GARDNER DENVER s.r.l.

Transcription

1 GARDNER DENVER s.r.l. pursuant to section 6, paragraph 3, of Legislative Decree 231 dated 8 June 2001 Regulations for the administrative liability of legal entities, companies and associations even without legal status, pursuant to section 11 of Law 300 dated 29 September 2000 Model approved with resolution of the Board of Directors dated 23 October 2013

2 CONTENTS A Introduction The activity of GARDNER DENVER s.r.l The Legislative Decree The law governing the administrative liability of Entities The adoption of an Organization, Management and Control Model The adoption of the Model The areas in which the company operates Brief analysis of Corporate Governance at GARDNER DENVER Aims pursued by the Model Relations between the Model, Code of Ethics and Group Policy To whom does the Model apply? Areas of risk Crimes of 2nd degree homicide and serious injury through negligence as a result of violating accident prevention regulations and regulations safeguarding hygiene and health in the workplace Crimes against the Public Administration Crimes against the environment Company crimes Other types of crime Integrating risk areas Procedures and control principles Protocols Crimes of 2nd degree homicide and serious injury through negligence as a result of violating accident prevention regulations and regulations safeguarding hygiene and health in the workplace Protocols Crimes against the Public Administration Protocols Crimes against the Environment Protocols Company crimes 56 2

3 5. Supervisory Body (Supervisory Body) Identifying and appointing the Supervisory Body Functions and powers of the Supervisory Body Information flows Reporting of the Supervisory Body to the governing bodies of GARDNER DENVER Reporting to the Supervisory Body by Directors, employees, colleagues and third parties Collecting and keeping information on file Information and training Communication Personnel training Information to External Colleagues and Partners The disciplinary system General principles Violations of the Model Measures against Employees Measures against Directors Measures against Executives Measures against Colleagues, Consultants and third parties 76 ANNEX 1: Code of Ethics 77 ANNEX 2: Organizational Charter/2b/2c 77 3

4 A Introduction The activity of GARDNER DENVER s.r.l. GARDNER DENVER s.r.l. with Sole Proprietor (hereafter GARDNER DENVER and/or the Company ) has the following business object: the design, production, acquisition, sale, import, export, warehousing, assembly, maintenance and repair, technical consultancy for the installation and related start up and management, and, in general, the trade, on its own behalf and for third parties, including as representative, agent, distributor or commissioner for other companies or enterprises, including foreign ones, of compressors, pumps for any application, machines for compressed air, machinery and equipment for industry in general, as well as their accessories functioning with compressed air, equipment and spare parts. Specifically, the Company operates actively through three divisions called respectively GD LONATE/CORMANO, ROBUSCHI, GIEFFE. The GD LONATE/CORMANO Division The division handles engineering, production, procurement and sales, import, export, distribution, marketing, warehousing and in general the trading and maintenance of any type of pneumatic equipment, and particularly vacuum pumps and pumps to create vacuums, suction equipment and industrial vacuum systems, compressors and fans. The activity is carried out in the facilities in Cormano (MI) and Lonate Pozzolo (VA), which employ about 110 people. The division has indirect and occasional relations with the Public Administration. The turnover is about 33,100,000. The ROBUSCHI Division The division is active in the sector for the production of blowers, vacuum pumps, centrifugal pumps and couplings. The activity is carried out in the facility in Parma, which employs about 240 people. This division has indirect and occasional relations with the Public Administration. The turnover is around 55,000,000. 4

5 The GIEFFE Division The division is active in the sector for the construction of vacuum machinery and plant on a project basis, as well as the engineering of vacuum pumps for the medical, chemical and food industries, among others. The activity is carried out in the facility in Noceto (PR), which employs about 10 people. This division has indirect and occasional relations with the Public Administration. The turnover is around 4,000,000. 5

6 1. The Legislative Decree 1.1. The law governing the administrative liability of Entities Legislative Decree 231 dated 8 June 2001 enshrining Regulations for the administrative liability of legal entities, companies and associations even without legal status, pursuant to section 11 of Law 300 dated 29 September 2000 (hereafter the Decree ), taking effect on the subsequent 4 July, introduced into law the criminal liability of Entities (legal entities, companies and associations even without legal status), as well as the individuals who represent them and who carried out a crime. According to this legislation, Entities can be considered liable and hence punished for some crimes committed or attempted in the interest and to the advantage of the Entity itself, by its Directors and employees Basic principles of the Decree and the relevant regulations The Decree updates internal regulations in relation to the liability of legal entities to enshrine the international conventions Italy signed some time ago, including: the Brussels Convention of the European Community dated 26 July 1995 on safeguarding financial interests; the Convention of 26 May 1997, also signed in Brussels, on the fight against corruption involving officers of the European Community or Member States; and the OECD Convention dated 17 December 1997 on the fight against corruption involving foreign public officials in economic and international transactions. The Decree introduced into Italian law a system of administrative liability (essentially a criminal liability) for legal entities (i.e. companies, associations, consortia, etc., hereafter Entities ) for some crimes committed in the interest or for the advantage of the entities themselves, by: individuals who represent, administer or manage the Entities or a local organizational unit with financial and functional autonomy; individuals who de facto exercise management and control over the Entities; individuals subject to the management and supervision of one of the above. This liability is in addition to the (criminal) liability of the individuals who actually committed the crime. 6

7 1.1.2 Penalties The penalties for the 1 Entities, for committing or attempting to commit a crime, as specified above, are: - fines (up to 1.5 million euro); - penalties involving exclusion from carrying out a certain activity, the suspension or revoking of licenses and concessions, prohibition against having dealings with the Public Administration, exclusion from or the revoking of loans and grants, the prohibition to advertise products and services; - confiscation (preventive seizure at the preliminary stage of a trial) of the profit of the Entities from the crime, or equivalent value 2 ; - publicating of the sentence (where the penalty involves an exclusion or prohibition 3 ) The crime itself The Decree and its subsequent additions specifies certain crimes, which can be summarized as belonging to the following categories: - crimes against the Public Administration 4 ; - company crimes 5 ; - abuse of the market 6 ; - 2nd degree homicide and serious personal injury through negligence, committed by violation of accident prevention regulations and regulations safeguarding hygiene and health in the workplace 7 ; - receiving stolen money, money laundering and the use of ill gotten gains 8 ; - crimes against public trust 9 in relation to forging money, forging documents relating to public credit and revenue stamps; - crimes of a terrorist nature or to subvert the democratic order, including financing these activities 10 ; 1 Section 9 and subs., Paragraph I, Subsection II General Penalties of the Decree. 2 Section 6, paragraph 5. 3 Section 18, Subsection II mentioned above. 4 Sections 24 and 25, Paragraph I, Subsection II Administrative liability for crimes under the Criminal Code of the Decree. 5 Section 25 ter, Subsection III mentioned above. 6 Section 25 sexies. 7 Section 25 septies. 8 Section 25 opties. 9 Section 25 bis, Subsection III mentioned above. 10 Section 25 quater, Subsection III mentioned above. 7

8 - crimes against the person, such as the exploitation of child prostitution, paedopornography including via Internet, reducing and keeping people in a state of slavery 11 and female genital mutilation 12 ; - transnational crimes; - IT crimes and illegally processing data; - organized criminal activities; - crimes against industry and trade; - crimes violating copyright; - crimes involving failure to make declarations or making false declarations to the judicial authorities; - crimes against the environment; - crimes of employing third parties whose presence in Italy is illegal, where such presence is a crime Public Administration, public official and person appointed to carry out a public service Public Administration For the purposes of the Decree, a Public Administration is any entity, whether subject to the laws of a private or public enterprise, that carries out a public function or public service. Public function and public service What is meant by public function is any activity subject to the laws governing a public enterprise that relates to the following functions: - legislative (State, Regional Authority, Provincial Authority with special autonomous status, etc.); - administrative (members of state or territorial administrations, Law Enforcement, members of supranational administrations for example the EU members of Authorities, of Antitrust watchdogs, of the Chambers of Commerce, members of Building Committees, organizations responsible for the final approval of public works, experts for the Italian Register of Shipping, etc.); and - judicial (Judges, Court Officers, auxiliary bodies relating to the Administration of Justice, such as Court appointed receivers or liquidators in the case of bankruptcy, etc.). A public official carries out his/her functions via powers to authorize or powers of certification. Remember that: 11 Section 25 quinquies, Subsection III mentioned above. 12 Section 25 quarter. 8

9 - the power to authorize is the power that enables the Public Administration to pursue its aims through a command set up, to which private individuals are subject. This is the activity in which so called public powers are exercised, which include the powers of coercion (arrest, search, etc.) and the ability to establish violations of the law (traffic tickets, etc.), as well as the hierarchical powers within public offices; - the power to certify is the power of the certification agency to establish a fact, and serves as proof, unless legal action is brought to overthrow the judgement. Section 357 of the Criminal Code defines a public official as a person who exercises a legislative, judicial or administrative function. Public service and a person appointed to carry it out What is meant by public service is: - the activity of producing goods and services of general interest and subject to the supervision of the Public Authority; and - activities aimed at guaranteeing the rights of people to life, health, freedom, a retirement pension and social security, education, freedom of expression, etc. and carried out under concession and/or through agreements (e.g. Hospitals, Health Authorities, Social Security or State Accident Insurance Institutions I.N.P.S., I.N.A.I.L. members of City Authority Councils, Banks, Post Offices, Customs Offices, the Railway and Motorway Authorities, Municipal Utilities, Airlines etc.). A public service is an activity governed by the same legislation as public functions, but characterized by a lack of the powers normally associated with the latter (the powers to authorize and certify) and excluding simple duties and providing a merely material service. Section 358 of the Criminal Code defines a person appointed to carry out a public service as any person who carries out a public service Crimes against the Public Administration The Decree peremptorily lists crimes against the Public Administration where the Entity is liable. They include: embezzlement of the State s funds, or the funds of another public or Community entity 13 : failure to allocate funding, grants and so on to the purposes for which they were intended; - misappropriation of funding, grants and other payments by the State, another public or Community entity 14 via the use of falsified documents or the issue of declarations bearing witness to states of affairs that are untrue, or by omitting to provide information required; - aggravated fraud in order to obtain public finances 15 : the misappropriation of funding, financial resources or other payments by the State or other public or Community entity via 13 Section 316 bis of the Criminal Code. 14 Section 316 ter of the Criminal Code. 15 Section 640 bis of the Criminal Code. 9

10 cunning or through swindling other than by providing false documents or declarations or omitting to provide information required; - aggravated fraud against the State or other public entity 16 : the use of cunning and swindling to obtain an unlawful profit from the State or another public entity; IT fraud against the State or another public entity 17 : altering the functioning of an IT or electronic system, or the unauthorized use of data, information or programs in an IT system, to obtain an unlawful profit from the State or other public entity; extortion 18, i.e. where a public official or person appointed to carry out a public service abuses his office to force a private individual or company to hand over or promise money or favours; corruption for an official deed/action/certificate 19, i.e. where a public official or person appointed to carry out a public service or is employed by a public entity, refuses to carry out an action or provide a deed or certificate unless he/she or someone else in the department is paid or provided with favours; corruption for a deed/action/certificate contrary to the duties of the office 20, i.e. where a public official or person appointed to carry out a public service and is employed by a public entity, delays a deed/action or certificate or carries out an action contrary to his/her duties for the payment or promise of payment or provision of favours to him/herself or someone else in the department; - corruption in judicial proceedings 21 : in both cases outlined above, in which money or favors are accepted for oneself or someone else in the department in order to give someone an unfair advantage or disadvantage in a civil or administrative suit or criminal prosecution; - undue persuasion to give or promise money or other benefits 22 : i.e. when a public official or the person appointed to carry out a public service, abuses his/her office and powers and induces someone to give or promise money or favors to him/herself or someone else in the department; criminal liability extends to the person making or promising the payment or favors; - inducement to corruption 23 : in both cases of corruption outlined above, in the event of the public official refusing the money or favors or the private individual or company refusing to pay or provide favors; - embezzlement, extortion, undue persuasion to give or promise money or favors, corruption and inducement to corruption of members of the International Criminal Court or entities of the European Community or officials of the European Community or other States 24 : in such cases law makers these offences are dealt with as crimes against foreign public officials. 16 Section 640, paragraph 2, subsection 1 of the Criminal Code. 17 Section 640 ter of the Criminal Code. 18 Section 317 of the Criminal Code. 19 Section 318 of the Criminal Code. 20 Section 319 of the Criminal Code. 21 Section 319 ter of the Criminal Code. 22 Section 319 quater of the Criminal Code 23 Section 322 of the Criminal Code. 24 Section 322 bis of the Criminal Code 10

11 nd degree homicide and serious injury through negligence as a result of violating accident prevention regulations and regulations safeguarding hygiene and health in the workplace Law 123 of 3 August 2007 published in the Official Gazette on 10 August 2007, issue no. 185, and entering into force on 25 August 2007, introduces section 25 septies of Legislative Decree 231/01, subsequently amended by the Unified Safety Law: the Entity is liable in cases of: - 2nd degree homicide (section 589 of the Criminal Code) and - serious injury due to criminal negligence (section 590 of the Criminal Code), where the crime of 2nd degree homicide is committed violating section 55, paragraph 2 of the Unified Safety Law, or the crimes in question were committed violating accident prevention regulations and regulations governing hygiene and health in the workplace. The reference regulations are enshrined in the Unified Safety Law. However, it is necessary to specify that every violation of the obligation on the employer to guarantee safety in the workplace (section 2087 of the Civil Code) leading to a serious injury gives rise to criminal proceedings against the company. The law, in fact, states that any violation of safety regulations for the workplace are an aggravating circumstance in the crime of 2nd degree homicide and serious injury and therefore section 25 septies of Legislative Decree 231/2001 is applicable. Serious injury means (section 583 of the Criminal Code) an injury which leads to: a life threatening illness, or illness or inability to attend to routine matters for a period of over forty days; permanent impairment of a sense or organ; an illness that certainly or probably cannot be cured; loss of one of the senses; loss of a limb, or mutilation making the limb useless, or loss of an organ or the ability to procreate, or permanent or serious speech impairment; deformation or permanent scarring of the face. In these cases the crime is punished through guilt alone: without the need to demonstrate mens rea, unlike for other crimes. Therefore it is necessary to adopt an Organizational Model that extends the analysis of risk to situations covered by the regulations governing health and safety in the workplace Receiving stolen money, money laundering and the use of ill gotten gains. Legislative Decree dated 16 November 2007, implementing Directive 2005/60/EC dated 26 October 2005 and Directive 2006/70/EC dated 1 August 2006 introduces into the framework for application of Legislative Decree 231/01 the cases set out in sections 648 (receipt of stolen goods), 648 bis (money laundering) and ter (the use of money, goods or profits derived from criminal activities). 11

12 It should be noted that, if sections 648 bis and ter were already deemed crimes for which the entity was liable for prosecution within the framework of international crimes (Law 146/2006), the crime of receiving stolen money (section 648 of the Criminal Code), has been included for the first time. These are crimes with a common matrix and some components of difference. Lawmakers have aimed to prevent others (ʺnot directly involvedʺ), after a crime (or alleged crime) has been committed from benefiting from the crime. The nucleus of the three types of offense therefore can be found in activities subsequent to the committing of a crime, activities that involve attacking assets (so that the offender or other party cannot materially benefit from handling stolen money or ill gotten gains) and supporting judicial proceedings (because illicit or ill gotten gains tend to be hidden or laundered making it difficult to prosecute offenders and to combat crime). The differences between sections 648, 648 bis and 648 ter of the Criminal Code, on the other hand, essentially are related to conduct (a material component) and not a subjective component (generic or specific malicious fraud) 25. In relation to the material component material: Receiving: punishable are acts to acquire, receive, hide or interfere in order to acquire, receive or hide money and things derived from a crime. Money laundering: punishable are acts to replace, transfer, or carry out transactions to prevent the identification and origin of crime money, goods or other forms of benefiting from a crime. The use of ill gotten gains: punishable is the use of the above in economic or financial activities. With regard to the subjective component: Receiving: punishable is any conduct designed to procure profit for oneself or others (specific fraud). Money laundering: the crime is of the type included as a generic fraud. The use of ill gotten gains: the crime is of the type included as a generic fraud. 25 The crime of money laundering cannot be distinguished from receiving stolen money as specified in section 648 of the Criminal Code on the basis of the above, but the difference consists in the structural components of the crime, such as the subjective component, which is the case in the event of specific fraud for the purpose of making ill gotten monetary gains for receiving money and generic fraud in the case of money laundering, and the material component, in particular the use of means aimed at preventing the identification and concealing the origin of an asset, which is a characteristic component in conduct as set out in section 648 bis of the Criminal Code (Criminal Court of Cassation, 12 April 2005, De Luca Appeal). 12

13 Of these three cases of criminal activity, within the framework of criminal company law, money laundering is certainly the most relevant and hence represents the highest risk: in Italy the regulations governing money laundering were introduced by Legal Decree 59 dated 21 March 1978, converted into Law 191 dated 18 May 1978, which introduced section 648 bis of the Criminal Code, then called replacing stolen money or valuables or ill gotten gains from kidnapping for the purposes of extortion. Hence this was a specific form of receiving ill gotten gains defined through the criminal origin of the money. The reform of 1990, (section 23, Law 55 dated 19 March 1990), suppressed the profit aim (a subjective component) and conduct was based on the attempt to prevent the identification of the criminal origin of the ill gotten gains, as dealt with exhaustively in current regulations. Section 648 ter of the Criminal Code was also added, punishing subsequent conduct irrespective of money laundering, i.e. the use of ill gotten gains in economic or financial activities. This hypothesis, therefore, referred and refers to activities after the committing of a crime aimed at laundering the ill gotten gains. The subsequent reform, by Law 328/1993 ratifying the Convention of Strasbourg dated 8 November 1990, maintained the overall structure of 1990 but removed the obligatory listing of criminal activities replacing it with the generic definition of ill gotten goods, i.e. money, assets or goods obtained from criminal activities. This regulation, which is evolving constantly, sets out restrictions on the use and transfer of cash, the obligation to identify clients, the obligation on financial brokers to be registered and the obligation to report suspect transactions, as well operational regulations for the prevention of criminal activities (know your customer rule and the quantitative analysis of transactions) with an impact on the contents of compliance models Company crimes Within the framework of the reform of company law, Legislative Decree 61 dated 11 April , applicable since 16 April 2002, introduced a new section, 25 ter, extending the administrative liability of entities to so called ʺcompany crimesʺ. Company crimes are crimes which can be carried out directly: - by the Board of Directors, - by Directors, - by Directors General, - by Statutory Auditors, - by Liquidators, as well as with the complicity of the organization set up for administrative and accounting purposes, for financial management or to implement the IT accounting system. 26 Article 3. 13

14 Examples of company crimes include: false reporting (section 2621 of the Civil Code): including in the company reports required by law material facts that are untrue or omitting statutory information regarding the economic, equity or financial position of the company or Group; false reporting to the detriment of shareholders or creditors (section 2622, paragraphs 1 and 2 of the Civil Code): including in statutory reports material facts that are untrue or omitting statutory information on the economic, equity or financial situation of the company or Group, to the detriment of the shareholders or creditors; improper return of conferred assets (section 2626 of the Civil Code): returning conferred assets to shareholders or releasing them from the obligation of making conferrals; illegal distribution of profits and allocations to reserve funds (section 2627 of the Civil Code): distributing profits or allocations to reserve funds where this is against the law; illegal transactions regarding shares or shareholdings or in the parent company (section 2628 of the Civil Code): purchasing or underwriting shares in companies or in the parent company, eroding the company s share capital; transactions against the interests of creditors (section 2629 of the Civil Code): reducing share capital, merging or hiving off part of the company with a detrimental effect on creditors; failure to notify a conflict of interests (section 2629 bis of the Civil Code): violation of the obligations to notify a situation of conflict of interests to the detriment of the company or third parties; fictitious constitution of share capital (section 2632 of the Civil Code): a fictitious increase in share capital, by mutual underwriting of shares and by exaggerating the value of conferrals or equity in the event of transforming the company; improper distribution of company assets by liquidators (section 2633 of the Civil Code): distributing company assets before the payment of creditors or before making the necessary allocations to satisfy creditors; prevention of control (section 2625, paragraph 2 of the Civil Code): hiding documents so to prevent shareholders or company bodies from carrying out control activities; corruption of private individuals (section 2635, paragraph 3 of the Civil Code): giving or promising to give money or other benefits (as the agent of corruption) to Directors, Directors General or the executives who draw up the Financial Statements of the company, Statutory Auditors or liquidators, who as a consequence of the gift or promise of money or other benefits, for themselves or others, carry out acts or omissions in violation of the obligations upon them to draw up accurate and truthful Statements, to the detriment of the company (as the parties corrupted); liability pursuant to Legislative Decree 231/2001, regarding the agent of corruption; improper influence on the Shareholders Meeting (section 2636 of the Civil Code): carrying out simulated or fraudulent actions aimed at creating unlawful majorities at Shareholders Meetings; - market rigging (section 2637 of the Civil Code): spreading false information or carrying out simulated transactions in order to cause an alteration in the price of non listed financial instruments; 14

15 - preventing the watchdog from carrying out its supervisory function (section 2638, paragraphs 1 and 2 of the Civil Code): in order to prevent watchdogs from carrying out their supervisory activities, reporting untrue material facts, although subject to evaluation, in relation to the economic, equity or financial situation of the companies under the supervision of watchdogs or, for the same purposes, hiding by other fraudulent means facts that should be reported Market abuse By extension, company crimes include market abuse, governed by Law 62 dated 18 April 2005, i.e.: - abuse of privileged information (section 184 Legislative Decree 58/1998), a crime committed by someone who, due to his/her ʺprivilegedʺ position (for example as a member of the Board or executive Director or part of the Control Entity supervising the issuer, or someone with a shareholding in the issuer) uses this information to trade on financial markets; - market manipulation (section 185 of Legislative Decree 58/1998), a crime committed by those who spread untrue information or connive to alter the price of financial instruments forging moneys, bills of public credit and revenue stamps Law 409 dated 23 November 2001, enshrines Urgent dispositions in light of the introduction of the Euro, and includes as part of the Decree section 25 bis, which aims to punish the crime of forging moneys, bills of public credit and revenue stamps, further examples of company crimes: - forging moneys and conspiracy to spend or circulate forged moneys within the State (section 453 of the Criminal Code); - alteration of moneys (section 454 of the Criminal Code); - forging of watermarked paper used for bills of public credit or revenue stamps (section 460 of the Criminal Code); - manufacturing or possession of watermarks or instruments used for the forging of moneys, revenue stamps or watermarked bills (section 461 of the Criminal Code); - introduction into the State or spending, without conspiracy, of forged moneys (section 455 of the Criminal Code); - spending forged moneys received in good faith (section 457 of the Criminal Code); - use of forged or altered revenue stamps received in good faith (section 464, paragraph 2 of the Criminal Code); - forging revenue stamps, introduction into the State, procurement, possession or circulation of forged revenue stamps (section 459 of the Criminal Code); - use of forged or altered revenue stamps (section 464, paragraph 1 of the Criminal Code). 15

16 Acts of terrorism or subverting the democratic order Law 7 dated 14 January 2003, ratified the international Convention on the fight against the financing of terrorism, signed in New York on 9 December Unlike for other cases of criminal liability for companies, this Law does not list the potential crimes: each crime committed for the purposes of terrorism or the subversion of the democratic order involves company liability to prosecution Crimes against individuals and against the person There are numerous relevant areas: - reducing and keeping someone in a state of slavery (section 600 of the Criminal Code): reducing and keeping someone in a state of continuous subjection, so as to exploit the person by profiting from his/her work; - the slave trade (section 601 of the Criminal Code): trading in slaves and people in conditions similar to slavery; - procurement and sale of slaves (section 602 of the Criminal Code): any act that involves transferring slaves or people in conditions similar to slavery; - prostitution of minors (section 600 bis, paragraphs 1 and 2 of the Criminal Code): inducing, fostering or exploiting the prostitution of minors, or carrying out sexual acts with minors in exchange for money or other economic benefits; - pornography using minors (section 600 ter paragraphs 1, 2, 3 and 4 of the Criminal Code): exploiting minors for pornographic exhibitions of the production of pornographic material; trading in pornographic material produced through exploitation; distribution, dissemination or publishing of pornographic material produced by the exploitation of minors, or news or information aimed at the inducement or exploitation of minors; - tourist initiatives aimed at exploiting the prostitution of minors (section 600 quinquies of the Criminal Code): organizing or marketing trips for the exploitation of child prostitutes; - possession of paedopornographic material (section 600 quater Criminal Code): obtaining or merely possessing pornographic material produced using minors; - virtual pornography (section 600 quater paragraph 1 of the Criminal Code): where in the case of paedopornography and the possession of paedopornographic material, the pornographic material comprises virtual images; - crime of mutilating female genital organs (section 583 bis of the Criminal Code) with no therapeutic purpose Transnational crimes Transnational crimes, introduced by Law 146 dated 16 March 2006, ratifying implementation of the Convention and Protocols of the United Nations against organized crime, are those committed by criminal associations operating in more than one State, and carrying out the following crimes: 16

17 - criminal association: an association of at least three people aimed at committing an unspecified number of crimes; - criminal association of the mob kind: a criminal association which intimidates its members and benefits from the subjection of members and the silence imposed on them; - criminal association for the smuggling of foreign tobacco products: a criminal association aimed at illegally importing, selling, transporting, procuring or possessing foreign tobacco products in the territory of the State; - criminal association with the aim of drug trafficking: a criminal association that distributes illegal drugs; - trafficking in migrants and dispositions relating to clandestine immigration: fostering illegal immigration and the stay of clandestine immigrants in the country; - money laundering: replacing or transferring ill gotten gains, and obstructing attempts to identify the origin of the money, goods or assets; - the use of ill gotten gains; - inducement not to make a declaration: inducement by threats, violence or the offer of money to a person to make a false declaration to the judicial authorities; - aiding and abetting: the offer to aid and abet someone accused of criminal activities for the purpose of obstructing the investigation Crimes committed abroad The criminal liability established by this Decree also applies to crimes committed abroad pursuant to sections 7, 8, 9 and 10 of the Criminal Code provided the State where the crime was committed does not prosecute the offenders IT crimes and the unlawful processing of data Legislative Decree 48 dated 4 April 2008 ratifying the implementation of the Convention of Budapest of the European Council relating to IT crime, includes for the application of Legislative Decree 231/01 the following crimes: - false IT documents (section 491 bis of the Criminal Code); - unlawful access to an IT or electronic data system (section 615 ter of the Criminal Code); - unlawful possession and dissemination of access codes to IT or electronic data systems (section 615 quater of the Criminal Code); - dissemination of equipment, devices or IT programs for the purposes of damaging or crashing an IT or electronic data system(section 615 quinquies of the Criminal Code); - unlawfully intercepting, preventing or interrupting the communication of IT or electronic data (section 617 quater Criminal Code); - installing equipment for the purposes of intercepting, preventing or interrupting the communications of IT or electronic data systems (section 617 quinquies of the Criminal Code); - damaging information, data and IT programs (section 635 bis of the Criminal Code); 17

18 - damaging information, data and IT programs used by the State or another public entity or of public utility (section 635 ter of the Criminal Code); - damaging information or electronic data systems (section 635 quater of the Criminal Code); - damaging of IT or electronic data systems of public utility (section 635 quinquies of the Criminal Code); - IT fraud by the subject providing an electronic signature certification service (640 quinquies of the Criminal Code) Other crimes Criminal organizations Law 94 dated 15 July 2009 enshrining Dispositions relating to public safety, which came into force on 8 August 2009, introduces into Legislative Decree 231/2001 section 24 ter Criminal Organizations, extending the criminal liability of Entities in the following cases: - criminal association (section 416 of the Criminal Code); - criminal association of the mob kind (section 416 bis of the Criminal Code); - electoral exchange engineered by the mafia (section 416 ter of the Criminal Code); - kidnap for the purposes of robbery or extortion (section 630 of the Criminal Code); - crimes committed making use of the conditions set out in section 416 bis i.e. furthering the activities of criminal associations; - a criminal association for the purpose of trafficking in illegal or psychotropic drugs (section 74 of the Unified Text as per Presidential Decree 309 dated 9 October 1990); - crimes of illegally manufacturing, importing into the State, selling, handing over or possessing and transporting to a public place firearms and weapons of war or parts thereof, explosives, clandestine weapons and ordinary firearms excluding those specified in section 2, paragraph three, of Law 110 dated 18 April Crimes against industry and trade; Crimes violating copyright Law 99 dated 23 July 2009 enshrining Dispositions for the development and internationalization of companies, and with reference to energy, which came into force on 15 August 2009, includes in Legislative Decree 231/01 the following crimes: Crimes against industry and trade; Crimes violating copyright: - interfering with the freedom of industry and trade (section 513 of the Criminal Code); - unfair competition with threats or violence (section 513 bis of the Criminal Code); - fraud against national industries (section 514 of the Criminal Code); - fraud against the exercise of trade (section 515 of the Criminal Code); - selling foodstuffs that are not genuine as though they were (section 516 of the Criminal Code); 18

19 - the sale of industrial products with false markings (section 517 of the Criminal Code); - the manufacture and sale of goods produced by infringing industrial property rights (section 517 ter Criminal Code); - forging the specification of a geographical origin for food produce and beverages (section 517 quater of the Criminal Code); - crimes of infringement of copyright (sections 171, first paragraph, subsection a bis, and third paragraph, 171 bis, 171 ter, 171 septies and 171 octies of Law 633 dated 22 April 1941). Crime of inducing someone to make a false declaration or not to make any declaration to the judicial authorities Law 116 dated 3 August 2009 Ratification and implementation of the Convention of the United Nations Organization against corruption, adopted by the UN General Assembly on 31 October 2003 with resolution 58/4, signed by the Italian State on 9 December 2003, and the measures updating internal regulations and amending the Criminal Code and Criminal Code of Procedure, adds to crimes previously specified in Legislative Decree 231/01 the crime of inducing someone to make a false declaration or not to make a declaration to the judicial authorities (section 377 bis of the Criminal Code). Crimes against the Environment Legislative Decree 121 dated 7 July 2011, as follows: Implementation of Directive 2008/99/EC for protecting the environment against crime, and Directive 2009/123/EC amending Directive 2005/35/EC relating to the pollution caused by shipping and the introduction of penalties for these violations, and adds to the previously specified crimes in Legislative Decree 231/01 Crimes against the Environment, which include: - killing, destroying, capturing, taking possession of and holding protected wild animals or vegetable species (section 727 bis of the Criminal Code); - destroying or negatively impacting on the habitat within a protected site (section 733 bis of the Criminal Code); - trading in species specified in Enclosure A, Annex I and Annex C, part 1 of Regulation (CE) 338/97 (section 1 of Law 150 dated 7 February 1992); - trading in species specified in Enclosure A, Annex I and III, and Annex C, part 2 of Regulation (CE) 338/97 (section 2 of Law 150 dated 7 February 1992); - prohibition of the possession of species that are a danger to the health and safety of the general public (section 6 of Law 150 dated 7 February 1992); - the discharge of effluent (section 137, paragraph 2, 3, 5, 11, 13 of Legislative Decree 152 dated 3 April 2006); - discharge into the soil (section 103 of Legislative Decree 152 dated 3 April 2006); - discharge underground and into underground waters (section 104 of Legislative Decree 152 dated 3 April 2006); 19

20 - discharge into the sewer system (section 107 of Legislative Decree 152 dated 3 April 2006); - discharge of dangerous substances (section 108 of Legislative Decree 152 dated 3 April 2006); - unauthorized processing of waste (section 256 paragraph 1, 3, 5, 6, and sections 208, 209, 210, 211,212, 214, 215, 216 of Legislative Decree 152 dated 3 April 2006); - prohibition to abandon waste (section 192 of Legislative Decree 152 dated 3 April 2006); - prohibition to mix dangerous substances (section 187 of Legislative Decree 152 dated 3 April 2006); - electrical and electronic waste, sanitary waste, scrap vehicles and asbestos containing products (section 227 of Legislative Decree 152 dated 3 April 2006); - the reclamation of sites (section 257 paragraphs 1 and 2 of Legislative Decree 152 dated 3 April 2006); - violation of the statutory reporting obligations, keeping registers, ledgers and forms (section 258, paragraph 4, sentence II of Legislative Decree 152 dated 3 April 2006); - false declarations by a private individual in a public deed (section 483 of the Criminal Code); - illegal trafficking in waste (section 259 paragraph 1 of Legislative Decree 152 dated 3 April 2006); - organized activities for illegally trafficking in waste (section 260, paragraphs 1 and 2 of Legislative Decree 152 dated 3 April 2006); - IT system to trace waste (section 260 bis of Legislative Decree 152 dated 3 April 2006); - violation of restrictions on issue values (section 279, paragraph 5 of Legislative Decree 152/06); - material falsehood committed by a public official in certificates or administrative authorizations (section 477 of the Criminal Code); - material falsehood committed by a private individual (section 482 of the Criminal Code); - ceasing to use or reducing the use of ozone depleting substances (section 3 of Law 549 dated 28 December 1993); - intentional pollution from shipping (section 8 of Legislative Decree 202 dated 6 November 2007); - accidental pollution from shipping (section 9 of Legislative Decree 202 dated 6 November 2007). Employment of citizens from other countries without valid resident permits in Italy Legislative Decree 109/2012, as follows: Implementation of Directive 2009/52/EC introducing minimum regulations and penalties for employers who employ citizens of other countries who do not possess a valid residence permit with reference to section 25 duodecies of Legislative Decree 231/01 and the crime specified in section 22 paragraph 12 bis of Legislative Decree 286/1998 (employment of citizens from other countries without a valid residence permit in Italy). 20

21 1.2. The adoption of an Organization, Management and Control Model The Decree 27 introduces a special form of non criminal liability if Entities can demonstrate: a) that, before a crime was committed, they had adopted and effectively implemented organizational and management models able to prevent such crimes from being committed; b) that they have entrusted to an internal organism, with independent proactive and control powers, the task of supervising over the functioning and compliance with these models, as well as updating them; c) that the people who committed the crime acted in defiance of these organizational and management models; d) that the body appointed pursuant to subsection b) above did not fail to carry out its duties or carry them out insufficiently Model providing exemption in the event of a crime The Decree also stipulates that, in relation to the extension of delegated powers and the risk of committing a crime, the organizational, management and control models should have the following features 28 : 1. identify the areas of risk for the committing of the crimes specified in the Decree; 2. establish specific protocols for training programs and the implementation of the decisions taken by the entity in relation to the crimes to be prevented; 3. includes ways of identifying and managing financial resources able to prevent these crimes from being committed; 4. set out obligations to inform the watchdog supervising the functioning and compliance of the Model; 5. include an internal system for disciplinary action and penalties in the event of failing to comply with the measures enshrined in the Model. The Decree establishes that the organizational, management and control models must be adopted, guaranteeing the above features, on the basis of codes of behaviour (e.g. Guidelines) drawn up by associations representing the industry and notified to the Ministry of Justice which, together with other relevant Ministries, shall come to an opinion (within 30 days) about whether the models are suitable for the prevention of the crimes in question 29. In entities of small size supervisory and control functions may be carried out by the executive body itself Section 6, paragraph Section 6, paragraph Section 6, paragraph Section 6, paragraph 4. 21

22 1.2.2 GARDNER DENVER and the adoption of the Model: introduction For the purposes of ensuring ever greater efficiency and transparency in carrying out its business activities, GARDNER DENVER decided to adopt an organizational, management and control model in line with the regulation enshrined in the Decree (hereafter Model ), as illustrated in more detail in section 2 below. GARDNER DENVER believes that, over and beyond the regulations enshrined in law, adopting this Model, and at the same time a Code of Ethics and Business Conduct (the Code of Ethics ) 31 (Annex 1), comprises a further valid instrument in drawing the attention of all employees and people who work with the company, to their responsibilities, ensuring in their activities proper and transparent behaviour in line with the ethical and social values of GARDNER DENVER in the pursuit of its business aims, and will prevent the crimes specified in the Decree from being committed within the company. For the purposes of drawing up the Model, GARDNER DENVER analysed the risk areas in the company in light of the regulations set out in the Decree, the rulings of Courts and the guidelines of the Italian Confederation of Industry (Confindustria). Implementing the provisions of the Decree, the Chairman of the Board of Directors of GARDNER DENVER appointed the company Professional Governance Overview s.r.l. in the persons of Carlo Ravasi and Elisabetta Billo to act as the Internal Supervisory and Control Body (hereafter Supervisory Body ), with the task of supervising the functioning, effectiveness and compliance of the Model and to update the Model as required. 31 The Code of Ethics and Business Conduct is an organic system of regulations, procedures and ethical principles that govern the way the company and other companies in the Gardner Denver Group conduct business. The Code of Ethics and Business Conduct is the code of Ethics for the Group and hence also for the company. 22

23 2. The adoption of the Model 2.1. The areas in which the company operates GARDNER DENVER is part of the GARDNER DENVER Group (hereafter GD Group ), which operates nationally and internationally The GD Group The GD Group is one of the leading suppliers of high quality industrial equipment as well as technology and services. For decades, the GD Group has produced high range equipment such as pumps for compressors and fans, to name but a few. The technical experience of the Group, combined with its production capacity and service capability, guarantee reliable and efficient products in terms of energy consumption in the sector, with the lowest costing full life cycle of all. The GD Group designs, produces and sells blade and rotative compressors or alternative types of highly sophisticated compressors, fans and liquid ring pumps for various industrial and transport applications. In addition, the GD Group supplies pumps used in the oil and other industries, as well as equipment for the transfer of fluids in the chemicals, oil and food processing industries. The products and solutions of the GD Group are sold worldwide through a multi channel distribution network and are used in almost all market sectors. The Group has 36 manufacturing facilities in America, Europe and Asia, and offices in 33 countries. Consolidated turnover in 2012 was $2.4 bn The Company in Italy Organizational structure GARDNER DENVER is a limited liability company characterized by a functional organizational structure divided into three divisions, each of which is shown in the attached Organizational Chart (Annexes 2/a, 2/b, 2/c). The leading sensitive processes identified by GARDNER DENVER within the structure refer principally to the operating functions by which the Company carries out its activities. The Organizational Charts show the functions/operating processes where crimes could be committed. Identifying these functions/processes involved using the same nomenclature as used by GARDNER DENVER as shown in the Organizational Chart of the Company Brief analysis of Corporate Governance at GARDNER DENVER GARDNER DENVER has the following executive bodies: The Shareholders Meeting; The Board of Directors; The Board of Statutory Auditors. 23