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

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Since there was no oral argument from the defence, the trial was not open to the public. The defendants in the case are Carla Alves, Fernando Luiz Alterio, Galeno Young, Luis Corey, Marcelo Halac, and Marcos Hatoshikano.. In June, they had an agreement proposal rejected by the League in the amount of R$1.5 million (R$250,000 each).

The sanctions process was opened in 2024, following a CVM investigation based on allegations that directors committed abuse of power and failed their duty of diligence. the The case began after auditors from the Ministry of Labor and Employment (MTE) found five employees from an offshore company (Yellow Stripe – YS) in conditions they classified as similar to slavery during the setting of the event in March 2023.

In the process, CVM’s technical field accused the consultants of failing to comply with T4F’s Code of Ethics, which expressly prohibits the exploitation of human beings, including forced labor, which may constitute an abuse of power. According to the accusation, there was a dereliction of the duty of diligence, even after reports of poor working conditions at previous editions of Lollapalooza (2018 and 2019).

Conditions described in the MTE report included leaving workers to sleep in canvas tents, without rest infrastructure, and subjecting them to grueling work hours.as stated in the report.

In response to the accusations, the defense said in the records that the violations were not sustainable. According to lawyers, the CV mechanism will be based on a fact that is still under discussion in Labor Courtwhich would violate the principle of the presumption of innocence. In terms of diligence, the defense said T4F already had an adequate system of internal controls and governance in place, known as the “three lines of defence”.

According to the defence, the outside YS was appointed after a “rigorous vetting process and had no history of wrongdoing.” The defense also asserted that the fact that the accident occurred with only five workers “out of more than 6,000 workers proves that the system was not a total or systemic failure.”

The rapporteur of the case, director João Accioli, accepted the defense’s arguments and voted in favor of acquitting all six advisors, as stated in his vote. For Accioly, the Board performed its duty of care and, according to the decision, T4F had an adequate system of governance and background checks.

For Accioly, the incident involving just five workers was isolated. The vote also stated that the Labor Court, in the first place, had already rejected the most serious charges (such as coercion and restriction of freedom), and only convicted companies for violations such as not having sufficient places to eat and sleep in tents.