Foreign Corrupt Practices Act (FCPA)

Compliance Guideline Foreign Corrupt Practices Act (FCPA) Dachser GmbH & Co. KG

Introduction The purpose of this guideline is to provide employees of DACHSER GmbH & Co. KG ( DACHSER ) involved in international operations with a basic understanding of the Foreign Corrupt Practices Act ("FCPA or "the Act") to enable such employees to comply with the Act. The FCPA was enacted in the United States in 1977 in response to a series of "questionable payments" made by large corporations to foreign government officials, and amended in 1998 to implement the OECD Anti-bribery Convention. As a result of this Convention, many other countries have now adopted laws similar to the FCPA prohibiting bribery of foreign government officials. In addition, most countries' laws prohibit bribery of their own government officials. The principal objective of the FCPA is to prohibit United States companies and their employees, officers, directors and agents from paying or promising to pay bribes to foreign officials, political parties, candidates or their conduits to obtain or retain business. The focus of the FCPA is two-fold: (i) it prohibits actions in furtherance of foreign corrupt payments by any person while in the United States, by any U.S. person abroad or by any person abroad working for a US company and (ii) it includes record-keeping and accounting provisions intended to deter the establishment of off-thebooks slush funds to finance the illegal payments. DACHSER requires all employees involved in operations inside and outside of the United States study this guideline carefully and ensure compliance and adherence to the principles stated within the manual. This guideline is not intended to make you an expert or designed to answer all questions that may arise relating to the FCPA. It is intended to provide you with a sufficient understanding of the FCPA to enable you to recognize and avoid potential violations. If you have any questions about a particular transaction, you should contact your local DACHSER Head Office. DACHSER Corporate Compliance Management System & Policies Commitment from the DACHSER Board of Management For a globally operating company like DACHSER, corporate culture is of vital importance in the international marketplace. Our corporate philosophy always characterized by clear ethical values forms the basis for our success. It is you, our staff, in particular, who, as part of the internationally networked DACHSER family, carry our values into the market each day and responsibly represent the DACHSER brand in the outside world. The DACHSER compliance programme is intended to provide you with the security you need in your everyday working life and to give you guidance if you have questions about the correct conduct in particular situations. Code of Conduct and Compliance Policies and Procedures To act in accordance to the law is and has always been self-evident for DACHSER. However, only the introduction of an organized Compliance-Management can ensure that this demand is also converted in practice and is always adhered to. DACHSER has reached a size which demands that a professional Compliance-Management is installed in order to correctly react according to the DACHSER values in a world of complicated rules which are getting more and more complex and in a world of increasing demands of the public. In addition to the DACHSER Values Management and the DACHSER Code of Conduct, further internal conduct guidelines have been established. On the one hand they are supposed to show the risks of a possibly unconscious - behaviour contrary to the rules. On the other hand the conduct guidelines are supposed to serve you as a guideline for participation in the market and daily business. The different guidelines cover inter alia the following different subject areas: (i) (ii) Conduct Guideline Benefits : How do I behave correctly in order to prevent any possibility of being accused of corruption, bribery or corruptibility? Conduct Guideline Competition Law : How do I behave correctly concerning competition and anti-trust law regarding competitors? 1

Compliance Organisation The Corporate Compliance Organisation of DACHSER is situated at the Corporate Head Office of DACHSER GmbH & Co. KG, Germany. Compliance Committee The Compliance Committee comprises various managers who generally deal with compliance issues (Legal, Insurance and Customs/Marketing/IT/Human Resources/Auditing, Taxes, Financial Statements). The Chief Compliance Officer is also permanent member of the committee. The compliance committee generally meets two to three times per year, as well as in cases where a meeting is justified. The goal is to discuss current and special developments, problematic issues that have arisen, specific cases or corporate policy matters. Chief Compliance Officer / Regional Compliance Agents Aside from the Chief Compliance Officer who is responsible centrally for the entire DACHSER organization (position combined with Head of Legal Department), Compliance Officers are also designated for each business field (for European Logistics, Food Logistics and Air & Sea Logistics). The organizational structures are fleshed out with the deployment of Regional Compliance Agents. As a voice for the Chief Compliance Officer, they are intended to act as the required bridge with the respective country organization and keep the central compliance officers informed of current incidents in the countries. Training and Continuing Advice The Corporate Compliance Office will conduct or arrange in regular intervals for training sessions concerning the DACHSER Compliance Management System, in particular including information to enable the DACHSER employees s full compliance with the United States Foreign Corrupt Practices Act (FCPA). Trainings can be held on a face-to-face basis, via web-based presentations or e-learning tools. In addition to such trainings the Corporate Compliance Office will sensitize the DACHSER employees by other methods of information, e.g. flyer, written information or news on a internal platform. Disciplinary Measures Violations of any of the DACHSER Compliance Policies may result in disciplinary action up to and including termination of employment or contract. Confidential Reporting and Internal Investigation If a DACHSER employee should have any doubt with respect to whether any action he / she is about to take violates the FCPA or in case that a DACHSER employee should have any confidential information related to a compliance topic, he / she should contact the local Compliance Office or the Corporate Compliance Office. On a regular basis a Compliance Audit will be conducted by the Corporate Revision Department. In cases of reasonable suspicion the Corporate Revision Department will conduct ad-hoc internal investigations. Mergers & Acquisitions / Joint Ventures / Third Parties Whenever DACHSER pursues the acquisition of any business entities, the due diligence process associated with the proposed acquisition shall include an investigation of the acquisition target s compliance with national and international legal regulations, such as FCPA. Whenever DACHSER elects to pursue work outside the United States through a joint venture, a review of the prospective joint venture partner in order to determine its financial, legal and social background shall be conducted. Whenever DACHSER intends to engage or retain a third party, e.g. consultant, agent or any representative in connection with any business being sought or transacted outside the United States, an investigation of the prospective third party in order to determine its financial, legal and social background shall be conducted. 2

FCPA Compliance Employees of DACHSER are required to comply with the FCPA. Any employee who knowingly violates the FCPA or who orders another to violate the Act or who knowingly permits a subordinate to violate the Act will be subject to disciplinary action up to and including termination of employment or contract. Who is subject to the FCPA? The anti-bribery provisions of the FCPA cover acts in furtherance of the direct or indirect bribery of foreign officials by any person while in the territory of the United States, by any U.S. person while acting wholly outside of the United States or by any person abroad working for a US company. Consequently, DACHSER, its operating subsidiaries, affiliates, officers, directors, shareholders, agents and employees are all subject to the FCPA. In furtherance of DACHSER s commitment to the provisions of the FCPA, DACHSER will only work with carriers, vendors, and subcontractors who also follow and have a commitment to promulgate the principles outlined by the FCPA. What are the FCPA bribery prohibitions? The FCPA prohibits those subject to the FCPA from giving or promising to give anything of value to: (i) any foreign official for purposes of influencing any act or decision of such official or inducing such official to influence any act or decision of a foreign government or instrumentality to obtain or retain business or for purposes of obtaining any improper advantage; (ii) any foreign political party or party official or any candidate for foreign political office for purposes of influencing any act or decision of such party, official or candidate or inducing such party, official or candidate to influence any act or decision of a foreign government or instrumentality to obtain or retain business or for the purposes of obtaining any improper advantage; and (iii) any person while knowing or having reason to know that such money or thing of value will be offered or given to any foreign official, foreign political party, party official or candidate for foreign political office for purposes of influencing any act or decision or inducing such foreign official, political party, party official or candidate to influence any act or decision of a foreign government or instrumentality to obtain or retain business or for the purposes of obtaining any improper advantage. In compliance with the bribery prohibitions, you must carefully avoid promising, offering or making any payments in money, products or services to any foreign official in exchange for or to induce favorable business treatment or to affect any government decision or generally to obtain any improper advantage. You must also avoid extravagant entertainment and gifts of significant value that may be considered bribes in violation of the FCPA. Government Official refers to all of the following: (i) any employee of a government entity or subdivision, including elected officials; (ii) any private person acting on behalf of a government entity, even if just temporarily; (iii) officers and employees of companies that are owned or controlled by the government; (iv) candidates for political office; (v) political party officials; and (vi) officers, employees and representatives of public international organizations, such as the World Bank and United Nations. You should be aware that in certain countries and in certain industries, an individual who seems to work for a private entity might be considered a Government Official. Facilitation payments / routine governmental action exemption In 1988, the FCPA was amended to clarify that certain payments (often referred to as "grease" or "facilitating" payments) made to government employees "to expedite or to secure the performance of routine governmental actions" are not violations of the Act. Routine governmental actions include, for example, obtaining permits, licenses or other official documents; processing governmental papers, such as visas and work orders: scheduling inspections; providing police protection; providing mail pickup and delivery; providing phone, power or water service; and loading or unloading cargo. Routine governmental action, however, does not include any decision of a foreign official with regard to awarding new business or continuing to do business with a particular entity or any other discretionary decision. The definition of a facilitating payment under the FCPA is complicated, and it is often difficult to determine when a 3

payment meets the definition. Moreover, although facilitating payments do not violate the FCPA, they may violate the laws of other countries, including the countries in which we do business. These issues explain DACHSER s policy that facilitating payments are generally prohibited. Affirmative defenses / bona fide expenditures In addition to the routine governmental action exception discussed above, the FCPA provides two affirmative defenses for U.S. companies accused of making prohibited payments. (i) a U.S. company may make a payment, gift, offer or promise of anything of value to a foreign official, a political party or a candidate s country provided such action is expressly permitted under the written laws of that country. (ii) a U.S. company may make a payment, gift, offer or promise of anything of value that constitutes a reasonable and bona fide expenditure directly related to the promotion of products and services or the execution of a contract with a foreign country or agency. Due to the many legal and business issues posed by facilitating payments, it is DACHSER s policy that facilitating payments are prohibited. What are the FCPA record-keeping and accounting requirements? FCPA requires to make and keep books, records and accounts which, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets. The FCPA also requires to devise and maintain a system of internal accounting controls which provides reasonable assurances that transactions are properly authorized.the record-keeping and accounting standards apply to domestic operations as well as to foreign operations. DACHSER must record payments and other compensation in the corporate books, records and accounts in a timely manner and in reasonable detail. No undisclosed or unrecorded accounts may be established for any purpose. False, misleading, incomplete, inaccurate or artificial entries in the books and records are prohibited. In compliance with the FCPA, it must carefully be avoided (i) the use of DACHSER funds or assets for any unlawful, improper or unethical purpose; (ii) the establishment of any undisclosed or unrecorded funds or assets of DACHSER (iii) the recording of any false entries on the books and records of DACHSER for any reason: and (iv) the making of any payment on behalf of DACHSER with the intention or understanding that any part of such payment is to be used for a purpose other than that described by the documents supporting the payment. Any employee having information or knowledge of any unrecorded or misrecorded funds or assets has a duty to promptly report such matters to the (local) DACHSER Compliance Office or the Corporate Compliance Office. What are the penalties for violations? The penalties for violation of the FCPA are severe for both companies and individuals. There are two sets of penalty provisions: the anti-bribery provisions and the accounting provisions. Both provisions may impose civil and criminal penalties as follows: Anti-bribery penalty provisions (per violation): (a) A company may receive a criminal penalty fine up to $ 2,000,000. (b) An individual may incur a criminal penalty fine up to $ 250,000 and/or be imprisoned up to 5 years. Accounting penalty provisions (per violation): (a) A company may be fined up to $ 25,000,000. (b) An individual may be fined up to $ 5,000,000 and/or be imprisoned up to 20 years. In addition to the penalties mentioned above civil penalties may be received by companies or individuals. Fines imposed against officers, directors, employees, stockholders or agents may not be paid directly or indirectly by their companies. Thus, companies are precluded from indemnifying individuals against liability under the FCPA. 4

What are "red flags" that require extra precautions? In dealing with foreign third parties, you should observe a "red flag" concept and take extra precautions when one or more of the following red flags are involved: excessive commissions to third-party agents or consultants; unreasonably large discounts to thirdparty distributors; third-party consulting agreements that include only vaguely described services; the third-party consultant is in a different line of business than that for which it has been engaged; the third party is related to or closely associated with the foreign official; the third party became part of the transaction at the express request or insistence of the foreign official; the third party is merely a shell company incorporated in an offshore jurisdiction; and the third party requests payment to offshore bank accounts. Conclusion The goal of the company management is to increase the awareness of all employees of the fact that their actions always have an impact direct or indirect on the fate of the company. This does not require blind obedience, of course, but rather conscious behaviour in harmony with the firmly established corporate values that have always been practised. The basis for this is the expectation that each employee knows and understands the internal guidelines with respect to compliance and acts accordingly, in the interests of the company. Key phrases such as mutual respect, honesty and integrity should form the basis of our employees actions. Moreover, each employee should be aware that for the purposes of sustainable and reliable compliance management if the compliance rules are breached a policy of zero tolerance is applied (including possible personal consequences). Any objectionable behaviour should be reported to the appropriate offices for investigation and, if appropriate, initiation of the necessary measures. For more information please visit the following documents (Annex) 1. DACHSER Code of Conduct (also available at: www.dachser.com) 2. Foreign Corrupt Practices Act (also available at: http://www.justice.gov/criminal/fraud/fcpa/statutes/regulations.html) 5