Anti bribery corporate policy

This Candy Group Policy is approved by the CGL Board; it represents the CG Board’s direction to the business on this topic. Compliance with this policy is mandatory through aligning Candy Group Management System processes and people behaviours to the commitments below.

The Corporate leadership at the Candy Group believes that: “Corporate bribery is bad business. In our free market system, it is basic that the sale of products should take place on the basis of price, quality and service. Corporate bribery is fundamentally destructive of this basic tenet. Corporate bribery of foreign officials takes place primarily to assist corporations in gaining business. Thus, foreign corporate bribery affects the very stability of overseas business. Foreign corporate bribes also affect our domestic competitive climate when domestic firms engage in such practices as a substitute for healthy competition for foreign business.”   A Resource Guide to the U.S. Foreign Corrupt Practices Act, p. 1., https://www.justice.gov/sites/default/files/criminal-fraud/legacy/2015/01/16/guide.pdf

BACKGROUND

Candy and its Management are committed to conducting global operations honestly, ethically and in compliance with all laws, wherever Candy does business. This particular policy focuses primarily on the United States and United Kingdom anti-bribery laws (i.e., those contained in the Foreign Corrupt Practices Act (FCPA) and the United Kingdom’s Bribery Act (UKBA)) because of the prominence and “long arm” that legislation has on our operations in the international marketplace.

The fundamentals of the FCPA’s and the UKBA’s anti-bribery provisions are similar in many respects to other global anti-corruption regulations.  That is why some venues where Candy does business may be regulated by the FCPA, the UKBA (or both) as well as the anti-corruption legislation of one or more other countries.

Consider the following:  a salesperson from Candy is in a joint venture with MGS to sell Canadian equipment to a Brazilian company. Which of the following anti-bribery, anti-corruption acts are applicable?

1. FCPA
2. UK Bribery Act
3. CFPOA (Canada)
4. Brazil Clean Company Act
5. All of the above

The correct answer is number 5, because the laws of the four nations may impact the way the salesperson does business.   This must be kept in mind by Candy personnel.  There is not a single all-embracing set of rules to be applied to anti-corruption, anti-bribery situations. The answer to the question of whether a particular action is prohibited or should be avoided also depends on where you are, what the local law says on the subject and, potentially, who you are with.

Candy expects all of its employees, and many others with whom we do business (including third-party intermediaries and other stakeholders), to become familiar with this policy and receive training on this policy.

This policy will be supplemented periodically to keep up with current laws and best practices, and when necessary, to address customs and laws of other countries where we do business.  But this policy will never compromise the Company’s commitment to lawful, honest and fair dealings with our customers, suppliers, employees and other stakeholders.

FCPA AND UKBA ANTI-BRIBERY LAWS

The FCPA has two primary components: (i) the anti-bribery provisions, and (ii) the books and records and internal controls provisions.  The latter is often referred to for simplicity as the “accounting provisions.”

The FCPA is enforced by United States Department of Justice (DOJ) and the United States Securities and Exchange Commission (SEC).  The jurisdictional mandates of these two enforcement bodies often overlap, and it is becoming increasingly common for them to work collaboratively on enforcement of the FCPA against business organizations and their individuals responsible for violations of the statute.  However, there are also significant jurisdictional differences.  The SEC typically brings civil and administrative actions against public companies (and often its employees), while the DOJ is generally authorized to enforce the criminal sanctions of the FCPA against companies and culpable employees.  It is not unusual for the SEC and the DOJ to collaboratively seek and assess penalties for the same or similar misconduct, but only the DOJ can bring criminal charges.

As stated above, the fundamentals of global anti-bribery laws are often quite similar, but their differences can be material.

The FCPA and the UK Bribery Act (UKBA) share many key similarities (e.g., their global reach, as well as the possibility of criminal fines and imprisonment). But material differences between these laws exist as well (e.g., the UKBA’s prohibition of commercial bribery between private parties, and its standard of “strict liability” against a commercial organization for its failure to prevent bribery). The FCPA generally does not criminalize commercial bribery not involving foreign officials.

It is therefore incumbent upon every Candy employee engaged in global commerce to reach out to our Legal Counsel or Compliance personnel with questions or concerns about the legality of business transactions, and to get help to navigate between the various anti-bribery and anti-corruption laws that affect our cross-border businesses.

Compliance with such laws and regulations are particularly important since Candy, it sister companies and companies with which we have strategic alliances conduct business in emerging markets in which (i) government officials are frequently engaged in commercial and financial activities for their own accounts, (ii) corruption and related problems are common, and (iii) legal standards and enforcement policies are developing, but are often unclear and inconsistently applied. In such circumstances, special vigilance is important to ensure compliance with anti-corruption and related legislation. It is crucial that competitive pressures in such environments do not undermine our commitment to ethical conduct and compliance with all applicable laws.

Reading and being familiar with this anti-corruption policy is essential but is only part of the obligation of every employee and stakeholder subject to the policy.  The Company will provide periodic and mandatory training on this policy to ensure compliance with applicable laws. All employees, including those individuals involved in the Company’s governance, will be required to receive anti-bribery compliance training.

OUR ANTI-BRIBERY POLICY PROVISIONS

1. Scope of the Policy: This Policy applies to all directors, officers and employees of Candy and of each domestic and foreign subsidiary, partnership, venture or other business association that is effectively controlled by Candy, directly or indirectly.  It is also the Company’s policy to educate our stakeholders and others with whom we do business of the Company’s commitment to compliance with all laws and best practices involving avoidance of bribery and corruption.
2. Anti-Bribery: The FCPA and UKBA prohibit Candy employees (as well as third-party intermediaries, such as sales agents, joint venture relationships, distributors, business partners and certain other stakeholders) from corruptly offering, promising, authorizing or paying anything of value to any foreign official, any foreign political party or official thereof, or any candidate for foreign political office, in order to influence the official for the purpose of obtaining or retaining business, or securing some other improper advantage. As noted above, The UKBA also regulates transactions between commercial parties and prohibits bribery between private parties.
3. Accounting; Books and Records and Internal Controls: The FCPA also requires that the Company maintain a system of internal accounting controls and make and keep accurate books and records which, in reasonable detail, fairly reflect transactions and dispositions of assets.  False, misleading or incomplete entries in such records or in other documents are prohibited as a matter of Company policy and may violate the law. No undisclosed or unrecorded fund or account may be established for any purpose. Accurate records are part of a overall Compliance program. So, while there is no formal recordkeeping requirements under the UBKA, a regimen such as that mandated by the FCPA will aid one in defending itself under the UBKA.
4. A system of accounting controls shall be maintained that provides reasonable assurances that (i) transactions are executed in accordance with management authorization; (ii) transactions are recorded so as to permit preparation of accurate financial statements and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management authorization; and (iv) appropriate auditing functions are conducted.

DEFINITIONS

1. Foreign Official is an officer or employee of a government (or any department, agency or instrumentality thereof), or a “public international organization” or any person acting in an official capacity for or on behalf of any such government (or department, agency or instrumentality thereof) or public international organization.  Public international organizations include such organizations as the International Monetary Fund and the European Bank for Reconstruction and Development.  Note that foreign officials also include employees of government owned or controlled commercial entities, such as government owned/controlled energy companies.
2. The term corruptly is used in the statutory language but is not precisely defined. It generally means that the offer, promise, authorization or payment must be intended to induce the recipient to misuse his or her official position in order to wrongfully direct business to the payer, or to obtain preferential treatment or otherwise secure an improper advantage.  More simply stated, the word corruptly connotes an evil motive, bad purpose or intent to wrongfully influence the recipient.
3. Knowledge under the FCPA is broader than “actual” knowledge, and its meaning may vary depending upon in which provision of the statute the word is used.  In order to violate the FCPA’s anti-bribery provisions, an individual must “know” that the corrupt payment is being offered. Under the FCPA, knowledge exists when a person is aware that a “result is substantially certain to occur” or a person has a “firm belief that such circumstance exists.” Conscious disregard, deliberate ignorance and willful blindness will not avoid liability.  Note that the books and record provisions of the FCPA contain no knowledge requirement.  Thus, even unintentional, immaterial misstatements can potentially create liability.

Knowledge under the UKBA has been done away with in at least one situation.  Under the UKBA there is a strict liability rule for prosecution of a “failure to prohibit bribery”. Hence, there is no need for the government to prove actual knowledge.

ADDITIONAL GUIDANCE

Risk assessments

Our Company’s anti-bribery compliance efforts will be judged in part by the adequacy of the risk assessments that we perform on a daily basis.  Risk of bribery and other corrupt practices may differ depending upon the location of our business activities, as well as the companies and individuals with whom we do business.  Our business units work closely with our Legal Counsel and Corporate Compliance Department in making these risk assessments.  Some of the areas of concern are as follows:

Transactions Involving Government Officials

• Payments, including hospitalities and gifts, to government officials may be made only in compliance with this policy and any procedures implemented pursuant to this policy.  Prior to any such payment being made to an official, Legal Counselor and/or the Compliance Department must determine that such payment complies with the FCPA, the UKBA and local law. Such payments must be accurately recorded and are subject to regular review by Candy Senior Management.
• Retaining a government official (as an agent, lobbyist, consultant, etc.) may be permissible in very limited circumstances, but must be handled with great caution.  Such relationships must be structured so that they meet the requirements of the FCPA, UBA and local law. No such relationship may be negotiated without the input and approval of Legal Counsel and/or the Compliance Department.
• Similar caution must be exercised where a potential employee or agent is affiliated with an organization which could be deemed to be a government instrumentality, has a familial relationship with a government official or was previously engaged in government service.  If you face any of these circumstances, you should consult Senior Management and/or Legal Counsel.

Transactions with Intermediaries and Partners

Payments by Candy to all third-party intermediaries or partners where such intermediaries or partners subsequently make illegal payments pose great danger to Candy and violate this Policy.  In order to minimize this risk, the Candy requires that due diligence be conducted on the intermediaries and partners with whom the Candy intends to do business.  Legal Counsel will work with you in performing a due diligence investigation tailored for new intermediaries, as well as for retaining existing intermediaries.  Such investigations may include a review of reputation, expertise, experience and past performance of potential intermediaries or partners; their connection, if any, to government officials; the reasonableness of the proposed payment arrangements under the circumstances; and the business purpose for entering into the transaction.

Red Flags When Dealing with Intermediaries

If there are “red flags” that raise questions or concerns about the intermediaries, then there is a duty to inquire.  In an intermediary situation, typical issues that may trigger red flags include the following non-exhaustive list of concerns:

• Is the relationship of the intermediary to the governmental entity or contracting party?
• Is the intermediary him/herself a government official or closely related to a government official?
• Is the intermediary’s company owned in part by a government official or his/her family?
• The size of the payment to the intermediary – does it seem excessive?
• Is the payment excessive in light of payments made by the Company elsewhere for similar services?
• Is the payment excessive in light of local custom or local law for legitimate services?
• The nature of the payment to the intermediary – why is the intermediary being paid, and for what services?
• Has the intermediary made comments to the effect that a particular amount of money is needed in order for him to “get the business,” “make the necessary arrangements,” etc.?
• Are there strong indications that business in that country can only be done by bribing officials?
• Is it legal for the intermediary to act as such in that country and with relation to that contract?
• Are the services of the intermediary really necessary, or were they suggested merely to provide cover for a prohibited payment?
• What is the method and manner of the payment to the intermediary?
• Will the payment be all or partly in cash or a bearer instrument?
• Will the payment be made partly to another person or company?
• Will the payment be made in a country other than the one where the services were rendered?
• Has the intermediary requested any false documentation (e.g., false invoicing or failure to report the payment to host country fiscal authorities)?
• What is the reputation of the intermediary?  And is that reputation for honesty and effective service?
• Are there business references available to confirm the expertise, experience and integrity of the intermediary?

If you are aware of any such “red flags” involving an intermediary, contact Senior Management and/or Legal Counsel. Pursuant to Company policy, further investigation may be required before contracting with the intermediary.

Certain standard provisions designed to ensure compliance with the requirements set forth in the FCPA/UKBA and which have been developed by Legal Counsel shall be included in all such agreements.

Charitable Contributions and Support for Social Projects

Monetary and other contributions to charities, social projects and funds, including schools, educational funds and infrastructure projects, should be handled with caution because they can be conduits for corrupt payments.  In order to minimize this risk, Candy requires an appropriate investigation be conducted into such charities and projects.  Any such contributions require prior approval of Senior Management.

Hospitalities and Gifts

Under certain circumstances and consistent with the standards of the FCPA and UKBA certain hospitalities such as transportation, accommodations, meals, entertainment and nominal gifts may be extended to government officials.  All such hospitalities and gifts must (i) have a clear business purpose which is directly related to the Company’s commercial objectives; (ii) be reasonable in amount and bona fide; and (iii) be offered only in connection with the promotion, demonstration, or explanation of the Company’s products or services or the execution or performance of a contract with a non-U.S. government or agency thereof.

For the purposes of the UKBA, the above guidelines on “Hospitalities  and Gifts”  for dealing with government officials, also applies to interactions between two commercial businesses. The provision of any such hospitalities and gifts should be infrequent since the cumulative effect of regular hospitalities or gifts may create the appearance of improper conduct.  In addition, hospitalities and gifts may not be lavish or extravagant.  No hospitalities should be extended or gifts given to family members or relatives of government officials without the prior approval of Senior Management and/or Legal Counsel. It is usually advisable that the Company pay for hospitalities itself, rather than reimbursing the recipient. Further, such hospitalities and gifts must be permitted under local law and should conform to generally accepted local customs.

Candy employees are required to consult with Legal Counsel or the Compliance Department before proceeding to assume responsibility for payments which would fall within this category of permissible expenses.

Facilitation or “Grease” Payments

In very limited circumstances, facilitation or “grease” payments (less than $100) may be made to low-level government officials to expedite the performance of routine, non-discretionary government action(s).  Such payments are specifically exempt from the FCPA, but nonetheless may violate local law. The UKBA does not address the issue but one can assume it would be considered violative of the Act.  Any such payment must be accurately and fully recorded in the Company’s books and records and reported to the Legal Department.

Documentary Accuracy

Candy requires that documents prepared to evidence a transaction accurately reflect the parties, the payment arrangements and the purposes of the transaction. Documents prepared by other parties to a transaction should be carefully reviewed by Legal Counsel to ensure that Candy’s standards are met.

Internal Controls

Compliance with the Candy’s accounting and internal control procedures is mandatory.  Of particular significance are the following:

(i). Record Keeping  

All accounting records, expense reports, invoices, vouchers, records of gifts, business entertainment or other expenditures, and contracts or agreements must be accurately and completely reported and recorded.

False or misleading documentation will result in immediate disciplinary action up to and including termination and could result in an employee’s civil and/or criminal liability.  No Company funds or assets may be used for any unlawful, improper or unethical purpose.  All Company financial books and records must be maintained in accordance with applicable accounting and auditing standards.

(ii). Support for Expenses

Requests for expense reimbursements must be approved in accordance with Candy policy. Supporting documentation, including original receipts, invoices or other relevant documents, for the expense reimbursements must be filed with the expense reports and maintained for a reasonable period of time established by policy from the Company’s accounting department. Such documentation must state (i) description of the expenditure; (ii) purpose; (iii) identification of the recipient; (iv) amounts involved, and (v) manner of payment.

(iii). Wire Transfers

The practice of transferring funds to the offshore accounts of employees, intermediaries, consultants and third-party vendors is not permissible unless the recipient provides proper supporting documentation, the transactions are properly recorded and the transactions are authorized by Senior Management.

(iv). Petty Cash

All petty cash accounts must be maintained with strict controls to ensure their use is limited to proper purposes and that each use is appropriately documented. No undisclosed or unrecorded Candy funds may be established for any purpose.  Any amounts paid from such accounts should be properly supported as described above, and accurately recorded and reflected in the accounting records. 

Comparison Chart

FCPA | UKBA