SUSTAINABLE & COMPLIANT LOGISTICS IN YOUR SUPPLY CHAIN ENSURING YOU ARE NOT CAUGHT OFF GUARD

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1 PUBLIC SUSTAINABLE & COMPLIANT LOGISTICS IN YOUR SUPPLY CHAIN ENSURING YOU ARE NOT CAUGHT OFF GUARD Jason Blackman 24th August 2017 Express Global Compliance

2 Compliance at Deutsche Post DHL refers to the rules and processes we have adopted to ensure our activities follow the letter and the spirit of laws, regulations and ethical standards. In short: Compliance means making sure we do the right thing. Frank Appel, CEO DP DHL 2

3 If you think Compliance is expensive, try non-compliance. (Paul McNulty, form. U.S. Deputy Attorney General) Anticorruption Competition compliance Code of Conduct Training Compliance Incidents Risk Assessment Analysis Third Party Screening Compliance Audits Region EMEA 3

4 Some recent media cases The Bureau of Industry and Security has issued an order imposing a $30,000 fine against a New Jersey-based freight forwarder for facilitating the export of three spiral duct production machines and related accessories, which are subject to the Export Administration Regulations, to China without the required U.S. government authorization. The Bureau of Industry and Security has issued an order imposing a $750,000 civil penalty on a California company to settle charges that it committed 55 violations of the Export Administration Regulations. These include 51 unlicensed exports of operating software with encryption functionality, classified under Export Control Classification Number 5D002 and controlled for national security reasons, to end-users in China, Hong Kong, Russia, Israel, South Africa and South Korea, as well as four unlicensed exports of such items to entities in China identified on the BIS Entity List A clinical diagnostic and life science research company based in California will pay a total of $55 million to settle charges that its subsidiaries made improper payments to foreign officials in Russia, Vietnam and Thailand in violation of the Foreign Corrupt Practices Act. This amount includes $40.7 million in disgorgement and prejudgment interest to the Securities and Exchange Commission and a $14.35 million criminal fine to the Department of Justice. Two senior managers of a global Freight Forwarding Firm are under suspicion of corruption. Background are obviously corrupt payments of logistics company in Russia, as "Der Spiegel" reported. To speed up cargo handling in the port of St. Petersburg, kickbacks amounting to over five million dollars have been paid to Russian customs officers. According to the report from the Cologne public prosecutor, nine accused employees, including the Germany CEO and are suspected of having knowledge about the bribery payments. Securities and Exchange Commission announced Oct. 27 that a global water management, construction and drilling company headquartered in Texas has agreed to pay more than $5 million to settle charges that it violated the Foreign Corrupt Practices Act by making improper payments to officials in several African countries to obtain beneficial treatment and reduce its tax liability. This amount includes $3.9 million in disgorgement, $858,720 in prejudgment interest and a $375,000 penalty. 4

5 AFRICA HOW COMPLEX AND PAINFUL CAN IT BE 5

6 Compliance & Corruption CIP 2016

7 The Trade Off

8 Why Anti-bribery and Corruption Compliance is so important? Multi National Companies are global organizations operating within a complex legal and regulatory environment and committed to behaving responsibly and with integrity. Bribing in any jurisdiction may result in prosecution and hefty fines of the company and criminal charges against individuals that are implicated or have oversight responsibility, in particular under the UK Bribery Act and, with respect to government officials, under the US Foreign Corrupt Practices Act. Compliance should be sponsored by and supported by every individual within the organization including its Senior Management Teams and to ensure they take all reasonable measures, and keep on doing so, to prevent bribery and corruption behavior within all business units. Attention should be focused on: Ethical behavior of subcontractors and business partners Bribery and Corruption Commercial (Sales and Customers) Bribery and Corruption Operations (Government Officials and Suppliers) Customs handling Gifts, Hospitality and Sponsorship 8

9 What can you do to tackle of bribery and corruption legislation Annual Risk Assessment conducted in country operations, which includes an assessment of risks related to bribery and corruption. Due Diligence screening of business partners, which includes the signature of your companies Supplier Code of Conduct. Incident Management and reporting Hotline form part of a system to detect and investigate suspected violations. Strict standard operating practices to process shipments quickly, efficiently and in accordance with applicable international laws and regulations. Monitoring and Review: regular assessment and modification of policies: Quality Management Systems in place and certification that builds in regular audits through our certification body. Corporate Internal Audit overseeing and regarding compliance, including fraud, bribery and corruption risks and their mitigating controls. A controls and risk platform is used in each country to improve the quality of your financial, compliance and other processes and reporting and to ensure that we control and address our risks adequately. Regular external audits of companies financial, compliance and other processes and reporting controls. All publicly available financial records are available for inspection. 9

10 AFRICA NOT BEING CAUGHT OFF GUARD 10

11 DHL How we work to ensure compliance Established mandatory Compliance E-learning training for all Deutsche Post DHL Employees Compliance Helpline established and available for employees to contact 24 hours a day 7 days a week, if they have questions about compliance Compliance Officers have been establish at Country levels in order to support employees and customers with actions relating to compliance All 3 rd Party Providers have to sign up to the DPDHL Code of conduct Due Diligence must be in place for 3 rd Party provides to allow them to clear Customs brokerage Access to DPDHL elearning materials on My Talent World for training of employees Dedicated member of the Global Customs Team in place to support Compliance with our Product Dedicated Global Compliance Management Team within all Business Units (DGF, DHL Express, DHL Supply Chain) 11

12 Engrained within the business, across all dimensions, addressing and mitigating risks 12

13 DP DHL Compliance Policy Overview Example DP DHL Code of Conduct is about how we do what we do. It is a strict set of ethical values to guide us as a company and individuals in our business dealings. Every member of DHL Express staff is required to complete Code of Conduct training The Code also communicates to our customers, investors, and the public that DP DHL is a reliable, trustworthy partner that combines first class service with a strong sense of responsibility. It confirms our aspiration to become the provider, employer and investment of choice Anti-Corruption and Business Ethics and Competition Compliance ensure that DHL Express is in compliance with the FCPA, the UK Bribery Act and that we behave in accordance with all country-specific regulations, laws, rules and ethical standards Anti-Corruption and Business Ethics and Competition Compliance training is mandatory for Express staff above a certain level Both ensure that we, as company, are living up to our global commitments, like the UN Global Compact Just as our Code of Conduct guides us as a company, the Supplier Code of Conduct requires our partners to uphold similar commitments with regard to complying with laws and ethical standards The DP DHL Due Diligence Questionnaire is the standard platform upon which all DP DHL business units screen potential suppliers or business partners to ensure their suitability 13

14 Compliance Training Comprehensive awareness and training at all levels and all locations is one of the most effective means to mitigate risks and protect a company and its employees. For example at DHL we have! >100,000 staff trained! Delivered in multiple languages in +220 countries & territories Training Code of conduct Competition Compliance Anti-Corruption and Business Ethics CIS Compliance Awareness Target Group All employees group wide. Once in a life time. Relevant staff, including, employees negotiating or contracting with suppliers & customers. Renewed every two years. Relevant staff, including employees in contact with ext. parties, preparing and deciding on contracts or business relationships. Renewed every two years. All Express employees. Once in a life time. Description/Content Content and significance of CoC Guidelines and case studies Case reporting and coping with violations Classroom or online Competition and anti-trust law Guidelines and case studies Test and certificate Online Corruption laws, regulations & penalties Guidelines and case studies, examples Assessment criteria Contacts Online The meaning and importance of Compliance Increased awareness of the risks we face every day Classroom 14

15 BACKGROUND LEGISLATIVE ENVIRONMENTS Presentation title Location xx Month 20xx 15

16 PUBLIC Foreign Corrupt Practices Act The Foreign Corrupt Practices Act of 1977 (FCPA) is a US federal law Provisions / Scope Penalty Jurisdiction Prohibits to make a payment to a foreign official for the purpose of obtaining or retaining business for or with, or directing business to, any person. The meaning of foreign official is very broad. It is illegal to offer anything of value as a bribe, including cash or non-cash items. FCPA defines expenses allowed for a foreign official only as modest not $ amount (i.e. modest lunch). Cap used in the industry is $50 max / meal (or lower if there is a local law limiting the expense. This applies too to non-cash, like tickets to sporting events, free golf, vacations, etc. Significant fines and penalties. For instance, a company can be criminally fined up to $2 million per violation of the anti-bribery provisions and culpable individuals can be subject to a criminal fine of up to $100,000 per violation as well as imprisonment for up to five years. Violation of accounting provisions can lead to fines of up to $25 million for companies and up to $5 million and 20 years of imprisonment for individuals. Additionally, civil penalties and disgorgement of ill-gotten profits plus interest. The scope of the law is extra-territorial. Application Liability / Culpability Any person (covers enterprises and individuals, issuers and domestic concerns). Also applies to foreign citizens and corporations not otherwise covered and act in furtherance of violating the FCPA while in the territory of the US. Broad third-party payments provisions under which the actions of foreign subsidiaries and other third parties can result in FCPA liability to a parent company or the entity engaging the third-party. 16

17 PUBLIC UK Bribery Act The Bribery Act 2010 is a UK law Provisions / Scope Active bribery: promising or giving a financial or other advantage. Passive bribery: agreeing to receive or accepting a financial or other advantage. Bribery of foreign public officials. Includes commercial bribery as well (private-to-private bribery), i.e. the failure of commercial organizations to prevent bribery by an associated person (corporate offence). Penalty Up to a maximum of 10 years imprisonment. Jurisdiction The scope of the law is extra-territorial. Under the Bribery Act, a relevant person or company can be prosecuted for the above crimes if the crimes are committed abroad. Application The Bribery Act applies to UK citizens, residents and companies established under UK law. In addition, non-uk companies can be held liable for a failure to prevent bribery if they do business in the UK. Liability / Culpability Companies can be liable for bribery committed for their benefit by their employees or other associated persons. A company or corporate entity is culpable for board-level complicity in bribery, including bribery through intermediaries. There is also personal liability for senior company officers that turn a blind eye to such board-level bribery. 17

18 PUBLIC German Criminal Code (Strafgesetzbuch, StGB ) * Provisions / Scope The StGB is a German law Active and passive bribery established as criminal offence Prohibits commercial bribery (both active and passive bribery in the private sector) Prohibits bribery of national and foreign public officials Penalty Jurisdiction Imprisonment of up to ten years or fine for individuals No concept of corporate criminal liability yet However, administrative fines and skimming of profits for corporations possible (pursuant to Regulatory Offences Act (Gesetz über Ordnungswidrigkeiten, OWiG )) The StGB applies to offences committed on German territory Also, the StGB applies to offences committed abroad (corruption involving German or foreign public officials) Application The StGB applies to German citizens (offender or victim) abroad (as long as the offence is penalized in the respective country) Liability / Culpability Only individuals; German law so far abstained from introducing corporate criminal responsibility Notwithstanding, administrative fines can be imposed / confiscation measures can be ordered against a legal entity if it obtained a benefit from an illegal act (incl. skimming of profits) 18

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