ADP Anti-Bribery Policy Frequently Asked Questions

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1 ADP Anti-Bribery Policy Frequently Asked Questions This document is intended to address questions that may arise in the course of an associate s learning about ADP s Anti-Bribery Policy (the Policy ). It further provides guidance for due diligence inquiry as well as recommended contractual provisions when dealing with potential third party agents who may be assisting ADP with any transactions with any governmental agencies or entities, as well as potential acquisitions of any new businesses. Possible questions regarding who to contact on questions about the Policy: Q. Who should I contact with questions or concerns regarding anti-bribery and anticorruption compliance? Questions or concerns regarding anti-bribery and anti-corruption compliance should be directed to the Ethics helpline (adp.ethics.helpline@adp.com), Global Compliance (global.compliance@adp.com), your business unit attorney, ADP s Vice President Corporate Ethics, ADP s General Counsel or any member of the legal department. Contact information is available in the Reporting Violations section of the Anti-Bribery Policy and the Code of Business Conduct & Ethics. Q. Where can I get a copy of the ADP Anti-Bribery Committee Approval Request form? A copy is available on the ADP Portal by following the links for Our Company / Policies & Guidelines / Ethics. Possible questions regarding the law underlying the Policy: Q. What does anything of value mean? Anything of value may include, but is not limited to, cash, cash equivalents, discounts, donations, employment opportunities, travel expenses, entertainment, stock or gifts. Q: Is the Policy s requirement to maintain accurate records of all transactions only designed to reveal improper transactions? No. The Policy s requirement to record accurately all ADP expenses and transfers of ADP assets applies to all transactions. In fact, an associate may incur a legitimate expense on behalf of ADP (for example, reasonable expenses associated with a -1-

2 prospective government client s tour of ADP facilities), but if the expenses are recorded in a misleading manner, the associate (and ADP) may face criminal penalties under the Foreign Corrupt Practices Act ( FCPA ). Q: May ADP transact business with Government Entities? Yes. Applicable law does not prevent ADP from engaging in legitimate business transactions with government entities. The Policy focuses on improper payments or gifts to individual government officials that are made in order to gain or retain business opportunities. Q: Is it possible to do business with Government Officials or entities that are coowned by Government Officials? Yes, it is possible provided that the requirements and monetary limits included in the Policy are observed. Q. If the government owns a business, are its employees government officials? Employees of state owned enterprises, such as hospitals, universities, communications firms and steel firms, should be treated as government officials under the anti-bribery laws. Q: Is ADP responsible for the actions of its agents or third party representatives? Yes. ADP may be liable for bribes made by any agent, representative or third party acting on ADP s behalf. In fact, if the circumstances reveal that ADP turned a blind eye to conduct that violates the FCPA, ADP and its associates may be deemed to have had knowledge of the unlawful conduct. All associates have a duty to inquire further when circumstances raise potential red flags (for example, a request by an agent for an unusually high commission, a request that payments to be made in cash or to accounts outside the country where the transaction is taking place). Note that while the FCPA does not define agent or representative, associates should consider any person or entity which performs services for ADP at ADP s direction as an agent or representative (for example, an entity which is reselling ADP s products for a commission under contract with ADP should be considered an agent or representative in that jurisdiction). Q. Can I or ADP be prosecuted under the FCPA and other anti-bribery statutes, if a bribe is made by a third party, such as a business finder or agent? Yes. Legal liability is not limited to those who actively participate in illegal conduct. A bribe made by a third party is illegal under anti-bribery laws. ADP and individuals who made the payment to the agent can be prosecuted under the FCPA and other anti-bribery statutes. -2-

3 Q. How is the U.K. Bribery Act different from the FCPA? The U.K. Bribery Act is not limited to government officials. The U.K. Bribery Act makes any form of bribery illegal, including bribery in private commercial transactions. The U.K. Bribery Act also creates an offence for failure to prevent bribery. Q. How serious is it if someone makes a payment that violates the anti-bribery laws? Violations of these laws are felonies. The individual or individuals involved, as well as the company, face criminal prosecution. For the individual, there is jail time and substantial fines. The company may not reimburse the individual for the fines. For the company, there are potentially enormous fines, plus the possible loss of the right to conduct business in certain markets. Q: Will ADP pay my fine if I violate the FCPA? No. The Policy highlights that the law prohibits ADP from paying an associate s fines. In addition, such an employee will be subject to disciplinary action from ADP, including possible termination. Possible questions from Associates about the application of the Policy: Q: I am trying to win a bid for potential business with a large governmental agency of a country located in the Asia Pacific region. To assist in the decision making process, I would like the senior representative of the agency to tour our U.S. facilities. The potential services contract is very large, so I would like ADP to provide first class airline tickets for the representative and her husband, a per diem amount, and first class hotels and meals. Would this be a violation of the Policy? This could be a violation of the Policy and the FCPA. To be sure your particular arrangements are permitted under the Policy, before making any such travel arrangements, you must first obtain the permission of your business unit CFO. Q: I work in a country where bribery is common payments to governmental officials are expected and necessary in order to conduct business activities. Since every other company appears to be doing it and I am not aware of any fines or penalties for these other companies, I assume that limited payments to government officials would be acceptable. Is that correct? No. Bribery is unacceptable under any circumstances. The fact that everyone else in a local marketplace might be paying bribes does not make it acceptable and does not permit our associates to violate the law. By making such a payment, you are violating the Policy and applicable anti-bribery laws. -3-

4 Q: I am a citizen of a country outside of the U.S. and I have never even traveled to the U.S. I have been recording small cash gifts to a government official as a travel expense on my expense reports. I have not informed my manager, but these gifts allow me to operate my business smoothly and without undue interference from the government. Since my manager does not know the details and I am not a U.S. citizen, am I still violating the Policy? Yes. Even though you are not a U.S. citizen, ADP is a U.S. company and is required to have all of its associates worldwide abide by the FCPA. The gifts you are making not only violate the anti-bribery provisions of the Policy (and the FCPA), but also the accurate recordkeeping provisions of the Policy (and the FCPA). Further, not only will ADP be exposed and you personally be subject to punishment under applicable antibribery laws, but you may be putting your manager in jeopardy of violating the Policy and the FCPA. Q: I am working in a country where the local tax official has asked me to provide him with occasional travel vouchers or otherwise arrange for ADP to pick up the expense of his travel (for travel not connected to any business of the official with ADP), with the understanding that he will help us on various local tax matters. We are not contracting with this tax official s agency for any ADP service offering, so would such a payment/gift be permissible under the Policy? No. Even though it does not appear to be directly related to obtaining or retaining a contract with the tax official s agency, ADP stands to gain economically from favorable tax treatment it might not otherwise have if our associate did not make such a payment/gift. The Policy prohibits it and some courts have found that to be an illegal bribe under the law. Q. We have a local agent who handles all dealings with the government. As long as the local agent handles things, do I have to worry about corruption? Yes. You still have to be alert to corruption risks. Merely having a local agent does not protect you. In fact, you are expected to have conducted adequate due diligence to ensure you understand who your agent is and whether or not that agent has a history of making (or may be inclined to make) an inappropriate payment. YOU CAN BE HELD RESPONSIBLE FOR THE ACTS OF YOUR AGENTS. Q. Does the Policy apply if you are not seeking to do business with a government agency? Yes. The Policy prohibits all inappropriate payments to obtain or retain any business or any improper advantage. The Policy is not limited to government contracting as it also applies to private commercial transactions. -4-

5 Q. Anti-bribery laws often apply to government officials. Does the Policy only cover government officials? The law is much broader than you might first think. Government officials cover a broad category of individuals. For example, it covers members of any royal family, employees of political parties, candidates for a political office, employees of public international organizations (e.g., UN and IMF) and even employees of state owned enterprises. It is not limited to bureaucrats or those at high-level policy positions such as ministers. Further, some of the anti-bribery laws cover any bribe or inappropriate payment, even if a government official is not involved. That is why the Policy prohibits ALL inappropriate payments regardless of the recipient. Q. What if a government official demands payment from us, and we did not initiate the issue. Is a payment illegal if we are forced to make it? The payment is illegal, even if the official initiates it. Q. What if a government official requests that a payment be made to a charitable organization in which he/she has a personal interest? This could also be considered an illegal payment. Any charitable contributions in the US must be given by the ADP Foundation and require approval by the Anti-Bribery Committee. You as an associate should not make a personal contribution because it could be illegal. Q. What if a government official has a relative looking for a job? Can we offer to hire, or at least consider the person for employment? This is possible, but it has to be done on a reasonable basis, and may not be done to obtain anything from the official. You should seek counsel from the Legal Department if a question similar to this arises. Q. You have an important shipment of materials sitting in a customs warehouse and they won t release it. What can you do if everyone else is paying the officials under the table to move things along? The Policy prohibits facilitation payments. No such payments should be made and if you are requested to provide such payments they should immediately be reported to the Legal Department. -5-

6 Q. How about a payment to expedite the performance of a routine governmental action such as the obtainment of a required license or visa? No. Payments to expedite the performance of a routine governmental action are also facilitation payments, and are prohibited by the Policy. Q. We are funding the travel expenses of an important opinion leader who is speaking at an ADP-sponsored conference. She would like to bring her spouse, at her own expense. Is this permitted? This is unlikely to be approved by the Anti-Bribery Committee. Q. In my region, it is both typical and expected for suppliers to provide their clients with fairly expensive gifts. Because of this custom, it is difficult to discourage our suppliers from providing us with these gifts. How do I handle this? You should politely advise these suppliers that ADP s standards do not permit our employees to accept these gifts. You can provide the supplier with copies of the Code of Business Conduct & Ethics and the Anti-Bribery Policy. If you have questions or concerns, you should consult your manager or the Ethics helpline. Q. I recently attended a business conference at ADP s expense, where my name was automatically entered into a raffle, along with all other attendees names. I won a trip to London. Can I keep the prize? It depends. Employees may be able to keep prizes from raffles, provided that the employee is not placed under any obligation for having entered or won the raffle (e.g., an obligation to use a specific company s services or to provide the sponsoring company with the employee s business attention). If the value of the prize is more than $50, you should seek approval to keep the prize from the Anti-Bribery Committee. Q. A potential vendor has invited me to attend a professional sporting event with him. May I attend? Yes if the hospitality does not exceed $250. However, if the value of the entertainment is more than $250 you must seek approval from the Anti-Bribery Committee before accepting and/or attending the event. Q. A gift basket arrives from a client that has a value of $100. Can I keep it? Yes but only if the items in the basket can be shared with others in your department. In that case you may keep the basket provided it is actually shared with your department. -6-

7 Q. If a client invites me to attend an event with them, when I am calculating the value, do I look at the cost of the ticket by itself or do I need to also add in the cost of any transportation and/or food and drinks to see if it exceeds $250? It is one event so all of the things that the client is paying for need to be added together cost of ticket, transportation and food and drinks. Combined the amount must be less than $250. Possible questions from Associates about due diligence review of third parties/acquisition targets: Q. What due diligence should be done regarding Third Party Agents? Given the extent of ADP s potential liabilities, we must take special steps prior to entering into any engagement with a third party agent, particularly if that engagement may involve any interaction with local governmental authorities. The ADP associates involved in the selection of such third party agent should perform the due diligence necessary to determine that the entity or person ADP intends to engage as its agent is reputable and will be respectful of the FCPA and the Policy. The question of how much due diligence will be involved will be directly related to how much governmentrelated work such agent will be doing on ADP s behalf, coupled with an analysis of the relative risk of doing business in the country in question (please use the Transparency International s Corruption Perception Index, available at as a guide). In all cases, you should conduct your due diligence review in conjunction with your business unit CFO and the ADP attorney responsible for the relevant jurisdiction. In addition to the requisite due diligence inquiry prior to entering into any arrangement with any third party agent, ADP requires that the third party agent represent that it understands the Policy and that it will further covenant to adhere to the Policy. ADP recommends all associates work with the ADP attorney responsible for their jurisdiction to implement the contract provisions immediately following this section. Q. What due diligence should be done regarding Acquisitions? The concerns around ADP s potential liabilities are magnified in the case of an acquisition, given ADP has absolute liability for all the actions of its business operations and its subsidiaries around the world. Consequently, the guidance given above that applies to the due diligence review of a potential third party agent must be pursued with even more care in the case of an acquisition candidate. Similarly, the acquisition documentation should include appropriate representations and covenants from the sellers, using the provisions provided immediately following this section. In all cases, you should conduct your due diligence review in conjunction with your business unit CFO and the ADP attorney responsible for the relevant jurisdiction. Revised: [February 25, 2016] -7-

8 STANDARD CONTRACT PROVISIONS For transactions with any vendors, consultants, agents or third party representatives, as well as acquisitions of any sort whatsoever, associates should work with their local ADP attorneys to craft the appropriate representations and covenants to ensure compliance with ADP s Anti-Bribery Policy. ADP recommends using the following provisions within the relevant agreement with such entity or as a binding attachment or exhibit to such agreement. (a) Application of and Compliance with the Anti-Bribery Policy The parties acknowledge that [ADP] 1 and all of its employees, officers, directors and representatives are subject to the United States Foreign Corrupt Practices ( FCPA ) and that, accordingly, all of [Second Party] 2 s activities under or in connection with this Agreement are subject to the requirements of the FCPA. Second Party warrants that it has read and understands the full text of the FCPA and [ADP s] Anti-Bribery Policy (the Policy ). [Second Party] further warrants and agrees that it and all who act on its behalf will fully and faithfully comply with all requirements of the FCPA and the Policy, as the same may hereafter be amended from time to time, in connection with all of their activities under or in respect of this Agreement. Specifically, [Second Party] warrants and agrees that neither it nor anyone acting on its behalf will pay, offer to pay or give anything of value to any governmental official, political party or political candidate, any public international organization official or any other person with the knowledge that the payment, promise or gift, in whole or in part, will be passed on to any of the foregoing in order to influence an official act or decision that will assist [ADP] or the [Second Party] in securing an improper advantage or in obtaining or retaining business or in directing business to any other person or entity. [Second Party] acknowledges that no associate, officer or other representative of [ADP] is authorized to waive [ADP s] compliance with this Section of the Agreement. (b) Restrictions on Ownership, Government Service and Political Activities [Second Party] has disclosed to [ADP] in writing the names of all persons and entities who have a beneficial ownership interest in [Second Party]. [Second Party] shall immediately notify [ADP] in writing in the event any change in such beneficial ownership occurs or is expected to occur. [ADP] shall have the right to immediately terminate this Agreement for cause upon receipt of any such notice if [ADP s] continuation of its relationship with [Second Party] under this Agreement following the actual or proposed change of [Second Party] s beneficial ownership would constitute a violation of the FCPA or the Policy. [Second Party] represents and warrants that neither it nor any person or entity acting on its behalf is or while this Agreement is in force will become, except with the prior written consent and approval of [ADP], a government entity, a government official, a 1 Insert appropriate ADP corporate entity. 2 Insert appropriate name of counterparty.

9 political party, a political candidate, a public international organization or a public international organization official. [ADP] shall have the right to terminate this Agreement immediately for cause (without penalty) in the event of any breach of any of the foregoing representations. (c) Accuracy of Documents [Second Party] agrees that all invoices, reports, statements, books and other records which it or any other person or entity acting on its behalf prepares or submits to [ADP] will be true and accurate in all respects, will fully and accurately describe services rendered and the nature and recipient of expenditures and or payments made and will not fail to reveal any material information which [ADP] may require in order to accurately prepare its own books and records. [ADP] shall be entitled to immediately terminate this Agreement for cause in the event of any breach of the foregoing undertaking. (d) Cooperation with Audit Activities [if appropriate] [Second Party] shall maintain accurate, written books and records regarding all activities conducted pursuant to this Agreement. [ADP] shall have the right to cause an audit of the [Second Party] s books and records to be conducted by an independent auditor at any time upon reasonable notice. [Second Party] shall cooperate fully with any such independent audit. (e) Payment Mechanisms [if appropriate] Payments to be made by [ADP] to [Second Party] pursuant to this Agreement shall be made by wire transfer to a bank account owned by [Second Party], located in the country where the relevant services are performed and identified in writing in an Appendix to this Agreement.