foster, who exchanged week-end prime-time news interviews last weekend.

This is what I find curious is the following: The establishment of a new compliance division within the company was recently reported.

But wait: a quick perusal of the company’s SEC 20-F filing from April of this year, the company has had an ombudsman  since 2005.  From the company’s April 14 Form 20-K

The Petrobras General Ombudsman’s Office has been an official part of our corporate structure since October 2005, when it became directly linked to the board of directors. The General Ombudsman’s Office is the official channel for receiving and responding to denunciations and information regarding possible irregularities in accounting, internal controls and auditing.

The ouvidoria (ombudsman) is subordinated to Corporate Governance and featured on the company’s investor relations Web site. Also mentioned is an “in-house inquiry” — Comissão Interna de Apuração — that led to the firing of Venina.

So would the ombudsman presumably have have been the proper channel for reporting wrongdoing by the Petrobras manager Vanina?

The General Ombudsman’s Office reports directly to the Audit Committee and guarantees the anonymity of informants.

In December 2007, the board of directors approved the Policies and Directives of the Petrobras Ombudsman, which was an important step in aligning the General Ombudsman’s practices with those of the other ombudsmen offices in the system, contributing to better corporate governance.

In April 2010, the board of directors approved a two-year renewable term for the Ombudsman Officer, during which he cannot be discretionarily dismissed by the management, ensuring his or her independence in performing his duties.

In May 2012, the Public Access to Information Law (Law No. 12,527/2011), which regulates the constitutional right for people to have access to public information became effective. This law states that all information produced or held in custody by the government and not classified as confidential must become accessible to all citizens.

The extension of this law encompasses public entities that are directly or indirectly controlled by the Brazilian federal administration, which includes Petrobras. In April 2012, Petrobras’ CEO, Ms. Maria das Graças Foster, appointed the General Ombudsman as the authority responsible for implementing this law within the Company.

Now, the General Ombudsman’s Office has to perform new tasks, such as ensuring compliance with the rules on access to information by the public, monitoring the implementation of this law and submitting periodic reports to the Board of Directors, as well as making recommendations and providing guidance to Petrobras’ business units with respect to the enforcement of the law.

Or more simply:

The Petrobras General Ombudsman’s Office is an organizational unit under the auspices of the Board of Directors. It is responsible for the planning, guidance, coordination and evaluation of activities aimed at gathering the opinions, suggestions, criticisms, complaints and inside information of its stakeholders, proceeding with the subsequent enquiries and adopting countermeasures.

My simple-minded question is: how has this compliance department — the general ombudsman — performed since its inauguration?

It seems to have been elbowed aside by a special investigative body announced yesterday, though I have no way of guessing, of course:

The board of directors of Petrobrás approved, in a meeting held today, the creation of a special committee that will act as an intermediary (“reporting line”) with the internal investigations to be realized by  the law offices of  Trench, Rossi e Watanabe (Brazil) and Gibson, Dunn & Crutcher.

The committee wil

sec

Source: SEC

Document: Petrobrás Form 20-F

As filed with the Securities and Exchange Commission on April 30, 2014

Amid the media blitz unleashed by Operation Car Wash, a intensive broad based probe of corruption in the state-controlled Petrobrás.

News reporting on the case has been confusing, especially where it has to do with internal controls, a would-be whistleblower, and CEO Graça Foster, who exchanged week-end prime-time news interviews last weekend.

This is what I find curious is the following: The establishment of a new compliance division within the company was recently reported.

But wait: a quick perusal of the company’s SEC 20-F filing from April of this year, the company has had an ombudsman  since 2005.  From the company’s April 14 Form 20-K

The Petrobras General Ombudsman’s Office has been an official part of our corporate structure since October 2005, when it became directly linked to the board of directors. The General Ombudsman’s Office is the official channel for receiving and responding to denunciations and information regarding possible irregularities in accounting, internal controls and auditing.

The ouvidoria (ombudsman) is subordinated to Corporate Governance and featured on the company’s investor relations Web site. Also mentioned is an “in-house inquiry” — Comissão Interna de Apuração — that led to the firing of Venina.

This presumably would have been the proper channel for reporting wrongdoing by the Petrobras manager Vanina.

The General Ombudsman’s Office reports directly to the Audit Committee and guarantees the anonymity of informants.

In December 2007, the board of directors approved the Policies and Directives of the Petrobras Ombudsman, which was an important step in aligning the General Ombudsman’s practices with those of the other ombudsmen office in the system, contributing to better corporate governance.

In April 2010, the board of directors approved a two-year renewable term for the Ombudsman Officer, during which he cannot be discretionarily dismissed by the management, ensuring his or her independence in performing his duties.

In May 2012, the Public Access to Information Law (Law No. 12,527/2011), which regulates the constitutional right for people to have access to public information became effective. This law states that all information produced or held in custody by the government and not classified as confidential must become accessible to all citizens.

The extension of this law encompasses public entities that are directly or indirectly controlled by the Brazilian federal administration, which includes Petrobras. In April 2012, Petrobras’ CEO, Ms. Maria das Graças Foster, appointed the General Ombudsman as the authority responsible for implementing this law within the Company.

Now, the General Ombudsman’s Office has to perform new tasks, such as ensuring compliance with the rules on access to information by the public, monitoring the implementation of this law and submitting periodic reports to the Board of Directors, as well as making recommendations and providing guidance to Petrobras’ business units with respect to the enforcement of the law.

Or more simply:

The Petrobras General Ombudsman’s Office is an organizational unit under the auspices of the Board of Directors. It is responsible for the planning, guidance, coordination and evaluation of activities aimed at gathering the opinions, suggestions, criticisms, complaints and inside information of its stakeholders, proceeding with the subsequent enquiries and adopting countermeasures.

My simple-minded question is: how has this compliance department — the general ombudsman — performed since its inauguration?

It seems to have been elbowed aside by a special investigative body announced yesterday, though I have no way of guessing, of course:

The board of directors of Petrobrás approved, in a meeting held today, the creation of a special committee that will act as an intermediary (“reporting line”) with the internal investigations to be realized by  the law offices of  Trench, Rossi e Watanabe (Brazil) and Gibson, Dunn & Crutcher.

The committee will work independently and report directly to the Board. Among its powers and responsibilities are: (i) approving the plan of investigation; (ii) receive and analyze information forwarded to it from the law firms;  (iii) ensure that the investigation maintains its independence, making sure it is carried out without obstacles or obscurity;  (iv) analyze, approve and record ways of implementing the recommendations of the law offices;  (v) communicate and/or authorize the law firms to communicate with the competent authorities, including regulatory agencies, regarding the status of the investigation, its discoveries and its actions on behalf of the company;  (vi) prepare a final report based on the findings of the investigation and the recommendations of the select committee with respect to internal policies and protocols with respect to investigations.

The select committee will comprise three members: Two independent Petrobras outsiders, one Brazilian and the other foreign, with proven technical knowledge, as well as the director of Governance, Risk and Compliance.

The Return of Ellen Gracie

Just announced: The appointment of former Supreme Court justice Ellen Gracie to the special committee, or commission.

Ellen Gracie Northfleet will be one of the members of the Petrobras Special Commission, it was announced yesterday. She will follow investigations inside the state-controlled company from an independent point of view.  The commission will have three members, including two from outside the company, and will answer directly to the Board of Directors.

The members were selected by the law firms Trench, Rossi and Watanabe, and Gibson e Dunn & Crutcher, who also summoned the German legal expert Andreas Pohlmann. The third member will be  director of Governance, Risk and Compliance. The company is recruiting candidates for this position from the market.

Ellen Gracie, former presiding justice of the STF, “is recognized in Brazil and abroad as a fine jurist with vast experience in the analysis of complex legal questions.”  Andreas Pohlmann was trained in law at   Goethe University, was director of governance at Siemens between 2007 and 2010, and is the senior partner and founder of Pohlmann & Company, a consultancy in the area.

l work independently and report directly to the Board. Among its powers and responsibilities are: (i) approving the plan of investigation; (ii) receive and analyze information forwarded to it from the law firms;  (iii) ensure that the investigation maintains its independence, making sure it is carried out without obstacles or obscurity;  (iv) analyze, approve and record ways of implementing the recommendations of the law offices;  (v) communicate and/or authorize the law firms to communicate with the competent authorities, including regulatory agencies, regarding the status of the investigation, its discoveries and its actions on behalf of the company;  (vi) prepare a final report based on the findings of the investigation and the recommendations of the select committee with respect to internal policies and protocols with respect to investigations.

The select committee will comprise three members: Two independent Petrobras outsiders, one Brazilian and the other foreign, with proven technical knowledge, as well as the director of Governance, Risk and Compliance.

The Return of Ellen Gracie

Just announced: The appointment of former Supreme Court justice Ellen Gracie to the special committee, or commission.

Ellen Gracie Northfleet will be one of the members of the Petrobras Special Commission, it was announced yesterday. She will follow investigations inside the state-controlled company from an independent point of view.  The commission will have three members, including two from outside the company, and will answer directly to the Board of Directors.

The members were selected by the law firms Trench, Rossi and Watanabe, and Gibson e Dunn & Crutcher, who also summoned the German legal expert Andreas Pohlmann. The third member will be  director of Governance, Risk and Compliance. The company is recruiting candidates for this position from the market.

Ellen Gracie, former presiding justice of the STF, “is recognized in Brazil and abroad as a fine jurist with vast experience in the analysis of complex legal questions.”  Andreas Pohlmann was trained in law at   Goethe University, was director of governance at Siemens between 2007 and 2010, and is the senior partner and founder of Pohlmann & Company, a consultancy in the area.

A new director of governance will be selected from a list of three candidates, containing the names of executives pre-selected according to their “notable competence.” ….