Robroy Industries Foreign Corrupt Practices Act Policy

Introduction

The purpose of this Foreign Corrupt Practices Act Policy (the “Policy”) is to ensure compliance by Robroy Industries and its subsidiaries (the “Company”) and each of their directors, officers, employees, agents, consultants, and representatives with the Foreign Corrupt Practices Act of 1977, as amended (“FCPA”), and related laws of other countries in which the Company does or intends to do business.

The following pages provide a summary of international business activity that must comply with the Company’s Policy. The Company reserves the right to amend, rescind or replace this Policy at any time. This Policy is an extension of the Robroy Code of Ethics and Legal Compliance that all associates of the Company are required to comply. The Company also maintains Human Resources and Administrative Policies and Procedures. This Policy is intended to complement rather than replace the Company’s other existing policies and procedures. Those covered by this Policy must read, understand and comply with the policies and obligations described in the following pages.

Background

The anti-bribery provisions of the FCPA apply to the Company, a privately-held corporation. The anti-bribery provisions of the FCPA make it a criminal offense to pay, offer, or give anything of value to a foreign official, a foreign political party (or official thereof) or candidate for foreign office, for the purpose of influencing the decisions of those officials, parties or candidates. The FCPA was originally enacted by the U.S. Congress in 1977 and has been amended several times since. The FCPA is aimed at preventing corrupt practices by U.S. business organizations doing or seeking business in foreign countries. In recent years, there has been renewed focus and a number of enforcement actions with respect to the FCPA and similar foreign laws in other countries. Neither the complexity of the FCPA nor costs of compliance (including the loss of business) diminishes the responsibility to comply with the FCPA. It is imperative therefore that each and every person covered by the Policy become familiar with the FCPA’s provisions.

Scope

This Policy applies to:

  • All officers and employees of the Company and its subsidiaries regardless of where the officer or employee is located (within and outside the U.S.); and
  • Anyone who acts as a partner, representative or an agent for the Company and its subsidiaries. This may be a distributor, consultant, representative, broker or other person or firm of U.S. or any other nationality.

Obligations

  • Everyone covered by this Policy is expected to become familiar with and to comply with its contents as well as the Code of Ethics and Legal Compliance Policy, which applies to all associates of the Company and its subsidiaries.
  • Everyone covered by this Policy must ensure his or her strict compliance with this Policy and each person that the individual supervises.
  • If you have questions about this Policy and its application, contact the Chief Financial Officer, who serves as the FCPA Compliance Officer.
  • Concerns should be reported in accordance with the Code of Ethics and Legal Compliance Policy.

Anti-Bribery Provisions

The FCPA’s anti-bribery provisions make it illegal to bribe foreign officials in order to obtain or retain business or to secure any improper advantage. Specifically, the FCPA prohibits payments, offers or gifts of money or anything of value, with corrupt intent, to a “foreign official”.

What is considered to be a bribe?

A bribe is considered to occur when one party gives or offers another party, either directly or indirectly through an intermediary, any reward, advantage or benefit of any kind, in order to influence the making or not making or implementation of a decision or act by the party concerned. An action may be considered a bribe regardless of whether giving something of value may be widely accepted or even seem necessary in the country in question. In addition, an action may be considered a bribe even when it does not cause the desired outcome of influencing a foreign official.

Who is considered to be a foreign official?

The FCPA defines a “foreign official” as any officer or employee of a foreign government or any department, agency, or instrumentality of a foreign government. The term also includes any officer or employee of a public international organization such as the World Bank. Furthermore, any person acting in an official capacity for any foreign government agency, department or instrumentality, or for a public international organization is a “foreign official.” An entity hired to review bids on behalf of a government agency would be covered by the term. The FCPA also prohibits bribes to foreign political parties and their officials as well as to candidates for foreign political office. In addition, the following persons would be included in the definition of “foreign official”:

  • Officers and employees of foreign state owned companies • Uncompensated honorary officials if such officials can influence the awarding of business
  • Members of royal families who have proprietary or managerial interests in industries and companies owned or controlled by the government

The Company’s FCPA Compliance Officer should be contacted if there is a question as to whether an individual or an organization would be considered a foreign official for purpose of this Policy.

What is considered to be a direct or indirect payment or gift of anything of value?

A payment need not be money and might be in the form of a transfer of stock, bonds or any other property, the payment of expenses, the providing of services of any type, the assumption or forgiveness of any indebtedness, or any other transfer of goods, services, tangibles or intangibles that is given or accrues to the recipient. This prohibition might include entertainment, gifts, discounts and services not readily available to the public, an offer of employment, assumption or forgiveness of a debt, payment of travel expenses or personal favors.

Who is prohibited from making a bribe?

Everyone described in the “Scope” Section is prohibited from making direct and indirect payments to foreign officials. Therefore, a U.S. company can face FCPA liability based upon improper payments made by its agents or other business partners. Accordingly, except as set forth in this Policy, neither the Company nor anyone else covered by this Policy may make, promise or authorize any gift, payment or offer anything of value on behalf of the Company to a foreign official or to any third person (such as a consultant) who, in turn, is likely to make a gift, payment or offer anything of value to a foreign official.

What can be given to a foreign official in compliance with this Policy?

There may be very limited circumstances – entertainment, meals, Company promotional items, gifts of a nominal value and other business courtesies – when items of value can be given to foreign officials. Such entertainment, meals, Company promotional items, gifts of a nominal value and other business courtesies may not be made except in accordance with this Policy and unless the FCPA Compliance Officer has provided prior, written approval, if such approval is required.

Are there any exceptions or defenses available under the FCPA? The FCPA contains certain limited exception and affirmative defenses to the prohibitions set forth above. These limited exceptions and affirmative defenses may not be utilized or relied upon except in accordance with this Policy.

Facilitating Payments

The FCPA does allow certain types of payments to foreign officials under very limited circumstances. For example, the FCPA allows certain “facilitating” or “expediting” payments to foreign officials in order to expedite or secure non-discretionary, “routine governmental action.” Examples of this might include routine processing of governmental papers such as visas or work orders, unloading of cargo, mail pick-up and delivery, scheduling of inspections or the provision of police protection. To be considered a routine governmental action, it must satisfy the following criteria:

  • The assistance requested and for which the payment or gift is made is clearly an action which the person receiving the payment is legally required to provide, and the payment is only to facilitate such action;
  • The payment is legal and customary in the foreign country in question (i.e. not merely the payment is not illegal);
  • No reasonable alternative to making the payment exists; and
  • The duties of the person receiving the payment are essentially ministerial or clerical.

The term “routine governmental action” does not include any decision by a foreign official on whether, or on what terms, to award new business to or continue business with a particular party, or any action taken by a foreign official involved in the decision-making process to encourage a decision to award new business or to continue business with a particular party. Employees or agents may make facilitating payments only in accordance with this Policy and only if the supervisor and FCPA Compliance Officer has provided prior, written approval.

Actions that Comply with Local Laws

The FCPA also contains an affirmative defense for payments to foreign officials that are lawful under the written laws and regulations of the foreign official’s country. That being said, most countries have laws prohibiting the payment of bribes to government officials. Further, no country has written laws permitting bribery. Therefore, no payment shall be made by any Company employee, officer or agent to a foreign official in reliance upon the written laws of the local country without the prior written approval of the FCPA Compliance Officer.

Due Diligence Provisions

Local agents are retained and local partners are selected in part for their knowledge of and access to persons in the relevant market and their ability to contribute to the success of development efforts. Because actions by local agents may result in FCPA violations by the Company and other individuals, the Company should be careful when engaging third-parties and avoid situations that might lead to a violation of the FCPA. To avoid being held liable for corrupt third party payments, the Company and any Company person acting on its behalf must exercise due diligence at all times and take all necessary precautions to ensure that business relationships are formed only with reputable and qualified partners, agents, and representatives.

Therefore, prior to retaining any agent, representative, consultant, or other third party contractor (collectively “thirdparty contractors”) who act on behalf of the Company with regard to foreign governments or international business development or retention, the Company will perform proper and appropriate FCPA-related due diligence and obtain from the third party certain assurances of compliance. Due diligence should consist of the following, as available:

  • checking public sources of information, including any published press reports concerning the agent, the commercial attaché at the foreign embassy in the relevant foreign country and/or relevant country desk officers at the U.S. Department of State and U.S. Department of Commerce;
  • checking with business references provided by the potential third-party contractors; interviewing the thirdparty contractor; and
  • obtaining information from institutions (banks, accounting firms, lawyers) in the third-party contractor’s country of operations. A file should be maintained documenting the due diligence efforts undertaken in relation to the retention of each and every third-party contractor. All third-party contractors must be identified and selected on the basis of objective and written evaluation criteria, e.g., a partner should be selected on the basis of identifiable commercial and technical competence and not because he or she is the relative of an important government official. A written agreement must be entered into prior to doing business with any third-party contractor, the form of which must receive the written approval of the FCPA Compliance Officer.

Record Keeping

Although the recording keeping provisions of the FCPA do not apply to the Company because the Company is not a publicly-traded company, it is imperative that the Company maintain its books, records and accounts in reasonable detail to accurately reflect all transactions and dispositions of assets. The Company’s ability to maintain its books, records and accounts in this manner will assist the Company is demonstrating compliance with applicable laws.

Punishments

Sanctions for FCPA violations, or even a mere indictment for a potential violation, are severe and potentially devastating to the Company and to the individuals involved. Statutory criminal penalties for individuals include fines up to $100,000 per violation or imprisonment up to five years, or both. Individual officers and employees of companies may be prosecuted even if the Company is not. Fines assessed against individuals may not be reimbursed by the Company. The Company may be fined up $2,000,000 per violation and have to return a multiple of any money gained from the corrupt payment. The Company may also be required to return a multiple of any profit generated. Violations of the FCPA may result in violations of other laws and in other countries with separate and additional fines and penalties. The costs of any violation are extremely expensive to the individual and the Company.