«MARCH 2015 TABLE OF CONTENTS UNDERSTANDING BRIBERY ISSUES GLOSSARY OF TERMS INTRODUCTION What is corruption? 3 Why do we care? 4 Legislative ...»
As an employee of the Corporation, you must avoid any behaviour that is expressly prohibited by anti-corruption legislation in all circumstances. You must also use your judgement to avoid behaviours that even risk the appearance of corruption or malfeasance. It is therefore critical that you fully understand which activities are considered corrupt, especially when engaging with government officials.
As discussed below, penalties for infringement of anti-corruption legislation include fines and prison sentences for individuals, and heavy fines — often running to hundreds of millions of dollars — for companies.
If you have any questions, concerns or require additional information about anti-corruption legislation, consult your senior manager or the Risk and Ethics team.
PENALTIES FOR CORRUPTIONLegal and regulatory penalties for corruption can be severe. Sanctions under the CFPOA, FCPA, and UK Bribery Act for individuals and businesses who engage in bribery and kickbacks beyond their jurisdictional borders (Canada,
US and UK, respectively) include:
Criminal liability – individual employees convicted of bribery (including kickbacks) may be imprisoned for several years and subject to heavy fines. The Corporation may also be held criminally liable. While jurisdictions vary in terms of the recommended sentencing for bribery, almost all include some form of prison sentence.
Civil liability – the Corporation and/or our affiliates may be required to pay economic damages and heavy fines. Similarly, bribery and kickbacks typically involve fraud and other forms of financial non-disclosure, subjecting the Corporation to economic fines and damages under securities laws and other financial regulation. In recent years, economic damages under anti-corruption laws (especially the FCPA) have frequently reached into the hundreds of millions of US dollars. Penalties have even reached into the billions in a few high-profile cases.
Local laws in the jurisdictions in which we operate may also result in criminal and civil penalties, possibly with even stiffer penalties than the CFPOA, FCPA and UK Bribery Act.
The Corporation and its employees may be liable even if unaware that the corrupt activity was occurring. Turning a blind eye is no defence to corruption.
You have a duty to report behaviour or any activities where you suspect the Corporation, its employees or business partners may be involved in corruption. Likewise, certain precautionary measures must be taken when engaging with third parties, which are provided in the Corporation's policy Working with Third Parties.
ADDITIONAL CONSIDERATIONSIn addition to criminal and civil liability under local and international laws, the Corporation's direct or indirect involvement in corruption may also significantly disrupt our operations. Accusations and convictions for corruption may result
in any one of the following:
Debarment from operating in certain jurisdictions – development banks and multilateral organizations have adopted “blacklists” of businesses that have been involved in corruption. Similarly, businesses involved in corruption may be debarred from public sector projects in certain jurisdictions (businesses that have been convicted of corruption are mandatorily excluded from public sector contracts in the European Union, for example).
Exclusion from certain private tenders and projects – private businesses frequently refuse to engage in transactions with other businesses with prior accusations and convictions for corruption, which can be uncovered by simple due diligence investigations.
Termination of existing contracts – contracts obtained through corruption are often declared void and legally rescindable because of fraud.
Irreparable reputational damage – recent years have seen perceptions of corruption by the international business community and local governments change from indifference to outrage and activism.
Businesses with a reputation for corruption are increasingly isolated from important capital markets and international transactions. Similarly, individuals with a reputation for corruption and related offenses are unofficially barred from employment with leading global businesses.
The disruptive effects of a conviction or reputation for corruption cannot be overstated. The sections to follow will help you understand, recognize and avoid the forms of corruption expressly prohibited by international and local legislation (bribery, kickbacks and facilitation payments). However, if you have any questions about this document, the Company’s Code of Conduct, any of the supporting policy documents or any matters relating to corruption, consult your senior manager or the Risk and Ethics team.
WHAT IS BRIBERY?Bribery is perhaps the most well-known form of corruption. It is also the core target of most anti-corruption legislation. In general, bribery involves the exchange of something of value to secure an undue or unwarranted business advantage. Bribery can involve many different parties to the transaction, but it always involves at least two primary parties: the person who pays the bribe (the supply side) and the person who receives it (the demand side). Both raise serious ethical and legal issues and involve a breach of trust and duty by both parties.
The bribe does not have to occur through cash or monetary payment. Bribes may take the form of any financial inducement, a gift in kind or some other favour such as an offer of employment to a relative of the person being bribed. Even a mere promise to offer something in the future in return for a business advantage constitutes bribery.
As a general matter, you should never offer anything to a government official or business partner in the private sector that could cause them to breach a duty entrusted to them by a public or private organisation. This is especially true during a competitive bid, where even modest gifts can be misinterpreted as a bribe in certain contexts. Consult our policy on Gifts, Entertainment and Hospitality for more information.
If there is ever a doubt about whether something could be considered as a bribe, always seek advice before engaging in the activity.
KICKBACKSKickbacks are a scheme that arises when suppliers or service providers pay part of their fees to the individuals who give them the contract or some other business advantage. Kickbacks are a mechanism through which bribery can occur.
Paying kickbacks to government officials to win a bid may be one of the most common bribery schemes. The classic kickback scheme typically involves a competitive public bid and an agent with ties to a government official overseeing the bidding process. The agent, who may also provide otherwise legitimate consulting or advocacy services, offers to represent one of the competitors for the project for a fixed or variable fee. However, the agent has either prearranged to pay the government official a portion of such fees on the side in return for awarding of the contract or has negotiated this during the bidding process. The winning bidder may or may not know of this arrangement.
As mechanism to engage in bribery, kickbacks are expressly prohibited by anti-corruption legislation. Similarly, kickbacks are also subject to anti-fraud and other related legislation, as payments and invoicing invariably involve financial misstatements and misrepresentations.
COMMON TRANSACTIONSBribery and kickbacks may take place in an endless variety of transactions
and scenarios. Common transactions include:
Government tenders and concessions – government procurement of routine services to public concessions of large infrastructure or extractive projects are particularly prone to the influence of bribery. Bribes are typically paid to compromise the formal selection criteria and processes to the benefit a particular bidder.
Private tenders – like government tenders, bribery and kickbacks in a private tender typically seek to unduly modify formal selection criteria and processes. Although not all anti-corruption legislation prohibits bribery during private tenders (the FCPA does not, for example), many laws applicable to the Company – including the UK Bribery Act and local laws around the world – prohibit this form of bribery.
Regulatory approvals and audits – interactions with licensing, tax, customs and other regulatory authorities are frequently subject to the influence of bribery and kickbacks. Bribes may be paid to regulators to receive approvals that otherwise would not have been granted or to disregard violations. For example, tax authorities in some countries will request bribes to disregard or lower corporate or individual tax liabilities.
Commercial agreements – even ordinary agreements for the purchase and sale of services or goods can be subject to bribery. A bribe or kickback may be offered to the purchaser to breach purchasing standards or criteria set by any organization. Again, many international and local laws applicable to the Corporation prohibit this form of bribery.
All of the above transactions involving bribery are strictly prohibited by the Corporation's Code of Conduct.
GOVERNMENT OFFICIALSThough bribery and kickbacks of any form is never permissible under the Corporation's policies, special care must be taken when engaging government officials. Most national and international legislation pay special attention to government officials.
As a result, the Corporation's employees must take particular care when involved in any business relationship or discussion with government officials.
These include not only traditional representatives of governments at the federal, state and municipal levels (appointed or elected), but also a wide range of civil servants and employees of state-owned or state-controlled entities.
The FCPA, for example, defines “foreign official” as any officer or employee of a foreign government or any department, agency, or instrumentality thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of any such government or department, agency, or instrumentality, or for or on behalf of any such public international organization. Enforcement proceedings in the US have also made it clear that employees of state-owned enterprises, such as Petrobras (the Brazilian stateowned energy company) and similar entities in other countries, fall within the definition of “foreign official.” The Corporation's employees should always assume that officials working for state-owned enterprises or quasigovernment agencies are in fact government officials, and therefore, special care must be exercised when engaging with them In addition to current government or foreign officials, similar caution must be taken when engaging with their immediate family and close associates as well as former government officials (collectively known as “politically exposed persons” or PEPs). Although there may be occasions where such engagements are entirely appropriate and justified, engaging PEPs may, in general, lead to circumstances that place the Corporation and its employees at risk. Pitfalls can be avoided by exercising good judgment and closely following the Corporation's policies on Gifts, Entertainment and Hospitality and Working with Third Parties.
INTERMEDIARIESBribes and kickbacks can also occur directly or indirectly. Bribery occurs directly if one of our employees engages in the bribe. A bribery payment by one of our employees to a public official during a competitive tender is an example of direct bribery.
Bribery and kickbacks occur indirectly if they occur through a third-party intermediary. As a practical matter, indirect transactions are by far the most common way bribery and kickbacks occur. Common third-party intermediaries
used to commit bribery and kickbacks include:
Agents Representatives Consultants Joint ventures Equity partners Subsidiaries Suppliers Contractors Although bribery often occurs with the full knowledge of all of the relevant parties, it can also occur where one or more of the participants remain entirely unaware, especially when it involves a third party. It is not enough to simply say you did not know.