CLARIPHY COMMUNICATIONS, INC. FCPA. Foreign Corrupt Practices Act. FIN-161- Compliance Policy Revision C August 1, 2015

Transcription

1 CLARIPHY COMMUNICATIONS, INC. FCPA Foreign Corrupt Practices Act FIN-161- Compliance Policy Revision C August 1, Irvine Center Drive, Suite 100 Irvine, CA Phone: Fax:

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4 TABLE OF CONTENTS 1 Introduction Historical Overview General Rules Prohibitions Elements of Prohibitions Covered Person (Subject to FCPA Provisions) Corrupt Intent Value or Payment Recipient or Non-U.S. Government Official Obtain or Retain Business Prohibitions on Direct Payments to Non-U.S. Government Officials Prohibitions on Indirect Payments (by Agents or Consultants) FCPA Risks Authorization of Certain Payments Gifts and Expenses Prior Approval of Gifts/Expenses Accounting Standards for Gifts and Expenses Sanctions Against Bribery Criminal Civil Other Governmental Action Private Cause of Action Company Action Program Compliance Conclusion Exhibit A Certificate of Compliance ClariPhy Proprietary and Confidential, Page 4

5 1 INTRODUCTION The U.S. Foreign Corrupt Practices Act (FCPA) and the corrupt practices legislation in other jurisdictions ( Corrupt Practices Legislation ) prohibit improper payments or offers of improper payments to non-u.s. government officials to obtain business or any other benefit, whether the payments are made directly by an employee of ClariPhy Communications, Inc. (the Company ) or indirectly through an agent or consultant. Violating the Corrupt Practices Legislation can result in significant civil and criminal penalties for the Company and for you personally, including multi-million dollar fines and imprisonment. No violation of the Corrupt Practices Legislation will be permitted. It is the Company s policy that no transaction be permitted in which there is any appearance of impropriety. Each subsidiary, branch and division of the Company is responsible for compliance with all applicable policies of the Company concerning the Corrupt Practices Legislation including specific policies of the appropriate entity or office. The following guidelines generally describe the Corrupt Practices Legislation and will help you recognize issues of concern. If any question exists as to the propriety of any proposed transaction, the matter should be referred to the Chief Compliance Officer prior to entering into the transaction. Please contact the Chief Compliance Officer for advice on specific issues related to these laws. 2 HISTORICAL OVERVIEW In 1977, the United States Congress outlawed foreign bribery and was the first country in the world to do so. The increasing number of questionable and illegal payments being made to non-u.s. government officials, politicians, and political parties, as well as the preceding Nixon administration s Watergate scandal involving slush funds and illegal campaign contributions, gave impetus to President Carter to put a halt to these corrupt practices and sign into law the FCPA, prohibiting any bribery of non-u.s. government officials in order to get or retain business. Following the U.S. s effort to eliminate foreign bribery, anti-bribery enforcement expanded into a worldwide effort. The Organization of Economic Co-operation and Development (OECD) Anti-Bribery Convention aimed to combat bribery of non-u.s. public officials in international business transactions. In the 1970s, thirty eight countries, including the U.S., served as parties to the OECD Anti-Bribery Convention and officially signed the convention in Also as part of this worldwide effort, the United Nations Convention against Corruption, which was endorsed in 2005, had been signed by 140 countries and ratified by 136. Additionally, on April 9, 2010, the U.K. s Bribery Act 2010 was enacted and recently went into effect on July 1, ClariPhy Proprietary and Confidential, Page 5

6 The anti-bribery provisions of the FCPA make it unlawful to make a corrupt payment to a non- U.S. government official for the purpose of obtaining or retaining business for or with, or directing business to, any person. Since 1998, they also apply to foreign firms and persons who take any act in furtherance of such a corrupt payment while in the United States. The FCPA also requires companies whose securities are listed in the United States to meet its accounting provisions. See 15 U.S.C. 78m. These accounting provisions, which were designed to operate in tandem with the anti-bribery provisions of the FCPA, require corporations covered by the provisions to make and keep books and records that accurately and fairly reflect the transactions of the corporation and to devise and maintain an adequate system of internal accounting controls. 3 GENERAL RULES The following rules have been established for all employees, contractors, directors, agents and shareholders acting on behalf of the Company and its affiliates: Except as expressly provided elsewhere in this statement of policy, no payment, benefit or gift of any kind whatsoever may be promised, offered or made to any non-u.s. government official. Notwithstanding the foregoing, expenditures for meals, entertainment and other normal social amenities with respect to non-u.s. government officials are permitted provided they follow the guidelines of this policy, are not extravagant and otherwise conform to the laws and customs of the country in which the expenditures are incurred. Similarly, gifts may be given to non-u.s. government officials only if the gifts follow the guidelines of this policy, are of nominal value, are never gifts of cash, and conform to laws and normal social customs in the official s country. Complete and accurate records sufficient to show compliance with the above rules, the Corrupt Practices Legislation generally, and any other policies of (company) must be maintained at all times. 4 PROHIBITIONS The FCPA makes it unlawful to bribe non-u.s. government officials to obtain or retain business. With respect to the basic prohibition, there are five elements which must be met to constitute a violation of the Act, where a COVERED PERSON with CORRUPT INTENT directly or indirectly offers, promises, or gives anything of VALUE to a NON-U.S. GOVERNMENT OFFICIAL to OBTAIN OR RETAIN BUSINESS. 4.1 ELEMENTS OF PROHIBITIONS ClariPhy Proprietary and Confidential, Page 6

7 4.1.1 COVERED PERSON (SUBJECT TO FCPA PROVISIONS) The FCPA potentially applies to any individual, firm, officer, director, employee, contractor, or agent of a firm and any stockholder acting on behalf of a firm. Individuals and firms may also be penalized if they order, authorize, or assist someone else to violate the anti-bribery provisions or if they conspire to violate those provisions. In addition, U.S. parent corporations may be held liable for the acts of foreign subsidiaries where they authorized, directed, or controlled the activity in question, as can U.S. citizens or residents, themselves "domestic concerns," who were employed by or acting on behalf of such foreign-incorporated subsidiaries CORRUPT INTENT The person making or authorizing the payment must have a corrupt intent, and the payment must be intended to induce the recipient to misuse his official position to direct business wrongfully to the payer or to any other person. You should note that the FCPA does not require that a corrupt act succeed in its purpose. The offer or promise of a corrupt payment can constitute a violation of the statute. The FCPA prohibits any corrupt payment intended to influence any act or decision of a non-u.s. government official in his or her official capacity, to induce the official to do or omit to do any act in violation of his or her lawful duty, to obtain any improper advantage, or to induce a non-u.s. government official to use his or her influence improperly to affect or influence any act or decision VALUE OR PAYMENT The FCPA prohibits paying, offering, promising to pay (or authorizing to pay or offer) money or anything of value with the intent to receive a benefit in return including (but not limited to): Extremely large commissions that seem large in relation to the services provided Gifts like jewelry or travel Offering employment of an unqualified relative (i.e. promising employment of an unqualified relative, college scholarship for a child of an official) Donations to a political party, personal favors, charitable contributions (i.e. offering to pay a charity on a company s behalf) Promising future employment RECIPIENT OR NON-U.S. GOVERNMENT OFFICIAL The prohibition extends to corrupt payments to a non-u.s. government official, a non-u.s. political party or party official, or any candidate for non-u.s. political office. The term non-u.s. government official is defined as any officer or employee of a non-u.s. government or any department, agency, instrumentality thereof, or public international organization. The definition also includes any person acting in an official capacity, acting as an authorized intermediary or holding themselves out as an authorized intermediary, for or on ClariPhy Proprietary and Confidential, Page 7

8 behalf of such government, department, agency, instrumentality or public international organization (i.e., United Nations or World Trade Organization). For purposes of compliance, an officer or employee of a non-u.s. government or governmental agency or instrumentality (for example a government-owned corporation) are to be considered non-u.s. government officials. If there is any doubt as to the official capacity of an officer or employee of a non-u.s. government organization, they should be considered a non-u.s. government official whereby all aspects of this policy are in force. The FCPA applies to payments to any public official, regardless of rank or position. The FCPA focuses on the purpose of the payment instead of the particular duties of the official receiving the payment, offer, or promise of payment OBTAIN OR RETAIN BUSINESS The FCPA prohibits payments made in order to assist the firm in obtaining or retaining business for or with, or directing business to, any person. The Department of Justice interprets "obtaining or retaining business" broadly, such that the term encompasses more than the mere award or renewal of a contract. It should be noted that the business to be obtained or retained does not need to be with a non-u.s. government or non-u.s. government instrumentality. 4.2 PROHIBITIONS ON DIRECT PAYMENTS TO NON-U.S. GOVERNMENT OFFICIALS The Corrupt Practices Legislation prohibits a company or its representative from providing or offering gifts or benefits to any non-u.s. government official to persuade that official to help the company obtain business or other benefits. Payments are prohibited even if: (1) the benefit flows to someone other than the party making the payment; (2) the business desired is not with the government; (3) the payment does not result in an award of business; or (4) the non-u.s. government official initially suggested the payment. 4.3 PROHIBITIONS ON INDIRECT PAYMENTS (BY AGENTS OR CONSULTANTS) Indirect payments to non-u.s. government officials are also prohibited. You can violate the Corrupt Practices Legislation by making a payment to a non-employee of the Company, when you know or even have reason to know that all or part of that payment will or may be channeled to a non-u.s. government official, political party, or candidate to help obtain business or any other benefit. No employee of the Company or any subsidiary may retain a consultant or agent until sufficient due diligence has been performed to enable the employee to conclude with reasonable assurance that the consultant or representative understands and will fully abide by the Corrupt Practices Legislation and the Company's policies regarding ethical business practices. The ClariPhy Proprietary and Confidential, Page 8

9 Company must have a written agreement with each of its consultants and agents, and the agreement must specifically bind the agent to comply with the Company's policies regarding ethical business practices and to comply with the Corrupt Practices Legislation as if it directly applied to him or her. 4.4 FCPA RISKS The Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) have identified "red flags" that should serve as guidance for companies engaging in international business: Marketing representative wants to work without a contract (or vague contract) and either refuses to confirm that they will abide by the provisions of the FCPA or disclose their identity. Marketing representative asks for commissions that are substantially higher than the "going rate" in that country among comparable service providers. Marketing representative has family or business ties with non-u.s. government officials or has a bad reputation in the business community. Potential non-u.s. government customer or authorizing agency recommends a specific partner. Country has a widespread history of corruption. The contracting party has a history of improper payment practices and history of bribes. 5 AUTHORIZATION OF CERTAIN PAYMENTS Corrupt Practices Legislation and Company policy permit strictly limited types of certain gifts and expenses as described below. 5.1 GIFTS AND EXPENSES Nominal benefits and paying for legitimate and reasonable business expenses is permitted, so long as the offering of the benefit, gift or expenses is legal under the laws in force in the foreign country and follow the guidelines of this policy. Under no circumstances should a gift be cash or a cash-equivalent. For example: you may give modest holiday/wedding presents in a country where such gifts are traditional and are lawful under the laws in force in the country; and provided it is legal under the laws in force in the country in which you are operating, you may be able to pay for reasonable entertainment such as modest lunches or dinners during which business is discussed. ClariPhy Proprietary and Confidential, Page 9

10 Note that gifts may be given to non-u.s. government officials only if the gifts are of modest value and conform to normal social amenities in the official s country. Please seek advice from our Chief Compliance Officer if you have any questions in this area. 5.2 PRIOR APPROVAL OF GIFTS/EXPENSES Although the Corrupt Practices Legislation provides no specific dollar limits on the amount of allowable gifts and expenses, the cost should always remain below that permitted by local law and should be commensurate with the legitimate and customary amount of such expenses by private business persons in the country. The Company has determined that under no circumstances should (a) any gift, entertainment or other expense be greater than USD $100 for individuals located in China or India or greater than USD $200 for individuals located elsewhere, or (b) any gifts, entertainment or other expenses to one recipient in any given year exceed USD $250 for individuals located in China or India or exceed USD $450 for individuals located elsewhere. It is Company policy that any such allowable payments in excess of a de minimis amount should have the prior approval of our Chief Financial Officer and Chief Compliance Officer. 5.3 ACCOUNTING STANDARDS FOR GIFTS AND EXPENSES Employees must help to ensure that corporate books and records (which include virtually all forms of business documentation) accurately and fairly reflect, in reasonable detail, all transactions and dispositions of assets. No undisclosed or unrecorded fund or asset may be established or maintained for any purpose. The Company and its employees, directors and officers, must maintain a record of all payments or expenses. The following information must be recorded in respect of each benefit provided to a non-u.s. government official: the value of the benefit concerned; the date on which the conduct occurred; and the identity of the non-u.s. government official; No employee shall participate in falsifying any accounting or other business record, and all employees must respond fully and truthfully to any questions from the Company s internal or independent auditors. 6 SANCTIONS AGAINST BRIBERY 6.1 CRIMINAL The following criminal penalties may be imposed for violations of the FCPA's anti-bribery provisions: corporations and other business entities are subject to a fine of up to $2,000,000; ClariPhy Proprietary and Confidential, Page 10

11 officers, directors, stockholders, employees, and agents are subject to a fine of up to $100,000 and imprisonment for up to five years. Moreover, under the Alternative Fines Act, these fines may be actually quite higher -- the actual fine may be up to twice the benefit that the defendant sought to obtain by making the corrupt payment. You should also be aware that fines imposed on individuals may not be paid by their employer or principal. 6.2 CIVIL The Attorney General or the SEC, as appropriate, may bring a civil action for a fine of up to $10,000 against any firm as well as any officer, director, employee, or agent of a firm, or stockholder acting on behalf of the firm, who violates the anti-bribery provisions. In addition, in an SEC enforcement action, the court may impose an additional fine not to exceed the greater of (i) the gross amount of the pecuniary gain to the defendant as a result of the violation, or (ii) a specified dollar limitation. The specified dollar limitations are based on the egregiousness of the violation, ranging from $5,000 to $100,000 for a natural person and $50,000 to $500,000 for any other person. The Attorney General or the SEC, as appropriate, may also bring a civil action to enjoin any act or practice of a firm whenever it appears that the firm (or an officer, director, employee, agent, or stockholder acting on behalf of the firm) is in violation (or about to be) of the anti-bribery provisions. 6.3 OTHER GOVERNMENTAL ACTION Under guidelines issued by the Office of Management and Budget, a person or firm found in violation of the FCPA may be barred from doing business with the Federal government. Indictment alone can lead to suspension of the right to do business with the government. The President has directed that no executive agency shall allow any party to participate in any procurement or non-procurement activity if any agency has debarred, suspended, or otherwise excluded that party from participation in a procurement or non-procurement activity. In addition, a person or firm found guilty of violating the FCPA may be ruled ineligible to receive export licenses; the SEC may suspend or bar persons from the securities business and impose civil penalties on persons in the securities business for violations of the FCPA; the Commodity Futures Trading Commission and the Overseas Private Investment Corporation both provide for possible suspension or debarment from agency programs for violation of the FCPA; and a payment made to a non-u.s. government official that is unlawful under the FCPA cannot be deducted under the tax laws as a business expense. 6.4 PRIVATE CAUSE OF ACTION Conduct that violates the anti-bribery provisions of the FCPA may also give rise to a private cause of action for treble damages under the Racketeer Influenced and Corrupt Organizations Act (RICO), or to actions under other federal or state laws. For example, an action might be ClariPhy Proprietary and Confidential, Page 11

12 brought under RICO (Racketeer Influenced and Corrupt Organization Act 1970) by a competitor who alleges that the bribery led to the defendant winning a foreign contract. 6.5 COMPANY ACTION Disciplinary action, up to and including termination, will be taken against individuals who authorize or participate directly in a violation of this policy. Disciplinary action will depend on the circumstances of the particular violation. 7 PROGRAM COMPLIANCE This Compliance Program is issued by ClariPhy s Chief Compliance Officer under the direction of ClariPhy s Board of Directors. It is the responsibility of the Chief Compliance Officer and/or his Designee(s) to: Ensure day-to-day operational responsibility for the FCPA compliance and ethics program Provide adequate resources to the Company in regard to the FCPA Coordinate the training and awareness of the requirements of the FCPA Receive and respond to questions, reports, concerns, or complaints in regard to adherence of the Policy Report to the Board of Directors if any violation has occurred If you know of or suspect FCPA misconduct, or if you observe something that does not seem right, report your concern to your supervisor. Your supervisor will contact the Chief Compliance Officer, who will work with you and your supervisor to investigate your concern. If you are not comfortable reporting the conduct to your supervisor or you do not get a satisfactory response in a timely manner, you should contact the Chief Compliance Officer or submit your concern in any of the following ways: hotline@clariphy.com Voice mail: U.S Argentina China Mobile Access U.S. mail or other delivery: Chief Compliance Officer, 7585 Irvine Center Drive, Suite 100, Irvine, CA Online Anonymous Reporting Portal: All questions and reports of known or suspected violations of the law or company policy will be treated with maximum sensitivity and discretion. Confidentiality will be protected to the fullest extent possible, consistent with applicable law. Retaliation is strictly prohibited against ClariPhy Proprietary and Confidential, Page 12

13 any person who, in good faith, seeks help or reports known or suspected violations of company policy or the law. 8 CONCLUSION It is your responsibility to avoid any activity that could harm the Company s ability to compete legally and ethically in the international marketplace. Although the preceding guidelines should inform you about activities to avoid in international business dealings, you should seek help whenever you are not certain that your actions comply with the above. Feel free to contact the Chief Compliance Officer. ClariPhy Proprietary and Confidential, Page 13

14 9 EXHIBIT A CERTIFICATE OF COMPLIANCE CLARIPHY COMMUNICATIONS, INC. (THE COMPANY ) CERTIFICATE OF COMPLIANCE WITH FOREIGN CORRUPT PRACTICES COMPLIANCE POLICY I, [Name of Company Employee], certify the following: (i) I have received a copy of the Company s Foreign Corrupt Practices Compliance Policy (the Policy ), and I have read and understood the Policy. (ii) I acknowledge that it is my responsibility to comply with the Policy and to assure that those reporting to me also comply with the following: (1) Except as expressly provided elsewhere in this statement of policy, no payment, benefit or gift of any kind whatsoever may be promised, offered or made to any non-u.s. government official for the purpose of obtaining or retaining business. (2) Notwithstanding the foregoing, expenditures for meals, entertainment and other normal social amenities with respect to non-u.s. government officials are permitted provided they follow the guidelines of this policy, are not extravagant and otherwise conform to the laws and customs of the country in which the expenditures are incurred. (3) Similarly, gifts may be given to non-u.s. government officials only if the gifts follow the guidelines of this policy, are of nominal value, are never gifts of cash, and conform to laws and normal social customs in the official s country. (4) Complete and accurate records reflecting my expense and any business conducted with non-u.s. government officials have been provided to the Company. (iii) I have not violated any provision of the Policy in connection with the Company's business, and I am not aware of any potential violations of the Policy which have not been reported or disclosed to the Company s Chief Compliance Officer. (iv) All questions or possible violations of the Policy which have arisen since my last certification have been reported and/or disclosed to the Company s Chief Compliance Officer. Name: Signature: Date: ClariPhy Proprietary and Confidential, Page 14