TABLE OF CONTENTS 1. PURPOSE... 3 2. SCOPE... 3 3. DEFINITIONS AND ABBREVIATONS... 3 4.1 Individual Accountability... 4 4.2 Anti-Corruption Compliance Function... 4 4.3 Corruption Risk Assessment... 5 4.4 Decision Authority... 5 4.5 Training... 5 4.6 Controls... 6 4.7 Auditing and Monitoring... 7 4.8 Commitment to Business Partners... 7 4.9 Due Diligence... 8 4.10 Reporting and Investigation... 8 4.11 Disciplinary Actions... 8 5. ANTI-CORRPUTION OPERATING PROCEDURES... 9 5.1 Concepts and Fundamentals... 9 5.2 Facilitating Payments... 9 5.2.1 Health and Safety... 10 5.2.2 Exigent Circumstances... 10 5.3 Use of Agents, Representatives, and Consultants... 11 5.3.1 Written Contracts... 11 5.3.2 Representative Contracts... 11 5.3.3 Proportional Risk Assessment and Due Diligence Appraisal... 11 5.3.4 General Risk Assessment Considerations... 12 5.3.5 General Due Diligence Considerations and Procedures... 12 5.4 Business Partners... 15 5.5 Joint Ventures, Mergers and Acquisitions and other Equity Transactions... 16 5.5.1 Corruption Risk Assessment... 16 5.5.2 Anti-Corruption Due Diligence... 17 Revision: 8 Effective from: 04/10/2017 Page 1 of 26
5.5.3 Company Practices... 18 5.6 Divestiture of Company Assets... 18 5.7 Promotional and Sponsorship Benefits... 18 5.7.1 Promotional and Sponsorship Expenses... 18 5.7.2 Training... 19 5.7.3 Training Expenses... 19 5.7.4 Travel Expenses... 19 5.7.5 Approval... 20 5.7.6 Documentation... 20 5.8 Gift and Entertainment Benefits... 20 5.8.1 Approval... 21 5.9 Charities, Community Service Projects and Professional Associations... 22 5.9.1 Charities... 22 5.9.2 Community Service Projects... 22 5.9.3 Professional Associations... 24 5.10 Political Contributions... 24 5.11 New Territories... 26 6. REFERENCES... 26 Revision: 8 Effective from: 04/10/2017 Page 2 of 26
1. PURPOSE The Company s Code of Conduct reflects the Company s commitment to our shareholders, customers and employees to conduct business with the utmost integrity. It provides the framework for what the Company considers responsible conduct in the furtherance of its business activities. Compliance with laws, rules and regulations, including anti-corruption laws, applicable to the conduct and furtherance of the Company s business activities is fundamental. The Anti-Corruption Program and these Anti-Corruption Procedures ( Procedures ) are designed to prevent and detect corruption in the conduct and furtherance of the Company s business activities. The steps taken under these Procedures to prevent and detect corruption are to be proportionate to the respective identified corruption risks. 2. SCOPE These Procedures apply to the Company and all Company Personnel. 3. DEFINITIONS AND ABBREVIATONS Anti-Corruption Laws means the anti-corruption and anti-bribery laws, rules and regulations of all jurisdictions applicable to the conduct and furtherance of the Company s business activities, including those of Norway, the United Kingdom, and the United States of America. Anti-Corruption Policy is the Company s written policy regarding compliance with Anti- Corruption Laws. Anti-Corruption Program is the Company s program regarding anti-corruption compliance including the Company s Anti-Corruption Policy, the Company s Anti-Corruption Management Statement, and the Anti-Corruption Procedures. Company means Petroleum Geo-Services ASA and its subsidiaries and affiliates. Company Personnel means the Company s respective directors, officers, employees, and Representatives. Chief Compliance Officer is the person appointed by the Company s Audit Committee to report directly to the Audit Committee on matters pertaining to the Anti-Corruption Program. EVP is an abbreviation referring to an Executive Vice President of the Company. Representative means any third party representing the Company, including, but not limited to agents, representatives and consultants. Vendor means any third party providing goods or services to the Company that is not a Representative. Revision: 8 Effective from: 04/10/2017 Page 3 of 26
4. ANTI-CORRUPTION GOVERNANCE AND RESPONSIBILITIES 4.1 Individual Accountability All Company Personnel are individually accountable for and shall become familiar with and comply with the Anti-Corruption Program. All Company Personnel are to proactively raise concerns regarding suspected violations of Anti-Corruption Laws and this Anti-Corruption Program to their supervisor, the Legal Department, the Internal Audit Department, a compliance officer, or other appropriate Company representative, including the PGS Compliance Hotline. 4.2 Anti-Corruption Compliance Function The Company shall adequately maintain an independent anti-corruption compliance function (Compliance Function) that identifies, assesses, monitors, and advises and reports on matters associated with the Company s corruption risk. The Compliance Function has overall responsibility for the Anti-Corruption Program and shall (i) create, maintain and update Company documents included as part of the Anti-Corruption Program, (ii) assist Company s management ( Management ) to develop and implement appropriate anti-corruption training programs for Company Personnel, (iii) assist Management in implementing appropriate compliance and monitoring plans to address identified corruption risks, (iv) provide advice and support with respect to inquiries on the prevention of corruption, interpretation of the Company s Anti-Corruption Program and applicable anti-corruption laws, rules and regulations, (v) monitor and report compliance with the Company s Anti-Corruption Program and changes in applicable laws, rules and regulations, (vi) conduct or participate in investigations regarding compliance with Anti-Corruption Laws and the Anti-Corruption Program and (vii) conduct annual global corruption risk assessments. The Company s Compliance Function is led by the Chief Compliance Officer and shall be appropriately comprised of designated Company representatives from senior Management, the Company s business units ( Business Units ), the Legal Department, the Internal Audit Department and other corporate functions. The Company s Audit Committee shall appoint the person to serve as the Chief Compliance Officer for the Company who shall report directly to the Audit Committee on matters pertaining to the Anti-Corruption Program. The Chief Compliance Officer is to assure that the Company s Management, Business Units, Legal Department, Internal Audit Department, and other corporate functions cooperate to effectively implement the Anti-Corruption Program each with the following roles, responsibilities, reporting relationships, and authority. The Company s Management is responsible for (i) assuring that all Business Units comply with the Company s Anti-Corruption Program, implementing the anti-corruption compliance requirements, and monitoring compliance with the Anti-Corruption Program, (ii) identifying additional areas of need or concern with respect to anti-corruption compliance, (iii) maintaining awareness of the Company s business activities with respect to anti-corruption matters including changes in applicable laws, rules and regulations, (iv) establishing appropriate limits of approval authority as required under these Procedures, and (v) assuring the development, support, and conduct of appropriate anti-corruption training programs for Company Personnel. Revision: 8 Effective from: 04/10/2017 Page 4 of 26
The Legal Department is responsible for (i) maintaining awareness of, and changes to applicable anti-corruption laws, rules and regulations (ii) creating and updating the Anti- Corruption Program, (iii) assisting with anti-corruption training, (iv) providing advice and support to Business Units with respect to anti-corruption matters and the Procedures, (v) monitoring compliance with the Anti-Corruption Program, (vi) participating in, managing or conducting investigations regarding compliance with the Anti-Corruption Program, and (vii) assisting with annual global and specific anti-corruption risk assessments. The Internal Audit Department is responsible for (i) monitoring and reporting on the Company s compliance with the Anti-Corruption Program, (ii) conducting audits of Company Personnel s compliance with the Anti-Corruption Program, (iii) assisting with anti-corruption training, (iv) conducting or participating in investigations regarding compliance with the Anti- Corruption Program, and (v) maintaining an independent hot line for reporting on compliance with the Anti-Corruption Program. 4.3 Corruption Risk Assessment Annually, the Company is to undertake a global corruption risk assessment with respect to its then current and anticipated activities. Many of the factors considered in the global corruption risk assessment are set forth in the Procedures. Among other matters, each global corruption risk assessment identifies and considers the corruption risks that arise for the country, business sector and type of transaction with which the Company is involved, as well as the relationships through which the activity is conducted. In addition, the Company undertakes specific corruption risk assessments to prevent and detect corruption, with respect to many Company activities, including but not limited to promotional and sponsorship activities, gifts and entertainment, contributions to charities, community service projects, and professional organizations, political and charitable contributions, and the use of third parties to conduct business. These specific corruption risk assessments are proportionate with respect to the actual and perceived identified risks. Specific corruption risk assessments may form part of the Company s global corruption risk assessment profile, as inversely the Company s global corruption risk assessment profile may assist in assessing specific corruption risk concerns. Company corruption risk assessments will be reviewed and modified as circumstances require. 4.4 Decision Authority The Company shall maintain appropriate authorization matrices for all decision making authority required under these Procedures. The authorization matrices shall be reviewed and updated as required. 4.5 Training The Company s Management assures that the Anti-Corruption Program is embedded and understood throughout the Company by way of internal and external communication, including Revision: 8 Effective from: 04/10/2017 Page 5 of 26
training. Certain training may be accomplished through online and other messaging media while other training may require direct one-on-one meetings or classroom settings. Company Personnel, Representatives and Vendors shall be appropriately trained with regard to compliance with Anti-Corruption Laws and the Anti-Corruption Program proportionate to the identified corruption risks faced. All Company Personnel delegated authority under the anti-corruption authorization matrices shall receive additional annual training regarding the Anti-Corruption Program and other applicable policies and procedures and certify compliance with such training. Certain Company contracts may require the Company to train or hire government officials or other personnel. Before such contract provisions are offered, promised, committed to, authorized or made they must be approved in advance by Management in consultation with the Legal Department. While Management is responsible for assuring each Business Unit s compliance with the training requirements, the Compliance Function, the Internal Audit Department, and the Legal Department will assist with establishing procedures for all required training under the Anti- Corruption Program. 4.6 Controls The Company s Management shall establish and maintain a system of controls to prevent and detect corruption, which shall be clear, practical, accessible, effectively implemented and enforced. The system of controls will consist of common and company-wide controls, as well as specific controls and procedures designed to address particular elements of corruption risks facing the Company. Company-wide controls include, among other factors, the Code of Conduct; the Anti-Corruption Management Statement; Internal Audit Department reviews; Legal Department contracting oversight, Human Resource policies including those regarding staffing, compensation and disciplinary actions; appropriate delegation of authority; consistent, accurate, and truthful financial accounting, reporting and record-keeping; and the Compliance Hotline. Company Personnel must follow applicable standards, principles, laws and Company procedures for accounting and financial reporting. In particular, Company Personnel must timely prepare and complete all accounting and financial reports and records required by the Company. In connection with all payments and other benefits made and received and expenses incurred, Company Personnel must obtain all required Company approvals and, when appropriate, approvals from third parties such as governmental instrumentalities and entities, public international organizations and commercial enterprises. As provided in these Procedures, prior to authorizing or making a payment, incurring an expense or receiving a benefit that falls under the Anti-Corruption Program, the appropriate Company Personnel are to confirm that no part of such payment, expense, or receipt of benefit is for any purpose other than as fully and accurately described in the Company s books and records. The Company Revision: 8 Effective from: 04/10/2017 Page 6 of 26
shall maintain accurate, reasonably detailed records which fairly reflect the Company s transactions and disposition of assets. No undisclosed or unrecorded Company accounts may be established for any purpose. No false, misleading or artificial entries are to be made in the Company s books and records for any reason. In no event may personal funds or accounts be used to accomplish what is otherwise prohibited by Company policy. 4.7 Auditing and Monitoring The Internal Audit Department shall apply procedures and auditing systems to monitor, review and report on compliance with the Anti-Corruption Program. These procedures shall be designed to detect non-conformance with Company policies, including the Anti-Corruption Policy, at all locations where the Company conducts business. The Internal Audit Department shall propose improvements to the Anti-Corruption Program as appropriate. The Internal Audit Department shall include in its audit scope an assessment of compliance with the Anti- Corruption Program. The Internal Audit Department will prepare an annual risk based internal audit plan for approval by the Audit Committee. The annual internal audit plan will include audits on elements of the Company s system of controls that are designed to prevent and detect corruption and violations of Anti-Corruption Laws and the Anti-Corruption Program. Annual internal audits shall: focus on areas of elevated corruption risk identified by the Company and test the controls in place to address the risk; be conducted at various business locations on a periodic basis; assist with education of employees and as appropriate Representatives and Vendors; apply monitoring mechanisms; assess compliance with, and seek to detect violations of, the Anti-Corruption Policy and Procedures; and address other relevant matters. All Internal Audit Department reports will be presented to senior Management and the Audit Committee as will Management s action plan(s) to address the reported issues. All reported issues will be followed up by the Internal Audit Department and/or the Legal Department, as appropriate, until completion of the action plans. 4.8 Commitment to Business Partners The Company requires and accepts an appropriate level of risk and responsibility for compliance with Anti-Corruption Laws with regard to its business partners and each respective transaction. In relationships where the Company has a controlling interest (i.e. its subsidiaries and affiliates in which the Company directly or indirectly owns more than 50% of the voting shares or in which the Company otherwise exercises/possesses control), the Company will require its Anti- Corruption Program to be followed by such business partners. In relationships where the Revision: 8 Effective from: 04/10/2017 Page 7 of 26
Company has a significant interest, but not control, it will emphasize the need for the business partners to act as applicable in accordance with Anti-Corruption Laws and the Anti-Corruption Program. 4.9 Due Diligence To identify, mitigate and manage corruption risks, the Business Units are to undertake due diligence assessments with regard to (i) transactions, (ii) joint ventures and other business associations, and (iii) Representatives and Vendors, taking a proportionate and risk based approach. The extent of each due diligence assessment is to reflect the actual and perceived corruption risk that any transaction or third party presents to the Company. The procedure PRO- COR-PGS-128 Anti-Corruption Risk Assessment and Due Diligence describes the steps to follow for undertaking due diligence assessments, including templates and how to obtain approval. 4.10 Reporting and Investigation The Company s whistle-blowing system allows Company Personnel and others to safely and confidentially report concerns about or knowledge of corruption related to the Company and ensures that all such reports are investigated. Company Personnel are to direct concerns regarding actual or suspected violations of Anti- Corruption Laws or the Anti-Corruption Program to their supervisor, the Legal Department, the Chief Compliance Officer, or the PGS Compliance Hotline. The Company s Compliance Hotline may be contacted by calling: Direct +1 (704) 943-0136 anywhere worldwide Collect by contacting an international operator and asking for +1 (704) 943-0137 Toll free +1 (888) 289-4042 in USA or Canada Toll free +47 800 14471 in Norway. Internet access is available at any time by logging on to http://www.compliancehelpline.com/pgs.jsp. The Company will promptly review and investigate reports and allegations. No retaliatory action shall be taken by the Company against Company Personnel in good faith reporting a violation of an Anti-Corruption Law, the Anti-Corruption Policy, or the Procedures. 4.11 Disciplinary Actions Company Personnel failing to comply with Anti-Corruption Laws, the Anti-Corruption Policy, or the Procedures will be subject to (i) disciplinary actions by the Company, up to and including termination and (ii) the legal consequences in accordance with applicable law. Revision: 8 Effective from: 04/10/2017 Page 8 of 26
5. ANTI-CORRPUTION OPERATING PROCEDURES 5.1 Concepts and Fundamentals The Company and Company Personnel are to comply with Anti-Corruption Laws, i.e. all anticorruption and anti-bribery laws, rules and regulations of all jurisdictions applicable to the conduct and furtherance of the Company s business activities, including those of Norway, the United Kingdom, and the United States of America. Specific Anti-Corruption Laws differ in detail, however, they generally (i) make it illegal to directly or indirectly offer, promise, provide, approve or receive payments or anything of value or any other advantage in order to obtain, retain or direct business or seek or gain an improper advantage in the conduct of business and (ii) impose recordkeeping and internal auditing requirements. The collective prohibitions in the Anti-Corruption Laws are very broad and not only cover the provision and receipt of improper benefits by Company Personnel, but also cover Company Personnel interactions with government officials, instrumentalities and entities, as well as with commercial enterprises and public international organizations. Integral to the Company s Anti-Corruption Risk Assessment practices, the Company undertakes proportionate anti-corruption due diligence assessments with regard to each of the transactions and counterparties with whom the Company conducts business. Each situation is unique, and the nature and scope of each assessment will vary, but each circumstance will be addressed consistently and proportionately. With regard to transactions in which the Company is seeking goods or services to be provided to or performed on behalf of the Company, the Company may require that due diligence questionnaires, certificates of compliance, requests for information and other documents be completed by the counterparty. With respect to transactions in which the Company is the provider of goods or services, the Company will respond appropriately to requests from counterparties for information regarding the Company s anti-corruption compliance practices. Company Personnel may face legal liability for violations of Anti-Corruption Laws, in addition to Company disciplinary consequences. Anti-Corruption Laws provide for monetary fines from and/or incarceration of the offender. Company disciplinary consequences may include termination of employment. 5.2 Facilitating Payments No facilitating payments should be made, provided or authorized by the Company or any Company Personnel. Only (i) to protect the health and safety of Company Personnel or (ii) in other such exigent circumstances may a facilitating payment be made, provided or authorized by either the Company or Company Personnel, and then only in accordance with applicable law and applicable contractual obligations. The procedures set out below must be followed regarding the consideration or payment of any facilitating payment. A facilitating or grease payment may be characterized as an unofficial payment made to a public official to secure or expedite the performance of a routine or necessary action; however it is important to know that the specific definition of a facilitating payment for any given circumstance will vary according to applicable law. Facilitating payments are generally prohibited under most Anti-Corruption Laws, Revision: 8 Effective from: 04/10/2017 Page 9 of 26
but may be permitted in very limited circumstances, including under the United States Foreign Corrupt Practices Act. 5.2.1 Health and Safety If a request for a facilitating payment is made, or circumstances clearly require that a facilitating payment be made, with respect to the immediate health or safety of Company Personnel, and to the extent that the procedures set forth below for Exigent Circumstances cannot or cannot reasonably be followed, then Company Personnel may undertake whatever actions are deemed reasonably appropriate in accordance with applicable law to address the immediate health or safety issue. Once an action undertaken or payment is made, it must be properly reported and recorded on the Company s books in sufficient detail to accurately describe the circumstances requiring the facilitating payment, the amount of the payment, to whom the payment was made and the purpose of the payment. 5.2.2 Exigent Circumstances If a request for a facilitating payment is made due to exigent circumstances, or exigent circumstances clearly require that a facilitating payment be made with respect to all matters other than the immediate health or safety of Company Personnel, then the following actions shall be undertaken. A written request for approval to make the facilitating payment shall be submitted to the appropriate Business Unit Executive Vice-President ( EVP ) which shall include: an accurate, complete and detailed description of the exigent circumstance to be addressed; the amount of the payment; by whom the payment is to be made; to whom the payment is to be made (name of individual and title); whether it is a recurring payment; the purpose of the payment; the expected consequences of not making the payment; and the efforts made to obtain performance of the action without the facilitating payment. The EVP shall consult with the Legal Department and/or the Compliance Function regarding the request to make such payment, as well as the necessity, appropriateness and legality of such payment before the EVP makes the decision whether or not to approve the request to make the payment. If a facilitating payment has been approved by an EVP and after such facilitating payment has been made, the payment must be properly recorded in the Company s books and records with detailed supporting documentation accurately describing among other matters the purpose of the payment and the services received, including the following information: the amount of the payment; by whom the payment was made; Revision: 8 Effective from: 04/10/2017 Page 10 of 26
to whom the payment was made (name of individual and title); whether it is a recurring payment; the purpose of the payment; the consequence of making the payment; the efforts made to obtain performance of the governmental action without the facilitating payment; and the reasoning and justification that the payment did not violate applicable laws. The prohibitions and permissions pertaining to facilitating payments shall apply to the Company s and Company Personnel s interaction with all government officials and entities and commercial enterprises. Further, no Company Personnel may receive or accept any payment or other thing of value or advantage from any third party with respect to the performance of their respective duties to the Company. 5.3 Use of Agents, Representatives, and Consultants 5.3.1 Written Contracts A written contract is required between the Company and all third parties with whom the Company engages in the conduct or furtherance of its commercial activities. The form of each contract including extensions, modifications and revisions must be reviewed and approved in advance by the Legal Department in accordance with applicable policies. Each contract is to contain all necessary and desirable terms and conditions setting forth each party s rights and obligations, including compliance with applicable laws, rules and regulations, including Anti- Corruption Laws and Company policies as well as the consequences of failing to comply including, but not limited to forfeiture of amounts due or paid. 5.3.2 Representative Contracts Before entering into, extending or amending a contract between the Company and any Representative, the applicable Business Unit shall undertake an appropriate and proportional corruption risk assessment and due diligence appraisal with respect to such Representative as set forth in these Procedures. The Legal Department shall review (i) the corruption risk assessment and (ii) the due diligence documentation. Depending upon the specific circumstances of the proposed Representative relationship, special contractual provisions may be required. Only an EVP, after review by and approval from the Legal Department, may execute a contract with a Representative who provides any sales, marketing or commercial services to the Company. 5.3.3 Proportional Risk Assessment and Due Diligence Appraisal Appropriate and proportional corruption risk assessment and due diligence activities must be performed, completed, documented and recorded by the Business Unit prior to entering into, extending or amending a written contract with a Representative. Once a written contract has been entered into periodic reviews of the relationship, including annual certifications of compliance, are to be undertaken by the Business Unit that originated the contract. Minimum every third year, the Business Units shall re-perform the risk assessment and due diligence. Revision: 8 Effective from: 04/10/2017 Page 11 of 26
The proportional risk assessment is to be based on the actual and perceived corruption risks identified when considering the totality of the circumstances and particulars surrounding the proposed Representative, services and transaction. The actual and perceived corruption risks identified are to be managed so that it is acceptably minimized to the mutual satisfaction of the Legal Department and the Business Unit. The subsequent due diligence activities are to be proportionate to the actual and perceived managed corruption risks identified. 5.3.4 General Risk Assessment Considerations To determine the potential general risk of corruption when engaging a Representative, the contracting Business Unit should give consideration to a number of factors including, but not limited to the: country where services are to be provided (ranking on Transparency International s Corruption List); type of commercial activity (marine acquisition, data processing, crew change, other); Representative s status (legal entity, individual, geo-science professional, government official); services to be provided (sales representative, ship s agent, custom s broker, escort boats, other); and financial arrangements (amount of fee, fixed or variable). Prior to entering into, amending or terminating a relationship with a Representative, the contracting Business Unit shall consult with Legal Department on a timely basis to assure that appropriate actions are undertaken. 5.3.5 General Due Diligence Considerations and Procedures The scope and magnitude of due diligence undertaken regarding a Representative is to be proportionate to the corruption risks identified in the respective risk assessment. In any event, a due diligence assessment should be undertaken regarding (i) the Representative s ability and willingness to comply, and history of compliance with Company policies and Anti-Corruption Laws and (ii) whether there is any personal, commercial, financial, or other relationship between the Representative and any government official. The due diligence process is to ensure that adequate information about the ownership and business background of each Representative is obtained, properly reviewed and assessed in light of the corruption risk assessment. When conducting a due diligence review of a Representative, the following criteria are to be used: (a) Representative File: Each EVP (or their designee), and applicable country manager, shall establish a file for each actual and prospective Representative. Revision: 8 Effective from: 04/10/2017 Page 12 of 26
(b) Representative Due Diligence: The due diligence assessment shall include information pertaining to the Representative s: professional and commercial qualifications; financial resources; experience, including years of employment, knowledge of the industry, and a brief description of responsibilities and activities; ownership structure and whether any government official has an interest in or relationship with the Representative, or whether any family member of the Representative or the Representative s owners are family members or relatives of government officials; and prior and current government service positions and positions in quasigovernment entities Due diligence assessments shall also include local embassy or US Department of Commerce reviews as well as in person interviews as deemed appropriate by the Legal Department. Each Representative is to complete a questionnaire supplied by the Legal Department, prior to providing goods or services to the Company. If there is, or there is good reason to believe that there is a government official s ownership interest in or relationship to the Representative, such relationship must be clearly understood and documented. If adequate precautions can be implemented to ensure that the Representative does not violate any Anti-Corruption Laws or the Anti-Corruption Program then the Company s relationship with the Representative may continue under such precautions. If adequate precautions cannot be implemented then the Company s relationship with the Representative must be terminated. The Legal Department should be advised immediately of any actual or believed government official ownership interest in or relationship to a Representative and the Legal Department will assist the Business Unit in responding to the situation. (c) Due Diligence Report: The EVP (or their designee) is to prepare a written due diligence report at the conclusion of due diligence review (i) summarizing the specific due diligence efforts undertaken; (ii) noting resolution of all questions or red flags raised in the risk assessment and; identifying who performed the specific risk assessment and due diligence activities. The report shall also contain as much information as possible regarding the Representative including: commercial justification for Representative: explanation why the services of a specific Representative are necessary and identify the unique qualifications of the Representative; experience: including but not limited to, the number of years the Representative has been in business, and the number of years the Representative has been involved in the particular type of business considered for the actual or proposed relationship with the Company or Company Personnel; Revision: 8 Effective from: 04/10/2017 Page 13 of 26
general background: Representative s current and prior activities, primary areas of business activities, historical changes in ownership, and growth plan. financial stability: Representative s financial statements (audited, if available), including balance sheets and profit and loss statements or tax returns for the previous three years; ownership structure: identify principals of Representative and whether any current or former government official, political party official, candidate for political office, or relative (by blood, marriage or otherwise) has an ownership interest, direct or indirect, in the Representative or is an employee, officer or director of the Representative; quantity of work to be performed: identify the percentage of Representative s business time that will be devoted under the proposed agreement and the specific time periods in which the services are to be provided; location: identify the country(ies) or territory(ies) where the Representative will provide services; business and personal references: summarize information obtained through all reference checks which should include references from entities for whom Representative has previously performed activities similar to those contemplated under the pending relationship; and licenses: obtain the license number, expiration date and name of government agency or issuing organization for al licenses Representative is required to have to perform its services. (d) Embassy Check: The contracting Business Unit shall assure and report that information about the Representative is obtained from the local embassy or US Department of Commerce commercial representative as may be required by the Legal Department. (e) Representative s Cooperation: The contracting Business Unit shall assure and report that a determination is made indicating whether the Representative has refused to sign an Anti- Corruption acknowledgement letter or certificate of compliance, and whether the Representative has objected to any of the representations contained in the proposed representative agreement or to any questions pertaining to their background. (f) Regulatory Authorities Check: The contracting Business Unit shall assure and report that information from local, regional and/or national government authorities, agencies, ministries or other bodies that regulate any significant activities or business operations of the Representative as may be required by the Legal Department. Such information may identify potential corruption risks in connection with a government official who has a connection to the Representative. (g) Compliance Verification: The contracting Business Unit shall state and report whether the appropriate Company Personnel have reviewed and discussed the provisions of Anti-Corruption Laws with the Representative as may be required by the Legal Department. The completed risk assessment and due diligence report shall be forwarded to the Legal Department for review. Revision: 8 Effective from: 04/10/2017 Page 14 of 26
(h) Annual Certification: An annual certification of compliance must be executed by Company Personnel who are not employees, as required by the Legal Department or the Compliance Function. The Company may require personnel of non-individual Representatives who have significant responsibilities under the applicable contract to sign an additional certification of compliance. The annual certifications of compliance are to be obtained by the applicable Business Unit. Copies of all such documentation and certifications are to be maintained in the appropriate file and forwarded to the Legal Department. (i) Use of the Representative: Regarding each Representative with whom the Company is conducting or desires to conduct commercial activities, the Company through the contracting Business Unit shall, as applicable: establish clear lines of internal authority for screening, selecting and monitoring such Representative; thoroughly screen each Representative (i) prior to entering into a contract, or (ii) as soon as reasonably practicable if a contract exists between the Company and the Representative as of the effective date of these Procedures; obtain from each Representative written assurances that they understand and will abide by all Anti-Corruption Laws and the Company s Anti- Corruption Policy; provide appropriate Anti-Corruption training for each Representative and Company employees responsible for managing and overseeing such Representative s activities; monitor each Representative s activities, including periodic review/audit of their performance and payment practices; investigate any signs or allegations of potentially troublesome activities or unethical behavior; and maintain records of the Company s compliance-related activities concerning each Representative. The Legal Department will maintain copies of all completed due diligence documentation concerning Company Personnel who are not employees. The procedure PRO-COR-PGS-128 Anti-Corruption Risk Assessment and Due Diligence describes the steps to follow for undertaking due diligence assessments, including templates and how to obtain approval. 5.4 Business Partners Prior to the Company entering into a relationship or transaction with any third party, the appropriate Company Personnel shall undertake a review to determine that such third party is a legitimate party for the purposes of the proposed relationship or transaction. The review and determination is not to guarantee the success of the proposed relationship or transaction, but to provide assurance that the proposed counter-party is in fact legitimate for the intended purpose of the relationship or transaction. Revision: 8 Effective from: 04/10/2017 Page 15 of 26
The Company shall make a good-faith effort to ensure that those with which the Company transacts business are aware of the Company s Anti-Corruption Policy, Code of Conduct, and ethical guidelines. To identify, mitigate and manage corruption risks, the Business Units are to undertake due diligence assessments before entering into, extending modifying or revising a transaction taking a proportionate and risk based approach. The extent of each due diligence assessment is to reflect the actual and perceived corruption risk that any transaction presents to the Company. Before entering into, extending, modifying or revising a contract between the Company and any third party with whom the Company engages in the conduct or furtherance of its commercial activities, the applicable Business Unit shall undertake an appropriate and proportional corruption risk assessment and due diligence appraisal with respect to such third party substantially as set forth in these Procedures for Representative Contracts. The Legal Department shall review and the applicable EVP/its designee approve (i) the corruption risk assessment and (ii) the due diligence documentation. Depending upon the specific circumstances of the proposed third party relationship, special contractual provisions may be required. The procedure PRO-COR-PGS-128 Anti-Corruption Risk Assessment and Due Diligence describes the steps to follow for undertaking due diligence assessments, including templates and how to obtain approval. With respect to inquiries regarding the Company and due diligence on the Company from entities (whether governmental, private or non-governmental organizations (NGOs)) with which the Company conducts business, such inquiries shall be responded to by the appropriate Business Unit personnel with assistance from the Legal Department to assure accuracy and consistency. 5.5 Joint Ventures, Mergers and Acquisitions and other Equity Transactions Prior to entering into any joint venture, merger, acquisition or other equity transaction or relationship, appropriate Company Personnel shall undertake and report to the applicable EVP (i) a corruption risk assessment, (ii) the anti-corruption due diligence efforts and (iii) the determination whether the potential partner(s) is willing to comply with the Company s Code of Conduct, applicable business procedures, ethical guidelines and Anti-Corruption Policy. The transaction or relationship must not proceed if the results of any such undertaking(s) are not satisfactory to the EVP and Legal Department after their review. 5.5.1 Corruption Risk Assessment The corruption risk assessment is to identify corruption risks associated with each transaction or relationship when considering the totality of the circumstances and particulars surrounding that proposed transaction or relationship. Given the unique and differing facts encountered in each transaction and relationship, the Business Unit shall seek guidance and assistance from the Compliance Function and Legal Department to properly define the scope of each such corruption risk assessment. For the purposes of illustration only, consideration should be given to, among other matters: Revision: 8 Effective from: 04/10/2017 Page 16 of 26
the proposed partner (private/governmental/non-governmental organization (NGO)/other); the nature and extent of the relationship between the proposed partner and the Company (joint venture, merger, acquisition, equity, transactional); the activity to be undertaken; the country in which the activity is to be undertaken; the financial/commercial impact of the activity on the proposed partner and the Company; whether the proposed partner has an anti-corruption policy, statement or program; and whether the proposed partner has been accused of violating any Anti- Corruption Laws. 5.5.2 Anti-Corruption Due Diligence The anti-corruption due diligence is to be appropriate and proportional to the actual and perceived corruption risks identified when considering the totality of the circumstances and particulars of the proposed transaction or relationship. In person interviews with proposed partners may be appropriate depending upon the circumstances. Joint ventures, mergers, acquisitions, and other equity transactions with government officials or government entities require special consideration. In countries with developing markets where the public and private sectors often overlap, it can be difficult to determine whether one is doing business with a governmental or private concern as government officials may have dual roles and serve both as private businesspersons and government officials. In any joint venture, merger, acquisition or equity transaction or relationship with a government entity or enterprise, compliance procedures must be monitored closely and audit rights and routine oversight of the transaction or relationship should be part of Company s contractual rights, including the proposed compensation to the partner as well as to its directors, officers and employees. In the first instance, the proposed partner shall complete the (i) due diligence questionnaire, (ii) consent to release and (iii) certificate of compliance provided by the Legal Department. Further the Business Unit, with the assistance of the Legal Department, shall collect and retain other relevant information concerning its proposed partner and prepare a written due diligence report documenting all due diligence efforts, resolution of the identified corruption risks, and the commercial reasons entering into the transaction or relationship. If a government official is a direct or indirect owner, director, officer or employee in the proposed transaction or relationship, or is related to any such owners, directors, officers or employees, further due diligence should be conducted to determine: (i) the name and official position of the government official; (ii) the government official s official duties and responsibilities (or potential, if a candidate); (iii) the type and extent of the government official s ownership interest, if any, in the entity; (iv) the position in the entity held by the government official or any relative of such government official; and (v) if the government official is a relative of an owner, employee, officer or director of the entity, the exact relationship of that government official to the entity s owner, employee, officer or director. Revision: 8 Effective from: 04/10/2017 Page 17 of 26
The procedure PRO-COR-PGS-128 Anti-Corruption Risk Assessment and Due Diligence describes the steps to follow for undertaking due diligence assessments, including templates and how to obtain approval. 5.5.3 Company Practices Whenever the Company has majority ownership or controlling interest in a joint venture, merger, acquisition or other equity transaction or relationship, the Company shall contractually require the respective partner(s) to comply with all applicable laws, rules and regulations, including but not limited to Anti-Corruption Laws. The Company and Company Personnel should (i) include anti-corruption provisions in the transaction and relationship documents and agreements; (ii) if necessary provide training to the partner(s) and their personnel on Anti-Corruption Laws and Company policies and procedures; and (iii) monitor compliance once the transaction or relationship is concluded. When the Company does not have a majority ownership or controlling interest in a joint venture, merger, acquisition or other equity transaction or relationship, the Company should make a good-faith effort to ensure that transaction or relationship complies with the Company s policies, applicable procedures, ethical guidelines and Anti-Corruption Policy including all record keeping and accounting requirements. 5.6 Divestiture of Company Assets No Company Personnel shall receive or accept any personal benefit from a third party in connection with the divestiture of Company assets or equity, except when such benefit has been disclosed and prior written approval from the Company s CEO (or in case of the CEO the Board of Directors) has been first obtained. 5.7 Promotional and Sponsorship Benefits Promotional and sponsorship benefits may be offered, paid or received if the value of such benefit is reasonable, bona fide, fully documented and (i) related to the promotion or demonstration of the Company's, its suppliers' or its customers' goods or services or (ii) required by contract. Sponsorship benefits include such activities as sponsoring individuals to seminars, trade shows, facility tours, and training, including reasonable and necessary travel expenses. Company Personnel may be permitted to offer, incur, make or receive certain promotional and sponsorship benefits if they (i) relate to the promotion or demonstration of the Company s, its suppliers or its customers goods or services, or (ii) are required by contract with a government entity or instrumentality, public international organization, or commercial enterprise, and (iii) otherwise comply with applicable Company policies. 5.7.1 Promotional and Sponsorship Expenses The reasonable, necessary and bona fide cost(s) of promotional and sponsorship benefit(s) shall be incurred, made, reimbursed or received by the Company and Company Personnel in Revision: 8 Effective from: 04/10/2017 Page 18 of 26
accordance with (i) applicable Company policies and (ii) applicable contractual obligations provided: the applicable guidelines, procedures, and policies are followed; the purpose for the promotional expense is properly approved in advance; the payment, incurrence, reimbursement or receipt of the promotional expense is properly approved in advance; and the payment, incurrence, reimbursement or receipt of the expense is accurately described and reflected in the Company s books and records. 5.7.2 Training The Company may train individuals, including personnel from government entities or instrumentalities, public international organizations, and commercial enterprises, relating to the promotion or demonstration of the Company s goods or services as (i) required by contract or (ii) otherwise deemed appropriate by the Company. Company Personnel may receive training relating to the promotion or demonstration of the Company s suppliers or its customers goods or services, as (i) required by contract with a government entity or instrumentality, public international organization, or commercial enterprise or (ii) otherwise deemed appropriate by the Company. 5.7.3 Training Expenses The reasonable, necessary and bona fide cost and expense of training shall be incurred, made, reimbursed or received by the Company and Company Personnel in accordance with (i) all applicable Company policies and (ii) all applicable contractual obligations provided: the applicable guidelines, procedures, and policies are followed; the purpose for the training is approved in advance, including reference to applicable contract provisions; the payment, incurrence, reimbursement or receipt of the training cost or expense is properly approved in advance; and the payment, incurrence, reimbursement or receipt of the training cost or expense is accurately described and reflected in the Company s books and records. 5.7.4 Travel Expenses Company Personnel may be permitted to make, incur or receive reasonable, necessary and bona fide travel, lodging, meal and related benefits associated with promotion and sponsorship activities provided that the written request to make, incur or receive such benefit(s), including: the purpose of the sponsorship activity; the date(s) of the sponsorship activity; the cost(s) of such benefit(s); reference to specific contract and provisions thereof, if applicable; and Revision: 8 Effective from: 04/10/2017 Page 19 of 26