ABA Seminar April - 2008 ELEKTRO Legal & Compliance Cinthia Maria Ambrogi Alonso

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ABA Seminar April - 2008

ELEKTRO Legal & Compliance

Cinthia Maria Ambrogi AlonsoGeneral Counsel & Compliance Officer

1. Workforce Planning Project

2. Corporate & Securities

3. Advisory & Contracts

4. Litigation

5. Bad Debt Recovery

6. Real Estate Area

7. Compliance Program

8. External Counsels

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Agenda

Workforce Planning Project

This project was developed by Elektro’s HR with PWC and the scope was to define the future workforce of the company, as well as their training needs. HR and Legal Departments have participated in the pilot project, and as far as the Legal Department is concerned the accomplishments were:

Mapping of the processes, sub-processes and activities of the Legal

and Compliance Department;

Mapping of the current workforce;

Mapping of the future workforce, considering improvements on

processes and activities;

Planning of training of the team as well as job rotations, based on the

future needs of the department as well as the business as a whole.

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Mission“Provide legal support with excellence and safety to all the activities developed by Elektro aiming to protect the company’s image, assets and interests, among its stakeholders and acting as a strategic partner to the business. Assure the compliance of the Conduct Code, as well as Elektro’s internal policies, applicable laws and regulations.”

Vision “Be an excellent source of legal knowledge and business view,

guiding our actions by advocacy’s ethical principles and the company´s and shareholder´s values and policies.”

Mission and Vision

To influence and take part in the Company’s strategic and tactical decisions;

To provide legal advisory and act on litigations ethically with technical excellence, flexibility and agility;

To present innovative solutions and create opinions inside and outside of the Company’s sector;

To qualify and develop talented lawyers and future executives;

To spread legal knowledge throughout all levels of the Company;

To develop and increase the Corporate Governance of the Company;

To assure compliance of the Conduct Code, internal policies, applicable laws and regulation.

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Strategic Targets

Cinthia Ambrogi

General Counsel & Compliance Officer

Paulo Mulato

Litigation, Labor, Tax & Regulatory Manager

Jessica Reaoch

Corporate Legal Manager

01 Senior Analyst

04 Legal Counsels

01 Legal Intern

03 Legal Interns

Denise Formigoni

Assistant to GC and CO

02 Legal Counsels

01 Administrative

Assistant

05 Legal Counsels

Renato Batalha Compliance Supervisor

01 Intern

Organization Chart – restructure – effective May

Legal Team

Legal Team Profile

Legal Team

Legal Team

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Legal Team

Legal Team

Legal Team

Language:95% speak

English28% speakSpanish

Corporate Legal Manager Scope Corporate Legal Manager Scope

Litigation, Labor, Tax & Regulatory Manager Scope

Compliance Supervisor Scope Compliance Supervisor Scope

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Legal & Compliance - General Counsel Overview

Proprietário & Confidencial17

ProcessesProcesses

Corporate

Criminal

Real Estate

Environmetal

Regulatory

Intelectual Property

Tax

Labor

Civil

Securities

Law & Regulation

Macro process – Legal , ComplianceMacro process – Legal , Compliance and Real and Real Estate Estate

Real Estate

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Corporate & Securities

Advisory & Contracts

LitigationLitigationBad Debt Recovery

Compliance program


Real EstateReal Estate

Corporate & Securities - Governance

Legal Department is responsible for:

The Annual Corporate Agenda Schedule;

Consolidation of all corporate meetings Agenda;

Consolidation of the presentations prepared by the different areas of the company;

Minutes of the Meetings;

GC (or a Legal Manager) is the Secretary of all Corporate Meetings;

Coordination with Investors Relation department to present all documents to CVM

and BOVESPA (SEC and stock exchange).

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Corporate & Securities – Corporate Events

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LitigationLitigation


Bad Debt Recovery

Compliance program



M&A transactions;

Greenfield projects;

Structured finance;

Parent Company Guarantees;

Intercompany loans and services agreements;

Minimum contract standards.

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Standard/Model Contracts

The Legal Department, through an internal policy, has created standard/model contracts to be used by other departments of the company;

• All Elektro´s internal policies are filed in the Isosystem.


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These Model contracts can be regulated and non regulated contracts;

The standard/model contracts are drafts prepared by the Legal Department which can be used by the other departments without our revision, only if the rules, limits and guidelines defined on the referred internal policy are respected. They are mainly operational contracts;

The main criteria to a contract be considered a Model Contract: the standard terms of our Model Contract drafts must be maintained and the value of the contract must be up to R$ 300,000;

Currently, according to the internal policy enforce there are 42 model/standard contracts drafts available.

Elaboration and Analysis of other Contracts

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Statistics

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Statistics

Contracts Flow

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Powers of Attorney elaboration and analysis flow

The Legal & Compliance is responsible for the elaboration and analysis of all Elektro’s Powers of Attorney instruments;

All POA granted are previously analyzed by a Legal Manager and initialized by a Legal manager and the General Counsel & Compliance Officer;

Every week the Legal Department receives information from the HR department with all employees dismissed, in order to verify POA to be revoked.

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Start

Area send e-mail to legal trainee requesting the preparation of

the POA

Are all items right?

Legal trainee prepare the draft

and sends to Legal Manager

Approved?

Legal Trainee asks additional information to

demanding area

End

Yes

No

Legal trainee prints the POA

Yes

NoLegal Manager and GC include their initials in

the POA

CFO and another

Executive Officer signs

the POA

Legal trainee file copy of the POA to control

modifications or the grantees

Legal trainee sends the POA to notarize the

signatures

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POA Flow

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Litigation




Bad Debt Recovery

Compliance program


Legal & Compliance – LLT&R Management Litigation Summary 2008

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Legal & Compliance – LLT&R Management Main Civil Subjects

Interruption of the power supply

to non-paying customers

81%

Civil liability -indemnification

9%

Real State3%

Tariff Adjustment2%

Others5%

Criteria for Booking Contingencies

The contingency is accrued based in the criteria described below:

* Note: Elektro books the contingencies values as per the Court decision, although the decision can be reformed.

CIVIL LABOR TAX

• Court Decision • Court Decision • Court Decision

• Case law • Case law • Case law

• Doctrine • Doctrine • Doctrine

• Evidences • Evidences • Evidences

• Expert reports as per the ABNT rules

• Expert Reports • Case of – Tax Counsil

• Connection (nexo causal)

• Suspension of supply in which it is verified that the account was paid

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Legal & Compliance – LLT&R Management Accrued Values

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US$ 000 31- Dec - 07 31 - Mar - 08

Civil $6.391.751 $7.267.067

Labor $4.047.751 $4.602.679

Regulatory $3.500.254 $3.544.680

Tariff Adjustment $0 $0

Expropriataions & Easemets $2.164.384 $2.764.618

Tax : - CONFINS

$41.578.142 $42.675.653

- PIS $8.038.576 $8.248.393

- ICMS -- Demand $0 $0

- Other Tax

$2.669.553 $2.826.497

Total $68.390.411 $71.929.586

(-) Legal Deposits $21.425.526 $22.284.014

Total NeT $46.964.884 $49.645.572

FAS5

Lawyers monitor and register them in the

ProJuris

LLT&R Management Litigation - Contingencies

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Legal Contingencies“BRGAAP”

Lawyers receive new claims from Court

Lawyers analyzethe likehood of loss and

Make the register on Pro-Juris

Laptop com modemsem fio

Internet

Corporação

Segurança

Escritório

ProJuris Web

Filial

FAS-05consolidates

all the information Lawyers monitor claims

trough online system and register on ProJuris

LLT&R Management Litigation - Contingencies

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Legal Contingencies“BRGAAP”

Summons of new/or current lawsuits

Lawyers analyzethe case and

register iton ProJuris

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Bad Debt Recovery

Bad Debt Recovery




Compliance program


Extrajudicial Notification

LLT&R Management Litigation – Bad Debt Recovery

Judicial charge – Lawsuits

Non-paying costumers Bad Debt Recovery

Extrajudicial charge

Recovery of the amounts

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The charge goes to the Legal

Sues the client at law


March 2008

• Residential $10.899.662,37

•Industrial $20.375.392,37

•Commercial $4.607.205,56

•Rural $437.921,46

•Total $36.320.181,77

Profile of the Legal Portfolio as per the respective classes:


History of the Legal Portfolio:

Year Value (R$)Value

(USD - $)

2006 R$ 74.657.684,34 $34.919.403,34

2007 R$ 64.097.899,78 $36.186.924,73

2008 (March) R$ 63.527.629,94 $36.320.181,77


YearNumber of

Setlements Total

Amounts

2005 254 $2.540.600,59 DEZ/2005 - YTD $2,3407

2006 521 $1.559.628,24 DEZ/2006 -YTD $2,1380

2007 503 $3.862.981,83 DEZ/2007 - YTD $1,7713

2008 (March) 71 $5.932.804,01 Mar/2008 - YTD $1,7491

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Real Estate




Compliance program


Bad Debt

Recovery

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Real Estate Scope

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Internal client contract a valuation

report of the property

Real Estate follow the negociation and the

regularization about aquisition

Real Estate contracts a supplier to make the

negociation and regularization about

the property

Internal Client (ex. regional offices) identify necessity of

new instalations

Internal Client obtain all the licences;

Real Estate file and follow-up such licences

When the documents are all in due order they are delivered to the environment

department

Contract / deed

Real Estate

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INÍCIOÉ SOLICITADO A LOCAÇÃO

DE UM IMÓVEL

APROVAÇÃO DO

GERENTE(Poposta de

Locação)

sim

não

RETORNA À REGIONAL PARA PROVIDÊNCIAS

ENCAMINHA DOCUMENTAÇÃO E PROPOSTA PARA APROVAÇÃO DO

JURÍDICO

APROVAÇÃO DO

JURÍDICO

sim

não

RETORNA À REGIONAL PARA PROVIDÊNCIAS

O JURÍDICO ENCAMINHA A

MINUTA DO CONTRATO DE

LOCAÇÃO

FORMALIZA COM A REGIONAL (INFRA

ESTRUTURA) A APROVAÇÃO

SOLICITA À REGIONAL

(INFRA ESTRUTURA) O CADASTRO DO FORNECEDOR

ENVIA O CONTRATO DE

LOCAÇÃO À REGIONAL (INFRA

ESTRUTURA) PARA RECOLHIMENTO

DAS ASSINATURAS DO GERENTE REGIONAL E

LOCADOR

ACOMPANHA O RETORNO

RECOLHE A ASSINATURA DO

GERENTE ADMINISTRATIVO

ENCAMINHA À CONTROLADORIA PARA CADASTRO

DO CONTRATO

ENCAMINHA À REGIONAL (INFRA) A VIA DO CONTRATO PARA SER ENTRGUE AO LOCADOR , DEVIDAMENTE ASSINADA

INFORMAR À REGIONAL (INFRA)

SOBRE A LIBERAÇÃO DO CONTRATO DE LOCAÇÃO NO

SISTEMA

SCANEAR E ARQUIVAR

CONTRATO NA CENTRAL DE

DOCUMENTAÇÃO

ENCAMINHA À ÁREA DE CUSTOS E

ORÇAMENTOS PARA LIBERAÇÃO NO

SISTEMA

IMÓVEL LOCADO

Rent Agreement - Flow

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Compliance Program

Litigation



Compliance program

Real Estate

Bad Debt

Recovery

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• VP Compliance heads up Compliance Committee

• Approval of New Policies & Substantive Revisions to Existing Policies

• Recommendations & Implementation of Consequences to Non-compliance with Policies

• Home Page Project

• Policy Penetration Project

• Responsible for implementation and monitoring of Record Retention Program

• Author of other specific policies

• Code of Conduct

• Foreign Corrupt Practices Act (“FCPA”)

• Values & Ethics

• Office of Foreign Assets Control Compliance (“OFAC”)and Anti-Boycott

• Other AEI Policies

• Project Boomerang Readiness Training

• Package Training for Orientation & Integration of newly acquired operating companies

• Follow-up on training programs to ensure effectiveness

• New Hire Orientation Program

• Revise AEI Transaction Approval Process (TAP)

• Automate Transaction Approval System (TAS)

• Lead AEI risk review process in connection with TAP and TAS

• Maintain TAS Repository

• Coordination of Transaction Review Committee

• FCPA

• Code of Conduct

• Infractions of other AEI policies

• Manage and respond to direct and anonymous reporting systems

• Monitoring and assurance of consistency of infraction consequences across HQ/operating companies lines and across employee hierarchy lines

• Reporting to the AEI Audit Committee

Four Pillars of Responsibility

COMPLIANCE COMMITTEE

TRAININGRISK ASSESSMENT

INVESTIGATIONS

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Ethics Committee

The Ethics Committee is an independent body with mandate to ensure that the Code of Conduct is applied and updated. All Reported Violation are assessed by the committee, who advise the board of officers on the measures to be taken. The Ethics Committee has its own Internal Regulation, which describes the Committee’s competence and the attributions of its members. Such document can be easily accessed by any employee of the company.

Code of Conduct

Monitoring e-learning training to all employees; new hired employees; periodically revision;

Ethics & Compliance

Ethics & Compliance

Electoral Policy

Elektro’s participation on the electoral process has been based

on ethical and transparency principles, respecting the

company’s Code of Conduct and the Brazilian legislation. The

electoral policy, as a guideline for all Elektro’s internal public,

intents to encourage Elektro’s employees to participate on the

electoral process, respecting and maintaining an impartial

posture before any political organization or candidate, as well

as in accordance with the best practices of corporate

governance.

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Ethics & Compliance

Internal Rules for Governance Purposes

Elektro has identified that its Board of Directors and Board of

Officers, in accordance with the best practices of corporate

governance, could have Internal Rules to describe possible

conflicts of interests and to establish how to solve them, showing

the stakeholders the transparency of its administration entities. In

this sense, the Compliance area is already briefing those

corporate documents.

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ContractsIn accordance with P-JUR-01, lawyers reviews, stamps and initials all Elektro contracts, except for the contracts that do not need a Legal Department review, if it is executed using Elektro's standard contract draft. This procedure is in accordance with the policy "Standard Record" that describes in which cases Legal Department must not review and approve the contracts.

Legal ContingenciesMonthly, the Legal Analyst extracts from the Pro Juris system the report called "Contigenciamento Juridico" that contains all the claims with details - as new claims, claims written off and ongoing claims, including the estimated provision updated according to court decisions and legal precedents. Additionally, he/she analyzes another reports received from the outsourced offices (Civil, Labor and property dispossession). Legal Manager reviews and approves it prior to sent it for the Accounting Department for provision purposes.

POALegal Department has specific policy for Power of Attorney "P-JUR - 002". This control describes the internal process of authorization to create the Power of Attorney. All solicitations must be started at the requesting Department with Manager/Officer approval. The Power of Attorney must be sign by two Officer. One should be from the requesting Department and the second one can be from other department.

SOX – Legal and Risk Management

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SOX - Entity

GovernanceAs occurs, the company performs due diligence and background checks on all agents that may interact with government personnel on behalf of the company. Due diligence and background check activities are formally documented in accordance with procedure P-JUR- 004 and is retained by the Legal Department

Ethics CommitteeThe Internal Audit Manager, HR Manager and Compliance Officer are responsible for the reception of reported violations and communicating. The investigation is realized by the Elektro’s Ethics Committee and results are reported to Directors meeting. Recorded voice messages or emails regarding potential violations are retained for audit purposes. Additionally, as voicemail messages are received, the system automatically generates an email and sends it to members of the Elektro Ethics Committee.

FCPAFormal procedures are in place to follow-up on and appropriately investigate reported FCPA exceptions. Procedures include tracking of FCPA exceptions, formal documentation of investigation / follow-up activities, and documentation of exception resolutions. See C0062-TP0010 under the Elektro Entity process.

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External Counsels – high lights

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Thank you!

Documents

ABA Seminar April - 2008 ELEKTRO Legal & Compliance Cinthia Maria Ambrogi Alonso