Li & Fung Limited 1. INTRODUCTION The foundation of Li & Fung s culture lies in our history and our values. We believe that we should always conduct ourselves and our business openly, honestly and in compliance with all applicable laws. Our reputation is built by the actions of our people and this is why what you do everyday is so important. We believe that our success should be based on a common vision of shared values and a consistent standard of conduct. At Li & Fung, we take a zero-tolerance approach to bribery and are committed to complying with all applicable anti-bribery laws. This Policy sets out the rules and principles as they relate to bribery and forms part of our Code of Conduct and Business Ethics. It has the full support of our Board of Directors. You should read and understand this Policy and apply it every day. If the laws in your country are stricter, then you must comply with them in addition to this Policy. If you have a question on anything related to this Policy, you should speak to your Grade 2 line manager. He or she will raise matters to the Branch Manager, the Hub Manager or the Group Chief Compliance Officer as appropriate. Alternatively, you can send your query to GroupCCO@lifung.com.hk. We also welcome any suggestions you may have for improving the prevention of bribery in our business. 2. THIS POLICY APPLIES TO EVERYONE IN THE LI & FUNG LIMITED GROUP This Policy is mandatory for the directors, officers and employees of all Li & Fung Limited Group companies (Li & Fung Limited and all of its subsidiaries) no matter where they are located or what their position (collectively, Associates). This Policy also applies to all non-li & Fung persons or companies who perform services for us or on our behalf anywhere in the world. We have called them Business Associates in this Policy. The rules and principles under this Policy apply regardless of: the country in which you or the recipient are located whether the bribe is promised or given by you personally or by a third person (e.g. by an agent or intermediary) September 2012 Page 1 of 7
whether the bribe is received by the recipient or through another person (e.g. a family member or a friend of the recipient) local custom / locally acceptable practice the value of the bribe whether the decision relevant to the business of the company has already been made (e.g. where the bribe is a reward for a decision already made). The reason why this Policy has application worldwide is that some anti-bribery laws (such as the UK Bribery Act 2010 and the US Foreign Corrupt Practices Act 1977) apply beyond their national borders and to corporate entities from other countries. As a result, complying with local anti-bribery laws alone will not necessarily ensure full legal compliance. 3. WHAT IS BRIBERY? Bribery is when a person offers, promises or gives another person a benefit directly or indirectly (e.g. through a third party) intending that benefit to influence that person to perform their job improperly, or as a reward for doing so. Asking for, agreeing to receive or accepting such a benefit is also bribery. It doesn't matter if the bribe is offered or accepted by a third party. It is still a bribe. The benefit does not need to be in the form of cash - it can be any type of advantage. Some examples are: gifts, meals or sports tickets, travel expenses, discounts, rebates, kick-backs, donations, preferential treatment and favours. Bribery laws concerning public officials are even stricter - providing a benefit to a public official can be bribery even if no misconduct or improper motive is involved. Consequently, great care needs to be taken when dealing with public officials. Please refer to the Guidance Notes for further guidance on who are public officials. Examples of bribery include: a payment from a factory to clear goods for shipment to the customer a payment to a building inspector official to encourage him to overlook the lack of a fire permit a payment made through a customs broker to a customs official for the release of goods an expensive gift to an employee by a telecom company after LF awards a contract to that company requesting or accepting a payment from a factory in return for placing an order with the factory free stays at a luxury hotel for arranging a conference at the hotel's facilities September 2012 Page 2 of 7
We take a zero-tolerance approach to bribery. In many countries, it may be customary business practice to make small payments or give small gifts to junior public officials in order to speed up or secure a routine action or process to which the payer is entitled. These are sometimes known as "facilitation" or grease" payments. You should be aware that facilitation or grease payments are bribes. 4. WHAT ARE THE RULES? (a) (b) (c) (d) (e) (f) You must NOT offer, promise or give a benefit of any kind to a person if that benefit is intended to or is likely to influence him or her to perform their job improperly or to reward such improper performance. You must NOT ask for, agree to receive or accept such a benefit. You must NOT give or accept gifts or hospitality unless it is consistent with our Guidelines on Gifts, Entertainment and Hospitality. You must NOT give gifts or hospitality where you know or suspect that they would violate the recipient's own internal rules, guidelines or policies. You must NOT offer or make facilitation payments. Any request for a facilitation payment must be reported as soon as possible to your Grade 2 line manager. You must keep accurate financial and business records see paragraph 6 below. 5. HOW DO I RAISE CONCERNS? You have a responsibility to help prevent bribery and to raise concerns about any behaviour that may amount to bribery. If you come across something that may amount to bribery (by another Associates or by a non-li & Fung person), you must report it at the earliest possible time. Raising concerns early may help us address problems before they result in serious consequences. As an initial step, you should report your concern to your direct line senior management in writing or by telephone. If for whatever reason, you: feel that you cannot speak with your direct line senior management about your concern or complaint; or consider that your concern or complaint has not been handled by your direct line senior management properly; or prefer to make the report anonymously, you can direct your concern and provide all the relevant information and supporting documents you have to the Group Chief Compliance Officer by e-mail at September 2012 Page 3 of 7
(GroupCCO@lifung.com.hk), by post (to 1/F, LiFung Tower, 888 Cheung Sha Wan Road, Kowloon, Hong Kong) or by fax (+852 3165 6295). Please take a look at our Reporting of Concerns Guidelines as posted on our OneFamily intranet site. These Guidelines include multiple channels to raise concerns, including anonymous reporting. The Li & Fung Limited Group does not tolerate retaliation of any kind against Associates who raise genuine concerns or who participate in the investigation of a report of suspected misconduct. If you engage in retaliation you will be subject to disciplinary action, which may include the termination of your employment. 6. WHAT ARE THE CONSEQUENCES IF YOU COMMIT AN ACT OF BRIBERY? Li & Fung s continued success is dependent on its reputation and this reputation is dependent on the actions of its people. If you commit an act of bribery, you will bring the entire Li & Fung into disrepute. In other words, your action impacts all of us. There are very serious consequences for bribery. For you: disciplinary action (which will result in your dismissal or termination of your employment) criminal sanctions by governmental authorities (which includes imprisonment and unlimited fines in many jurisdictions) For the Company: criminal sanctions by governmental authorities including unlimited fines serious reputational damage high value breach of contract claims by third parties blacklisting from public and private tendering opportunities termination of contracts by our counterparties further criminal sanctions for money-laundering offences Full compliance with this Policy at all times is therefore extremely important. 7. RECORD-KEEPING We must keep accurate financial and business records that reflect our business dealings. If we don t, such failure (whether it was intentional or not) may result in our business breaking the law and being subject to severe penalties. Accordingly, an employee's failure to report September 2012 Page 4 of 7
and keep appropriate records could result in disciplinary measures. No accounts may be kept "off-book" to facilitate or conceal improper payments. You must submit all expense claims according to our expenses policy (which requires the submission of original receipts or similar documents) and specifically record the details of the expenditure. For gifts and hospitality expenses, you must include the following details: date, amount and description of the expense (e.g. location of function, item given) name, firm and title of all persons present business purpose/reason for the function or gift 8. OTHER THINGS YOU NEED TO BE CAREFUL OF 8.1 Engaging or contracting with Business Associates We may be liable for the bribery of our Business Associates where the bribe was made for the benefit of the Company's business. For this reason, we need to be very careful when we engage other people or companies to perform services for us or on our behalf. Common examples of Business Associates (i.e. people or companies that perform services for us or on our behalf) include: sales agents, consultants, intermediaries and other representatives finders and introducers vendors and outsourcers tax advisors, lawyers, sales and marketing firms lobbyists (of any kind) joint ventures, joint venture partners, consortia partners subsidiaries and affiliates. Before a Business Associate is engaged (under a new contract or renewing an old one) and before a Business Associate starts work, you should contact the Legal Department who will work with you to ensure that we understand who we are dealing with and that the Business Associate is aware of our zero-tolerance approach to bribery, the requirements of this Policy and that the contract contains the necessary representations and undertakings. 8.2 Gifts, Entertainment and Hospitality As explained above, bribery does not need to be in the form of cash - it can be any type of advantage or benefit. In some cases, bribes may come in the form of gifts, entertainment or hospitality. This is why we have developed a set of guidelines - the Guidelines on Gifts, September 2012 Page 5 of 7
Entertainment and Hospitality - to help you determine whether you should give or accept something. If it looks like someone is trying to influence your decision, you must decline. 8.3 Political Donations The Li & Fung Limited Group is politically unbiased and does not associate with or contribute to any political party. For this reason, you must not use Li & Fung resources to support, directly or indirectly, any political party, individual politicians or associates representing a political opinion. You are free to make lawful personal contributions, including the provision of services outside working hours, to political parties or candidates. These contributions, however, must not be linked to any business or potential business of the Li & Fung Limited Group. In addition, you cannot use your job title or company affiliation in connection with political activities unless required by law. 8.4 Charitable Contributions and Sponsorships We care about the well-being of the communities in which we operate and support the giving back to those communities in the form of charitable contributions and sponsorships. However, we must be careful to ensure that any corporate charitable contributions or sponsorships (whether they be cash, the donation of services, products or anything else) are free from any suspicion of bribery. Accordingly, all corporate charitable contributions and sponsorship proposals must be approved in advance by your Grade 1 line manager. 9. INVESTIGATIONS We take all reported concerns seriously. The Corporate Compliance Group will investigate all reports of bribery in any way connected to a Li & Fung Limited company. The Board (or a body or function to which it delegates such responsibility) will then consider what action to take as a result of such investigation, including, where applicable, disciplinary action against Associates (which may result in the termination of employment), termination of business relationships and reports to relevant governmental authorities or regulators. The Group Chief Compliance Officer will keep a record of all reports made under this Policy. This will include a record of any investigation and the outcome of those investigations. September 2012 Page 6 of 7
GUIDANCE NOTES Public Officials Public officials are people who perform a public function and includes people that you might not necessarily think of as "public officials". Public officials include: government officers, employees or other representatives (whether at local, national, foreign or domestic levels) any person with a legislative, administrative or judicial function (whether appointed or elected)(such as judges, tax officials, customs officials, regulators, government personnel who issue licences or permits, planning officials and immigration officials) officers, employees and representatives of government-owned or governmentcontrolled organisations and publicly-funded organisations (such as employees of state-run hospitals and employees of central banks. In China, many businesses and organisations are State-owned enterprises and their employees would also be public officials) political party officials, politicians or political candidates (whether at local, national, foreign or domestic levels) members of a royal or governing family employees, officers or representatives of international public organisations such as the United Nations and the World Health Organisation September 2012 Page 7 of 7