Summary of Patria Group's Business Partner Guidelines
Use of sales- and marketing-related business partners, such as agents, consultants, distributors, intermediaries, offset service providers, etc. implies a generally recognised corruption risk. Patria is committed to addressing the concerns and risks by having implemented a process described in the Business Partner Guidelines. The Guideline requires conducting certain transparent and well-documented, risk-based due diligence and approval actions related to evaluating and selecting Business Partners and further managing, monitoring and renewing the engagement of such Partner(s).
As stated in Patria Ethical Code of Conduct (under the framework of which also the Business Partner Guidelines falls), Patria is committed to contributing all possible efforts to ensure that Patria conducts its business as required by internationally recognised treaties, standards and principles regarding ethical business conduct, including those set forth, e.g. (without limitation) by Transparency International for State-Owned Enterprises regarding anti-corruption. Patria also expects at least the same level of ethical business conduct from its Business Partners.
Scope – when the Business Partner Guidelines apply
The Guidelines apply to evaluation, selection and management of all sales- and marketing-related Business Partners, such as e.g. agents, consultants, teaming partners, distributors, resellers, intermediaries, joint venture collaboration parties, service providers (for specific projects) and to planned engagement of any business partner that may (even if not specifically addressed in the Guideline), for any reason, pose a reputational or other risk to Patria. The Guidelines specify the actions to be taken prior to entering into agreements with Business Partners, monitoring of the Business Partner, following up during the duration of a Business Partner Agreement and payments under such Agreement.
Partner identification, Risk assessment and Integrity Due Diligence
When a Business Unit has identified a justified and valid need to engage a Business Partner for a specific market or business opportunity, to perform a legitimate business function, a team of individuals (including Compliance) participates in the identification, collection of materials, risk assessment and evaluation of potential Business Partner candidate(s). The team also ensures that integrity due diligence and background screening is conducted on the potential Business Partner(s) as part of the general Risk Assessment.
The scope of the Risk Assessment shall consider the context including the type and profile of Business Partner, ultimate beneficial ownership of the Business Partner, governance and compliance of the Business Partner, type of potential cooperation, scale, geography and any interaction with public officials and take into account our exposure to legal, financial and reputational risks. The Risk Assessment also considers the compensation model and potential compensation amount (incentives of the Business Partner).
Mandatory partner background screening (for all potential partners) and examination aims for instant recognition of possible integrity risks, such as allegations or incidences of corruption, fraud, money laundering, or other unethical or illegal practices. The screening is performed by gathering independent open source information and includes, but is not limited to, screening various sanctions lists, politically exposed person (PEP) status, potential investigations and media search.
If any potential risk areas or Red Flags are identified during the examination, or if discrepancies are revealed regarding material information provided in the self-assessment documentation, a new Risk Assessment (including the new issues) shall be performed and an increased examination level considered. The issues shall be clearly explained and referred to in the examination documentation.
More detailed, enhanced due diligence and Integrity Due Diligence (IDD) focuses on identifying risks not normally revealed through preliminary mandatory background screening. Typical areas of analysis include, for example, questionable business practices, market reputation, negative media coverage, any political associations that may be of concern, regulatory violations and litigation history. Also, in case any red flags or concerns are raised or discovered during the initial mandatory screening, a follow-up of a more detailed IDD will be conducted. Agents and higher risk intermediaries (including risk based on country, incentives, etc.) are always subject to a more detailed IDD and enhanced due diligence.
Risks discovered in the due diligence are to be mitigated, and if not possible to mitigate to a level that is reasonably acceptable to Patria, such a Business Partner shall not be engaged by Patria. As an example, in case the ultimate beneficial owners of a higher risk Business Partner cannot established, Patria will not engage such a partner.
In case of a significant change in the business relationship, a new IDD is to be completed. In addition, some high-risk Business Partners may need continuous follow-up through screening tools available and otherwise.
Concluding the Agreement, follow up and monitoring of Business Partner
The Business Partner Agreement term should be limited to two (2) years and automatic renewal of the Agreement is not permitted. In case of renewal, the due diligence and background screening shall be completed to discover possible changes or new issues.
The Agreement shall include the requirement to comply with Patria Ethical Code of Conduct or apply at least same level of ethics and integrity principles in the conduct of its business. Furthermore, there must be auditing rights for Patria to verify the business conduct and payments under the Agreement. The Agreement must entitle Patria to terminate the agreement in case of any suspected or alleged violation of anti-corruption, anti-bribery or any other ethics and/or compliance requirements that are to be specified in the Agreement.
The Business Partner is required to issue regular reports concerning its activities for which the Agreement specifies any compensation. No payments are to be made to the Business Partner without due reporting justifying the payments for legitimate business activities. In general, the compensation model and incentive level shall always need to be justified by the experience, skills, amount and legitimate nature of services and activities of the Business Partner, and the activities and services to be performed by the Business Partner shall always be duly specified in the Agreement.
Patria specifies the incentive schemes for agents and intermediaries in such a manner that payments are made against legitimate, verified services. Main focus of payments shall be on payments made in arrears, for due performance of services that support successful deliveries of products and services and services that enable successful execution/completion of a project. Arrangements without clearly determined roles and deliverables are against Patria's principles and are not acceptable.
The potential need for renewal of a Business Partner Agreement shall always have to be duly justified in writing by the Business Unit.
If the terms of the Business Partner Agreement remain unchanged, the business relationship remains materially the same, and there are no changes in the ownership or other material information (and no red flags or concerns) of the Business Partner, then the proposed renewal of Agreement is reviewed by the Business Unit together with Compliance (including renewed due diligence and background screening).