CVM acquits T4F advisers in lawsuit over slavery-like labor at Lollapalooza | Companies

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The trial was closed to the public as there was no oral argument from the defense. The defendants in this case were Carla Alves, Fernando Luis Artelio, Galeno Jung, Luis Curri, Marcelo Halac, and Marcos Hatsushicano.. In June, their proposed agreement worth 1.5 million reais (250,000 reais each) was rejected by the university.

The sanctions process was initiated in 2024 following a CVM investigation based on allegations that the directors had committed an abuse of power and failed in their duty of diligence. The The case began after Ministry of Labor and Employment (MTE) inspectors found that five employees of an outsourcing company (Yellow Stripe – YS) were in conditions classified as akin to slavery during preparations for the March 2023 event.

In the process, CVM’s technical field accused the counselors of failing to abide by T4F’s Code of Ethical Conduct, which explicitly prohibits the exploitation of human beings, including slave labor, which constitutes an abuse of power. The complaint alleges that there was a failure to comply with the duty of diligence despite reports of poor working conditions during previous editions of Lollapalooza (2018 and 2019).

Conditions described in the MTE report include forcing workers to sleep in canvas tents, leaving them without rest facilities and subjecting them to harsh labor.As stated in the report.

In response to the charges, the defense argued in the record that the violations were not sustainable. Lawyers say the CVM is based on facts that are still being debated in court. labor courtwould violate the presumption of innocence. Regarding diligence, the defense argued that T4F already had an adequate internal control and governance system in place, known as the “three lines of defense.”

According to the defense, YS, the contractor, was “hired after a rigorous verification process and had no history of misconduct.” The defense also argued that the fact that the incident occurred with “only five of over 6,000 workers proves that the system was not a complete or systemic failure.”

The rapporteur on the case, Director João Accioli, accepted the defense’s arguments and voted for the acquittal of all six advisers, as stated in the text of the vote. According to the reporter, Accioly’s board of directors fulfilled its duty of diligence and that T4F had appropriate governance and background check systems in place.

For Accioly, the incident, which involved just five employees, was isolated. The vote also noted that the Labor Court had already rejected the most serious charges in the first instance, such as coercion and restriction of freedom, and only accused the companies of wrongdoing, such as lack of a suitable place to eat and sleep in tents.