Foreign Corrupt Practices Act Compliance

Transcription

1 Document ID: LGL-D010 Rev 0 February 11, 2010 Page 1 of 6 Applies to: Aerojet Document Owners: Vice President, General Counsel and Executive Director, Contracts, Ethics & Compliance Purpose Background This Directive: Provides a general description of the Foreign Corrupt Practices Act (FCPA) States Aerojet s policy of full compliance with the FCPA Serves as a guide to help employees comply with the FCPA The FCPA prohibits the making, offer, promise, or authorization of a corrupt payment or gift of anything of value to a foreign official, foreign political party or party official, or candidate for foreign political office for the purpose of obtaining or retaining business or obtaining certain other advantages. Directive Requirement 1. Aerojet shall fully comply with the requirements of the FCPA. 2. No payment or offer that violates the FCPA may be made, authorized, or directed by the company or its personnel directly or through agents, contractors, or other third parties. 3. Each officer, manager, and employee of Aerojet has the responsibility for compliance with FCPA within his or her area of authority and must report any suspected violations immediately. 4. Any officer, manager, or employee who makes, authorizes, or directs a payment or offer in violation of the FCPA or this directive is subject to disciplinary action up to and including termination of employment, and civil or criminal law prosecutions. Bribery It is unlawful to bribe foreign government officials to obtain or retain business. This basic prohibition has five elements that must be met to constitute an FCPA violation. These five elements are described below: 1. Who: a. The FCPA potentially applies to any: Individual Firm, including, but not limited to, corporations, partnerships, associations, and sole proprietorships Officer, director or employee of a firm Stockholder acting on behalf of a firm Individual or firm (including an officer, director, employee, or agent of a firm or a stockholder acting on behalf of a firm) who orders, authorizes, or assists someone else to violate the anti-bribery provisions or conspires to violate those provisions

2 Document ID: LGL-D010 Rev 0 February 11, 2010 Page 2 of 6 b. A foreign company or person is subject to the FCPA if the foreign company or person causes, directly or through agents, an act in furtherance of the corrupt payment to take place within the U.S. Note: Foreign corporations that have issued securities registered in the U.S. or that are required to file periodic reports with the SEC are also subject to the FCPA. c. A U.S. company or national may be held liable for any act in furtherance of a corrupt payment taken outside the U.S. d. U.S. parent corporations may be held liable for the acts of foreign subsidiaries when the parent authorized, directed, or controlled the activity in question. 2. Corrupt Intent a. The FCPA prohibits any corrupt payment intended to: Influence any act or decision of a foreign official in his or her official capacity Induce the official to do or omit to do any act in violation of his or her lawful duty Obtain any improper advantage or Induce a foreign official to use his or her influence improperly to affect or influence any act or decision. b. 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. c. 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. 3. Payment or Offer a. The FCPA prohibits paying, offering, promising to pay, or authorizing anyone to pay or offer, money, or anything of value. 4. Recipient a. The prohibition extends only to corrupt payments to a foreign official, a foreign political party or party official, or any candidate for foreign political office. b. 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.

3 Document ID: LGL-D010 Rev 0 February 11, 2010 Page 3 of 6 5. Business Purpose a. The FCPA prohibits payments made to: Assist the firm in influencing any act or decision of such foreign official Induce such official to do or omit an act in violation of his or her lawful duty or to use his or her influence or Secure any improper advantage to obtain or retain business for or with, or direct business to, any person. b. Because the Department of Justice interprets "obtaining or retaining business" broadly, this phrase means more than the mere award or renewal of a contract. Note: The business to be obtained or retained does not need to be with a foreign government or foreign government instrumentality. Third Party Payments 1. The FCPA prohibits corrupt payments through intermediaries. 2. It is unlawful to make a payment to a third party while knowing that all or a portion of the payment will go directly or indirectly to bribe a foreign official. The term "knowing" includes conscious disregard and deliberate ignorance. 3. Intermediaries may include commissioned sales representatives, consultants, or joint venture partners. 4. To avoid being held liable for corrupt third party payments, employees and representatives of Aerojet must exercise due diligence and take all necessary precautions to ensure they have formed a business relationship with reputable and qualified partners and representatives. Facilitating Payments 1. There is a narrow exception to the anti-bribery prohibition for payments to facilitate or expedite performance of a routine, nondiscretionary governmental action. The statute lists the following examples: a. Obtaining permits, licenses, or other official documents b. Processing governmental papers, such as visas and work orders c. Providing police protection, mail pick-up, and delivery d. Providing phone service, power, and water supply e. Loading and unloading cargo or protecting perishable products f. Scheduling inspections associated with contract performance or transit of goods across country 2. Routine governmental action does not include any discretionary action or decision by a foreign official to award new business or to continue business with a particular party.

4 Document ID: LGL-D010 Rev 0 February 11, 2010 Page 4 of 6 3. Facilitating payments shall be avoided to the maximum extent possible. The prior written approval of the responsible Aerojet Attorney is required unless an emergency arises affecting an individual s health or safety. a. If the responsible Aerojet Attorney approves the payment, accurate records of the payment and its purpose must be maintained and a copy forwarded to the reviewing legal Attorney. b. For a health or safety emergency where prior approval of the responsible Aerojet Attorney cannot be obtained, information about the facilitating payment should be provided to the responsible Aerojet Attorney as soon as practical. Political Contributions Outside the U.S. Red Flags 1. The FCPA does not prohibit political contributions if the purpose of the contribution does not relate to the obtaining or retention of business. However, political contributions and activities outside the United States warrant special attention because the purpose of such contributions and activities could be misconstrued as payments to obtain or retain business in a given country. 2. For non-u.s. political contributions, Aerojet will neither fund nor in any way give support to any political party, party official, or any candidate for political office, even when permitted by law, unless such political contributions receive the prior approval of the President of Aerojet. 3. Prior to submission to the President of Aerojet, any proposed contributions must first be reviewed by the Vice President, General Counsel to ensure they comply with all applicable laws and policies. 4. Any contributions made per this procedure must be accounted for properly. Employees and representatives of Aerojet should be aware of Red Flags which provide an indication that a transaction might be questionable. Such Red Flags include: 1. A history of corruption in the country 2. A lack of transparency in expenses in accounting records 3. Inflated invoices 4. Recommendations of a representative that come from an official of a potential government customer 5. The amount of the payment or commission requested is more than one would normally expect to pay for the services rendered 6. You are not clear (or might be suspicious about) the reputation of an independent consultant or agent because they are less than forthcoming with information

5 Document ID: LGL-D010 Rev 0 February 11, 2010 Page 5 of 6 7. A method of payment is suggested that could be considered unusual for a business transaction (examples: payment in cash; payment to a numbered bank account; payment through a third party or payment in a third country) 8. An independent consultant or agent or a director, shareholder, or employee of the independent consultant or agent s firm has a personal, family, or business relationship with a government official 9. Bribery is a "way of doing business" in the country in question (Note: bribery is illegal in all countries.) 10. An independent consultant / agent does not have the credentials, qualifications, or resources you would expect for the business you want to get 11. An independent consultant / agent makes reference to political or charitable contributions as a way of influencing official action 12. The proposed agreement between Aerojet and the consultant / agent is illegal under local law 13. The independent consultant / agent employs individuals or firms unknown to Aerojet 14. The independent consultant, agent, or representative has undisclosed principals, associates, or subcontractors with whom fees or commissions are split 15. Instructions from an official of the potential governmental customer to work with a specific partner or representative Accounting Standards 1. FCPA requires that Aerojet maintain books and records in reasonable detail that accurately and fairly reflect all Company transactions. Accordingly, all transactions should: a. Be executed per management s authorization b. Be recorded in a manner that permits the preparation of financial statements per applicable standards (notably Generally Accepted Accounting Principles) c. Maintain accountability of assets d. Be recorded in accounts reconciled to underlying detail at reasonable intervals 2. FCPA also requires that Aerojet establish and maintain an adequate system of internal accounting controls that are devised (a) to provide reasonable assurances that transactions are executed in accordance with management's authorization; (b) to ensure that assets are recorded as necessary to permit preparation of financial statements and to maintain accountability for assets; (c) to limit access to assets to management's authorization; and (d) to make certain that recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. All such internal controls shall be maintained in accordance with existing Aerojet internal controls requirements.

6 Document ID: LGL-D010 Rev 0 February 11, 2010 Page 6 of 6 3. None of these statements is intended to supersede existing Aerojet accounting or internal controls requirements. Resources Definitions Term Definition Foreign Official Means any of the following: An officer or employee of any non-u.s. federal, state, municipal, or other government, department, agency, or instrumentality A political party or party official A candidate for a foreign political office An officer or employee of any of the following: - A public international organization or any department or agency thereof (examples: United Nations, World Bank) - An organization that is affiliated with one or more foreign governments - A company or organization that is owned or controlled by a foreign government, including non-profit organizations, colleges and universities, etc. A consultant, advisor, contractor, or agent of any of the above that represents or acts on behalf of or in an official capacity for such entity or person Acronyms Acronym Definition FCPA Foreign Corrupt Practices Act References Identification Title None