28 November 2011, APMM, Copenhagen Group Legal Anti-corruption 1 Group Anti-Corruption Program UK Bribery Act 2010 Juridisk Forening 28. november 2011 Joe Simon Group Legal – Legal Compliance

Anti-corruption UK Bribery Act background Consolidated/replaced several separate laws involving bribery, corruption Including laws signed by Queen Victoria Clarified ambiguities in existing laws, e.g. bribery through third parties Enhanced penalties, promises of enhanced action Response to criticism of UK’s limited efforts against bribery, e.g. BAE matter Implementation delayed twice Concerns about scope of the Act Ambiguities re business hospitality, entertainment Concerns about prosecution for facilitation payments Serious Fraud Office (SFO), Ministry of Justice (MJ) issued final guidance – not detailed Effective 1 July November 2011, APMM, Copenhagen Group Legal Anti-corruption PAGE 2

Anti-corruption UK Bribery Act overview Prohibits solicitation/receipt/payment of bribes to public officials/businesspersons Distinct crime of bribing foreign public officials Use of third parties in carrying out bribery covered Exempts bribery by UK officials in intelligence and defense work Creates new violation – company’s failure to prevent bribery anywhere globally No distinction between large bribes and facilitation payments – size doesn’t matter! Global jurisdiction UK citizens, residents, UK registered/based companies (partnerships, corporations) Any company based anywhere if it “carrying on a business” in the UK Companies protected if they have “adequate procedures” against corruption Six categories of adequate procedures Harsh penalties: unlimited fines, 10 years imprisonment 28 November 2011, APMM, Copenhagen Group Legal Anti-corruption PAGE 3

Anti-corruption Key elements of the Act – 3 bribery offences Section 1 – “bribing another person” A offers/promises/gives financial or other advantage to B In return for B doing/having done improper work related activity Section 2 – “being bribed” B solicits/agrees to receive/accepts an advantage in return for improper work activity Section 6 – bribing foreign public officials (FPO) A offers/promises/gives financial or other advantage to FPO Intending to influence FPO in his/her work NO ELEMENT OF IMPROPER WORK ACTIVITY NEEDED SIMPLY “INFLUENCING” FPO TO GENERATE SOME COMMERCIAL ADVANTAGE And intending to obtain/retain business or business-related advantages Local written law does not require FPO to be influenced/to act in the intended way E.g. – FPO officially responsible for receiving payments of fees for bid submissions 28 November 2011, APMM, Copenhagen Group Legal Anti-corruption PAGE 4

Anti-corruption Key elements of the Act, cont’d – common bribery threads Actions by third parties, e.g. Solicitation/promise/payment occurs through intermediaries, e.g. agent, supplier Boss promises that he/she will ensure his/her employee selects payer’s bid Improper activity = doing something improper or failing to do something proper Bribery offences can be committed by UK citizens, residents UK based/registered companies if senior management has been involved Senior managers involved also face prosecution – approval, participation required Foreign public officials Bribery of public officials, business partners are both illegal 28 November 2011, APMM, Copenhagen Group Legal Anti-corruption PAGE 5

Anti-corruption Money Laundering UK government will prosecute under UKBA and UK money laundering laws Proceeds of Crime Act (POCA) Money laundering includes Using/transferring/keeping proceeds of criminal conduct This could include Companies transferring from/to UK banks funds intended for bribes UK companies using the proceeds from corrupt business practices, e.g. profits from projects UK companies fail to report such proceeds if required by law Possibly non-UK companies transferring tainted funds to UK affiliates Easier to prove violations of money-laundering laws than UK Bribery Act Proceeds of criminal activity Used by or in possession of UK company or transferred to UK banks Similar money laundering laws in other countries re tainted funds? Could these be combined with prosecution under anti-corruption laws? 28 November 2011, APMM, Copenhagen Group Legal Anti-corruption PAGE 6

Anti-corruption Section 7 - Failure to prevent bribery Applies only to companies Applies to companies located anywhere globally if they carry on business in the UK Unclear what exactly comprises “carrying on business in the UK” Company is strictly liable if an associated person commits bribery offence 1 or 6 Associated person = e.g. employee, agent, supplier, contractor, JV partner, affiliate No need for senior management involvement – any associated person triggers sec. 7 Bribery can occur anywhere globally – no UK link required Complete defense if company has 6 “adequate procedures” countering bribery in place: PROPORTIONALITY – procedures reflecting the bribery risks company faces TOP LEVEL COMMITMENT – management, directors must promote anti-bribery program RISK ASSESSMENT – demonstrable assessment of relevant risks, e.g. markets, projects DUE DILIGENCE – business partners must be checked/approved before collaboration begins COMMUNICATION – accessible, clear policy & materials; training; confidential reporting of concerns MONITORING/REVIEW – internal/external checks on implementation, acting on violations UK government’s guidance on adequate procedures not detailed 28 November 2011, APMM, Copenhagen Group Legal Anti-corruption PAGE 7

Anti-corruption Group Legal Anti-corruption PAGE 8 Facilitation payments Small value payment to low level public official performing routine tasks to Perform a task that is an ordinary, required element of his/her job Perform that task more quickly than he/she intends to do Provide a service that the FP payer is entitled to receive UK government’s intended enforcement - mixed signals Illegal, no distinction between amounts of bribes - same as previous UK law ”Prosecution will take place unless” public interest is against it E.g. THREATS AGAINST PERSONS CAN JUSTIFY FP’s SFO director recognizes FP’s will not stop ”overnight” COMPANIES COMMITTED TO AND HAVING A PLAN FOR ELIMINATING FP’S SEEM TO BE SAFE Companies using FP’s as standard business practices risk prosecution Payment of FP’s can be added to violations involving bigger bribes – icing on the cake UK individuals, companies at special risk – APMM recognizes this 28 November 2011, APMM, Copenhagen

Anti-corruption Hospitality, entertainments, gifts These are illegal bribes of FPO’s if they Are intended to influence the FPO to provide a business-related advantage AND there is reasonable connection between what’s given and obtaining the advantage E.g. the more lavish the hospitality, the greater the likelihood of obtaining the advantage UK government underscores that ordinary business practices are not illegal Recognizes that entertainment helps promote business relations Uses tickets to Wimbledon and Grand Prix as examples of appropriate entertainment Even approves inviting a spouse! But warns against lavish entertainment, e.g. 1 day of meetings, 1 week at St. Andrews Key elements of appropriate hospitality, entertainment, gifts Clear relation to business activities, including promotion Intended for legitimate business purposes, e.g. promoting services, enhancing image Not excessive 28 November 2011, APMM, Copenhagen Group Legal Anti-corruption PAGE 9

Anti-corruption UK BA – US FCPA – key jurisdiction triggers UK Bribery Act – bribes to anyone Giving a bribe - UK citizens, residents, companies Bribe giver wants the receiver to act improperly And to obtain some business advantage from a public official Failure to prevent bribery anywhere - companies doing business in the UK Hoping to obtain some business advantage US FCPA – bribes to foreign public officials Bribe giver has corrupt intent and seeks some business advantage US citizens, residents, companies Any company engaged in certain US securities registration, e.g. stock exchange listing Any corrupt act in the US, e.g. US presence, calls/ s to the US, “knowing of” involvement of/participation with US parties Both – receiver is expected to do something or fail to do something 28 November 2011, APMM, Copenhagen Group Legal Anti-corruption PAGE 10

Anti-corruption Group Legal Anti-corruption PAGE 11 Group Anti-corruption program – does it comply? Policy, guidelines already prohibit bribery of any person Applying to direct and indirect bribes, e.g. using intermediaries Rules re hospitality, entertainment, gifts already comply Business related, moderate value Facilitation payments Policy:refuse, pay only if genuinely unavoidable, record payments as FP’s, escalate APMM is commited to and is developing a plan for eliminating FP’s Vessel masters increasingly refusing with success, e.g. No FP’s but business continues with slight or no delays or other obstacles BU’s identifying areas where FP’s are major problems – then identify solutions E.g. still threats of jail and other harassment, expensive delays (USD /day) APMM working with e.g. UN Global Compact, trade groups to eliminate FP’s Recognizing that elimination requires global coooperation between business and government Handytankers partners following APMM policy 28 November 2011, APMM, Copenhagen

Anti-corruption Group program, cont’d – adequate procedures 1-3 Proportionate procedures Already using practices used by other global companies These adequately address risks under UK, US, other key legislation Top level commitment Executive Board approved APMM’s policy – NSA announced it Increasing involvement by the Board of Directors Clear support for anti-corruption program by top management, e.g. APMT video Group CFO supervises Group compliance generally Risk assessment Systematic approach Undertaken based on markets, projects, countries, parties Levels of due diligence, contract clauses are risked based Identifying FP problem areas 28 November 2011, APMM, Copenhagen Group Legal Anti-corruption PAGE 12

Anti-corruption Group program, cont’d – adequate procedures 4-6 Due diligence Systematic, comprehensive approach Large suppliers, all JV’s, agents, government owned businesses are vetted Questions sent, responses reviewed and verified – standard procedures Using US-based TRACE organization to conduct due diligence Communication Policy, guidelines, Group compliance contract clauses, other materials cascaded globally Training: in person for key staff, comprehensive e-learning underway Whistle-blower system (since January 2011) supplements existing means of reporting Anonymous or by name; 40 languages; phone or online; available globally Monitoring, review All BU’s have provided implementation status reports Reported violations investigated under Group investigation guidelines Benchmarking against best practices; updating information; knowledge sharing 28 November 2011, APMM, Copenhagen Group Legal Anti-corruption PAGE 13

Anti-corruption What are the minimum legal compliance requirements? Forget about them! No magic formula for legal compliance Ask instead: Am I addressing my key risks? Yes – I comply. Have I mapped my key risks? Have I identified workable ways to mitigate risks? Do I know enough about my business partners to feel comfortable with them? Do my employees know what they may and may not do? Are they following the rules? Are my business partners following the rules? Are top management and the board of directors setting the right examples? Am I really doing what is necessary when I get bad news – making tough decisions? 28 November 2011, APMM, Copenhagen Group Legal Anti-corruption PAGE 14

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