Policy
Message from the CEO At SAExploration, we place a high value on honesty and integrity as well as delivering quality service to our customers. Our core values and commitment to high ethical standards in our operations define and influence how we interact with each other, our customers and the communities where we operate. Consistency in these standards, complying with the laws and regulations where we operate, and living our core values combine to help us achieve long-term success as a business, service provider and employer. The Foreign Corrupt Practices Act Policy along with the Code of Business Conduct and Employee Handbook are in place to help you understand what we consider right and wrong when conducting business at SAExploration. The documents provide you with the information, guidance and tools you need to make business decisions that are both ethical and legal. On behalf of the Board of Directors and the executive management team, I thank you for your contribution to our success as well as your commitment to continuing to live our Core Values and operating to the highest levels of honesty and integrity.
Contents Message from the CEO 2 OBJECTIVE 4 SCOPE 4 POLICY 4 FCPA ANTI-BRIBERY PROVISIONS 4 Prohibited Payments 4 Permissible Payments 5 FCPA BOOKS AND RECORDS PROVISIONS INTERNAL CONTROLS 7 PENALTIES FOR FCPA VIOLATIONS 8 APPOINTMENT OF AGENTS AND BUSINESS PARTNERS 8 CERTIFICATION 9 RESPONSIBILITIES OF EMPLOYEES 9 Responsibilities of Employees involved in International Matters - Red Flags 9 RESPONSIBILITIES OF THE COMPANY S GENERAL COUNSEL 10 QUESTIONS AND REPORTING POSSIBLE VIOLATIONS 10 APPENDIX A - FCPA Contract Language 11
OBJECTIVE This Policy (the Policy ) states and explains the Policy of SAExploration, Inc. ( SAE ) concerning compliance with the U.S. Foreign Corrupt Practices Act of 1977 as amended (the FCPA ). SCOPE This Policy applies to SAE and all of its affiliates, subsidiaries and affiliates (all of them collectively referred to herein as the Company ), and to all of their directors, officers, employees, contractors, agents and any other person acting on behalf of the Company. POLICY All directors, officers, employees, contractors, subcontractors, consultants, agents and persons acting on behalf of the Company (collectively referred to as the Company Representatives ) are expected to act legally and ethically when conducting the Company s business, and shall conduct themselves in accordance with all laws and regulations applicable to the Company in each jurisdiction in which the Company operates. In particular, and regardless of their office location or nationality, the Company Representatives are required to comply with the letter and spirit of the FCPA. Therefore, the Company Representatives are prohibited from making, offering, promising or approving payments, gifts or the giving of anything of value to any foreign official, either directly or indirectly through intermediaries or otherwise for the purpose of obtaining or retaining business or securing any other improper advantage for the Company or for any other person. In addition, the Company is required to maintain books and records that accurately and fairly reflect all transactions and dispositions of assets, and to maintain proper internal accounting controls. FCPA ANTI-BRIBERY PROVISIONS Prohibited Payments The FCPA prohibits the making of any payment, offer or gift of money or anything of value to a foreign official for the purposes of obtaining or retaining business or securing any other improper advantage for the payor or for any other person. The amount involved is not relevant. Further, the FCPA makes it illegal to make any such payments, offers or gifts to any other person (such as an agent, contractor, consultant or intermediary) while knowing or having reason to know that all or a portion of such payment has been or will be given or offered to a foreign official. This means that in some circumstances, and individual or the Company may be held liable for the actions of agents and other third parties. The FCPA s anti-bribery prohibition is broader than might appear at first glance. The FCPA uses a very broad definition of the term foreign official. As used in the FCPA and in this Policy, foreign official means: a) An officer, employee, consultant, or any other person acting on behalf of a government other than the U.S. government or any of its departments, agencies or instrumentalities (such as a government-owned or controlled state enterprise like PDVSA, Pemex or other national oil companies) b) An officer, employee, consultant, or any other person acting on behalf of a public international organization (such as the World Bank, the International Finance Corporation, the International Monetary Fund, and the Inter-American Development Bank); c) An officer, employee, consultant, or any other person acting on behalf of a foreign political party; or d) A candidate for foreign political office or any employee or person acting on behalf of such a candidate. Thus, the term foreign official includes not only elected officials but also consultants who hold government positions, employees of companies controlled by foreign governments, political party SAExploration Foreign Corrupt Practices Act Policy 4
officials, and others. Under the FCPA, foreign officials include not only high level government officials, but also middle and low-level employees and honorary government officials. Any offer or payment to an immediate family member of a foreign official is considered as if such offer of payment were given to the foreign official himself. The fact that a person is not a government official under local law is not controlling for FCPA purposes. The FCPA prohibits giving anything of value to a foreign official, and it is not limited to the payment of money. For example, the phrase anything of value has been broadly construed and can include other tangible and intangible benefits given to a foreign official, including the payment of non-business travel expenses, free services, gifts and business opportunities. new business or to continue business with a particular party or any other decision involving the official s discretionary powers is not a routine governmental action. Payments made for the purposes of obtaining more favorable treatment for foreign officials (such as customs officials) are also typically not facilitating payments. Use of this exemption is very limited. The rationale behind excluding facilitating payments from the general anti-bribery prohibition of the FCPA is that those payments are frequently accepted practice in some countries around the world. However, you should note that, even though the payment to a foreign official may be within the definition of routine governmental action described above, it may be a violation of local laws and therefore not permitted by the FCPA. Permissible Payments The FCPA allows the provision of bona fide promotional or marketing expenditures (such as meals, entertainment, travel and lodging) and the payment of permissible facilitating payments to foreign officials. Facilitating payments and promotional marketing expenditures involving foreign officials shall only be made, authorized, or reimbursed as provided below in this Policy. a) Payments for Routine Governmental Action Under very limited circumstances, the FCPA allows certain facilitating payments to low-level foreign officials in order to expedite or secure the performance of routine governmental actions. Use of this exemption is very limited. A routine governmental action is limited to clearly nondiscretionary action ordinarily and commonly performed by a foreign official. For example, routine governmental action includes action related to obtaining the issuance or entry and exit permits or visas, providing police protection, mail pick-up and delivery, providing phone service, and performing similar actions that are wholly unconnected to the award of new business, the continuation of prior business, or the giving of an improper advantage. A decision by a foreign official to award The Company does not encourage the making of facilitating payments. The Company s Policy is to authorize and reimburse facilitating payments only when: (i) the refusal to make such a payment may severely and adversely affect the Company s ability to do business in a foreign country; (ii) the payment is lawful under U.S. laws and regulations and local laws; and (iii) is made for the sole purpose of facilitating, expediting, or securing the performance of a routine governmental action that does not involve any discretion on the part of the foreign official. Nominal and non-recurring facilitating payments below a value of Five Hundred U.S. Dollars ($500) that meet the conditions listed in the preceding paragraph do not require written approval. However, these nominal facilitating payments shall be timely recorded into the company s books and records in detail with all pertinent information. All other facilitating payments must be approved in writing by the Company s General Counsel and/or Chief Financial Officer. All facilitating payments must be properly recorded in the Company s books and records as indicated in Section 5 below. SAExploration Foreign Corrupt Practices Act Policy 5
b) Gifts, Entertainment, Travel and Other Promotional or Marketing Expenses As noted above, the FCPA prohibits the payment of anything of value to a foreign official. This broad language includes, for example, paying a foreign official s meals, entertainment, travel, and lodging, or the giving of gifts or other merchandise to a foreign official. However, the FCPA allows the Company to incur certain promotional or marketing expenses, provided that payments or benefit given to the foreign official is a bona fide expenditure directly related to: (i) the promotion of the Company s services; or (ii) the execution or performance of a contract with a foreign government, state-owned company, agency, or instrumentality. The following rules shall apply for the payment or reimbursement of gifts, entertainment, travel or any other promotional or marketing expenses incurred by or on behalf of, foreign officials: i) Authorized Gifts, Entertainment, Travel and Other Promotional and Marketing Expenses Company Representatives may incur, or authorize the payment or reimbursement of gifts, entertainment, travel and other promotional or marketing expenses in connection with foreign officials only if: (1) Such payment or reimbursement is directly related to the promotion or explanation of the Company s services or to the performance of a particular contract between the Company and a foreign government, state-owned Company, agency or instrumentality and is clearly not provided for inducing a foreign official to misuse his/her official position; ii) (2) it is a reasonable expense for meals, travel, entertainment or gifts (including promotional items or Company s merchandise) in light of what is customary and usually associated with ethical business practices; (3) it does not create the appearance of being an improper payment, benefit or gift under the circumstances; (4) disclosure will not cause embarrassment for the Company, the Representatives or the foreign official; and (5) it is not illegal under the local laws, rules or regulations of the particular foreign country. Authorization Process Provided that all the conditions set forth in (1) above are met, prior authorization from the Company s General Counsel and/or Chief Financial Officer is required for payment or reimbursement of meals, beverages and entertainment of foreign officials that do not exceed what is generally considered proper, reasonable and customary. Generally, meals and beverages should be reasonable for the geographical location of the meal and consistent with all corporate policies and procedures for appropriate business meal reimbursements. In general, entertainment (attendance at a sporting event, concert or other cultural event) will be considered proper and reasonable if the tickets are of a moderate value, the Company s representative attends the event with the foreign official using the opportunity to promote the Company s services and disclosure to the public does not present potential for embarrassment for either party. Payments or expenses related to meals, SAExploration Foreign Corrupt Practices Act Policy 6
beverages and entertainment of foreign officials that exceed the amount or criteria stated above require written authorization of the Company s General Counsel and/or Chief Financial Officer. The giving of promotional items or merchandise of more than nominal value and the payment or reimbursement of travel and lodging expenses incurred by or on behalf of foreign officials requires the prior written approval of the Company s General Counsel and/or Chief Financial Officer. All gifts, travel and other authorized promotional or marketing expenses must be properly documented in accordance with the Company s expense processing policy and must be recorded in the Company s books and records as indicated in Section 5 below. c) Foreign Political Contributions and Donations to Foreign Charities The making of political contributions or donations to foreign political parties is not permitted. The making of contributions or donations to foreign charities requires prior written approval of the Company s General Counsel and/or Chief Financial Officer. Donations to foreign charities will only be approved after investigation of the charity in a manner similar to that used to investigate prospective business relationships. While the Company believes in contributing to the communities in which it conducts business, the Company will conduct or investigate to ascertain whether the charity is a bona fide charity and is not affiliated with a foreign official. All approved charitable contributions and donations must be properly recorded in the Company s books and records as indicated in Section 5 below. FCPA BOOKS AND RECORDS PROVISIONS INTERNAL CONTROLS It is the Company s Policy that all books, records and accounts shall be kept accurately and shall fairly reflect all transactions and dispositions of assets. Legal practices and Generally Accepted Accounting Principles ( GAAP ) for accounting and financial reporting shall be followed by all employees as well as by the company Agents (or any other Representative doing business on behalf of the Company) and no undisclosed or unrecorded accounts are to be established for any purpose. False or misleading entries are not to be made in the Company s books and records for any reason. All facilitating payments, promotional and marketing expenses, gift, travel, and entertainment involving foreign officials must be accurately recorded in the Company s records to completely reflect the true nature of the transaction. For example, the documentation should show the date of the payment, the purpose of the payment, to whom the payment was made, and the payment amount (both in foreign currency and U.S. dollars). If the U.S. dollar amount exceeds $500, the documentation should include a copy of the approved authorization (approval by the Company s General Counsel and/or Chief Financial Officer. Permissible facilitating payments, promotional or marketing expenses, gifts, travel and entertainment involving foreign officials shall not be commingled with or disguised as regular expenses. In addition, the Company shall maintain a system of internal accounting controls sufficient to provide reasonable assurance that: 1) Transactions are executed in accordance with management s general or specific authorization; 2) Transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP (or any other applicable principals) and maintain accountability for assets; SAExploration Foreign Corrupt Practices Act Policy 7
3) Access to Company assets is permitted only in accordance with management s general or specific authorization; and 4) Recorded transactions in corporate assets are compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any noted differences. PENALTIES FOR FCPA VIOLATIONS The FCPA imposes criminal and civil liability on both individuals and business entities. For violations of the anti-bribery provisions of the FCPA, individuals (including officers, directors, employees or agents of the Company -- regardless of their nationality) may be subject to criminal penalties including fines of up to $100,000, imprisonment of up to five years, or both. Business entities, such as the Company, may be fined up to $2,000,000. The criminal penalties for willful violations of the record-keeping provisions of the FCPA s books and records provisions include up to $5,000,000 in fines and 20 years in prison for individuals (including officers, directors, employees or agents of the Company) and up to $25,000,000 in fines for the Company. In addition, civil penalties may also be brought by the Government imposed against business entities and individuals. Additional penalties that are commonly imposed on companies that violate the FCPA include disgorgement of profits resulting from the prohibited payments. In addition, other U.S. laws permit the fines mentioned above to be doubled. Other penalties that can be imposed as a result of FCPA violations include debarment from participating in U.S. Government contracts. In addition, as required by statute, fines imposed against individuals for violations of the anti-bribery provisions of the FCPA may not be paid or reimbursed directly or indirectly by the Company. Violation of the FCPA will also result in discipline by the Company, up to and including termination of employment or any other contractual agreement. APPOINTMENT OF AGENTS AND BUSINESS PARTNERS The FCPA prohibits direct AND indirect payments to foreign officials. Thus, the Company can face FCPA liability based on improper payments or promises to make improper payments made by its agents, contractors, consultants, representatives, or other business partners (generally referred to herein as agents ). It is the Company s Policy to conduct business only by legal and ethical means, and this practice must be extended to the activities of all of the Company s Representatives or agents. Before entering into an agreement with an agent that may act on behalf of the Company with regard to foreign governments, government-owned entities and other instrumentalities, all Agents must review the Company s FCPA Policy and sign and deliver a FCPA Certificate of Compliance to our General Counsel to formally document that the Agent is aware and will comply in all respects with our FCPA policies and procedures. All contracts shall include a clause that the agent has received a copy of the Company FCPA Policy, has read the FCPA Policy and understands and will comply in all respects with the Company s FCPA Policy. In addition, all Agents will be required to confirm compliance with the FCPA on a yearly basis. A FCPA Certificate of Compliance will be required to be signed by the agent and received by the Company s General Counsel on a yearly basis. Prior to the Company retaining such an agent, the Company s General Counsel shall conduct an appropriate due diligence review to research and document in writing the reputation, background and past performance of the prospective agent. Such background investigations may include interviews with principals of the other party and consultation with the U.S. Embassy and other government officials regarding the background of the other party and its principals. The Company shall also conduct periodic update and due diligence reviews on the agent during the course of their representation. The Company shall also conduct an appropriate due diligence investigation to document the reputation, background and SAExploration Foreign Corrupt Practices Act Policy 8
past performance of any person or company (including his/her agents and consultants) with whom the Company contemplates entering into a business combination (merger, acquisition, joint venture, etc.) prior to the closing of any such business combination. The Company shall only retain an agent using a written agreement that contains appropriate FCPA-related provisions, including, but not limited to, the following provisions as appropriate in the context of each particular transaction: 1) the agent s acknowledgment that it, he or she understands the provisions of the FCPA and agrees to comply with its terms and with any other applicable laws; 2) the agent s acknowledgment that the contents of the agreement may be disclosed by the Company to third parties including government agencies; 3) the agent s representation and warranty that neither it, nor any of its owners, directors, officers, principals, or key employees are foreign officials and that it will promptly inform the Company of any changes in that regard; 4) automatic termination without compensation in the event the agent has made, attempted to make, makes, attempts to make or proposes to make an improper payment in violation of this Policy; 5) annual certifications by the agent of its compliance with the applicable law and this Policy; and, 6) the Company shall have the right to audit the agent s compliance with the agreement and this Policy. (See Appendix A for sample agreement language) is expected to comply with this Policy and to execute the FCPA Certificate of Compliance attached hereto as Appendix B. RESPONSIBILITIES OF EMPLOYEES Responsibilities of Employees involved in International Matters - Red Flags As the Company is heavily involved in foreign ventures, either through direct ownership of subsidiaries or via projects with non- U.S. corporations, all employees that are directly or indirectly involved in foreign activities need to be aware of possible FCPA violations. The presence of any of these factors or red flags when entering into a non-u.s. business relationship should be brought to the attentions of the Company s Chief Financial Officer and/or General Counsel: 1) unusual payment patterns or financial arrangements, including payments in cash or out of country; 2) a history of corruption in the country in question. See Transparency International Corruptions Perception Index for specific information: www.transparency.org/policy_research/surveys_indices/cpi; 3) a refusal by the foreign person to certify or represent that it will not take any action in furtherance of any unlawful offer, promise, or payment to a foreign official that would cause the Company to violate the FCPA; 4) unusually high fees or commissions; 5) lack of transparency in expenses or accounting records; 6) apparent lack of qualifications or resources to perform services offered; CERTIFICATION Every Company Representative whose duties are likely to lead to involvement in or exposure to any of the areas covered by this Policy 7) whether the agent or representative was recommended by an official of the potential government customer; and 8) family relationships with foreign officials. SAExploration Foreign Corrupt Practices Act Policy 9
RESPONSIBILITIES OF THE COMPANY S GENERAL COUNSEL All employees are primarily responsible for complying with this Policy and making sure that those that are under their supervision also comply. The Company s General Counsel shall be responsible for administering this Policy. In particular, the Company s General Counsel shall be responsible for: 1) establishing and maintaining the practices and procedures required to implement this Policy; 2) disseminating this Policy to all directors, officers, employees, agents and representatives of the Company; 3) ensuring that training on the substance of this Policy is provided to all directors, officers, employees, agents and representatives of the Company as appropriate; 4) procuring the FCPA Certificate of Compliance from each director, officer, employee, agent and representative of the Company on, at a minimum, an annual basis; 5) obtaining the attached FCPA Certificate of Compliance from each newly hired director, officer, employee, agent and representative of the Company; Chief Executive Officer, Internal Audit Department and to the Audit Committee and/or Board of Directors as appropriate. QUESTIONS AND REPORTING POSSIBLE VIOLATIONS Additional information about the FCPA can be found at the website of the U.S Department of Justice at: www.usdoj.gov/criminal/fraud/fcpa/. If you have questions or problems concerning your procedural understanding, the implementation or the accounting aspects of this Policy, you should contact the Company s General Counsel, Brent Whiteley, directly at bwhiteley@saexploration.com or (403) 776-1950. Any violation of this Policy should be immediately reported to the Company s General Counsel, Brent Whiteley, directly at bwhiteley@saexploration.com or (403) 776-1950. The Company will not retaliate against any employee that in good faith reports suspected or actual violation of the FCPA. The Senior Management of the Company fully supports employees who decline an opportunity or advantage which would place at risk the Company s ethical principles and reputation as stated in this Policy. 6) ensuring that any investigation required to be conducted under this Policy is properly conducted; and 7) maintaining a centralized file with all records and documentation related to and in connection with compliance with this Policy and the FCPA. The Company s General Counsel is authorized to employ all means and resources required for the purposes of administering this Policy and otherwise fulfilling its duties and obligations under this Policy, including the employment of outside consultants and advisors as needed. The Company s General Counsel shall immediately report any matters concerning violations of this Policy to the Company s SAExploration Foreign Corrupt Practices Act Policy 10
APPENDIX A - FCPA Contract Language 1 a) Local Party acknowledges, represents and warrants (i) that it has received a copy of, and understands, the Foreign Corrupt Practices Act Policy Statement and Guide; (ii) that neither it, nor any of its owners, directors, officers, principals or key employees are foreign officials and that it will promptly inform the Company of any changes in this regard; (iii) that this Agreement may be disclosed by the Company to their parties; (iv) that it will provide annual certification of its compliance with applicable law; and (v) that Company shall have the right to audit the Local Party s compliance herewith. b) Local Party warrants and represents to the Company that neither Local party nor any of its officers, directors, employees, affect or influence any act or decision thereof or (iii) securing any improper advantage. c) If Local Party breaches any of the covenants set forth in clause (b), above, (i) this Agreement shall become void; (ii) the Company shall have a right of action against Local Party for the amount of any monetary payment or thing of value made or given by Local Party in breach of any such covenants; (iii) all obligations by the Company to pay any Fee or other compensation to Local Party shall cease immediately; and (iv) the Company may its sole discretion, rescind this Agreement and Local Party shall immediately return to the Company any Fee paid to Local Party arising from any transmission in violation of clause (a), above. agents or other representatives has performed or will perform any of the following acts in connection with this Agreement, any sale made or to be made hereunder, any compensation paid or to be paid hereunder, or other transactions involving the business interests of the Company: pay, offer or promise to pay, or authorize the payment of, any money, or give or promise to give, or authorize the giving of, any services or anything else of value, either directly or through a third party, to any official or employee of any governmental authority or instrumentality, or of a public international organization, or of any agency or subdivision thereof, or to any political party or official thereof or to any candidate for political office for the purpose of (i) influencing any act or decision of that person in his official capacity, including a decision to fail to perform his official functions with such governmental agency or instrumentality or such public international organization or such political party, (ii) inducing such person to use his influence with such governmental agency or instrumentality or such public international organization or such political party to 1 These provisions are provided for purposes of guidance and illustration only. Contracts involving SAE s interests in international transactions should always be coordinated with SAE s General Counsel. SAExploration Foreign Corrupt Practices Act Policy 11