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EDC ANTI-CORRUPTION/BRIBERY PROGRAM

EDC ANTI-CORRUPTION/BRIBERY PROGRAM. Presentation Symposium “Three Years after the OECD Anti-Bribery Convention How are we doing?” Mel Massey Assistant General Counsel Legal Services April 25, 2002. What is Export Development Canada (EDC). Crown corporation owned by Canada

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EDC ANTI-CORRUPTION/BRIBERY PROGRAM

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  1. EDC ANTI-CORRUPTION/BRIBERY PROGRAM Presentation Symposium “Three Years after the OECD Anti-Bribery Convention How are we doing?” Mel Massey Assistant General Counsel Legal Services April 25, 2002

  2. What is Export Development Canada (EDC) • Crown corporation owned by Canada • Mandate contained in Export Development Act • Supports Canadian exporters and investors in 200 markets, 130 are developing markets: 5,679 Canadian customers • Financially self-sufficient • collects interest on loans • insurance premiums • www.edc.ca

  3. Accountability • Operates at arm’s length from government according to commercial principles/except Canada Account • Accountable to Government and Parliament • Subject to Canadian law • An export credit agency, respects domestic and world standards and principles of social responsibility • Member of the OECD (Anti-Corruption Questionnaire/Action Statement, etc.)

  4. EDC Service • Financial Services include credit insurance, bonding and guarantees, political risk insurance, direct loans and guarantees • Participation in limited recourse financing arrangements, and other complex financing including equity • Broad scope of financial support - known for flexibility • Purpose: enhance Canada’s export strength

  5. Aggregate Business Volume for the 12 month period ended December 31, 2001 (in millions)

  6. Driving Forces of Anti-Corruption • Criminal Law (Corruption of Foreign Public Officials Act) • Policy (EDC’s Code of Business Ethics) (Corporate Governance) • International Agreement (OECD Action Statement) • Reputation • Public • Counterparties • Shareholder (Canada)

  7. EDC’s Code of Business Ethics Under no circumstances will EDC, directly or indirectly, knowingly offer or give a bribe. Further, EDC will not support a transaction that involves the offer or giving of a bribe, andwillexercisereasonablediligenceandcarenottosupportunknowinglysuchatransaction.

  8. Concept Behind EDC Anti-Corruption Program • Obtain Documentary (passive) Safeguards • Educate Employees (vigilance) • Procedure for dealing with “RED FLAGS”; indications of possible corruption in transactions involving EDC • Educate Customers

  9. Documentary Safeguards • Anti-Corruption Declaration/Representations • Ability to cancel finance/insurance support if convincing evidence of corruption “found” • No payment of Insurance Claims in circumstances of perceived corruption/call in loans

  10. Standard Short-Form Declaration a) Canadian Declarants: “With respect to [description of (Contracts) which are insured under the Policy][other business i.e. Contracts which will benefit from EDC financing support] we have not been and will not knowingly be party to any action which is prohibited by Canada’s Corruption of Foreign Public Officials Act.” b) Non-Canadian Declarants: “With respect to [description of (Contracts) which are insured under the Policy][other business i.e. Contracts which will benefit from EDC financing support] we have not been and will not knowingly be party to any action which is prohibited by the criminal laws of [Country of Declarant] with respect to the bribery of public officials.”

  11. EDC Anti-Corruption Program(Short Term Insurance) • Fall of 2001: developed (materials) for staff and policyholders • Oct. 2001: trained small number of underwriters - for small customer survey • Oct. 2001: sent proposed anti-corruption material (covering letter, draft endorsement, short FAQ and article) to a small number of policyholders, followed up with telephone call to get feedback on the information we proposed sending to all short-term policyholders • Nov. 2001: four training sessions for STFS staff • Jan. 2002: training sessions for BDM’s (video conference, then further info at sales conference) • Jan. 2002: letters introducing anti-corruption measures sent to all PH’s - roughly 3600 • Jan. 2002: commenced anti-corruption declaration wording on monthly declaration forms • Jan. 2002: A-C info on web site (FAQs etc.) • Jan. 2002: started including the anti-corruption endorsement re: policy termination and exclusion from liability in event of a claim in new offers and renewal policies. (Note: as we have one and two year policies, it could take up to two years for all policies to be endorsed)

  12. Example of Insurance Provision Exclusion A new Subsection with the marginal heading “Corruption” is to be inserted in the exclusion section of each policy as follows: “….EDC shall not be liable….if the Exporter has engaged in or is knowingly a party to any action, related to the Eligible Contract, that is a prohibited action under Canada’s Corruption of Foreign Public Officials Act.” Termination The termination section of each policy is to be revised to read as follows: “EDC shall have the rights to terminate this Policy: (a) on fifteen days notice to the Exporter if the Exporter defaults in the due performance or observance of its duties or obligations as set out in this Policy, unless such default is cured or remedied by the Exporter within such fifteen day notice period; and (b) immediately on notice to the Exporter if the Exporter engages in or is knowingly a party to any action, related to an Eligible Contract, that is a prohibited action under Canada’s Corruption of Foreign Public Officials Act.”

  13. Finance Documents Compliance with Laws and Agreements (REPRESENTATIONS) “The Borrower is in compliance with all applicable laws, regulations and requirements of Governmental Authorities applicable to it or its properties and all material agreements, charges and other instruments binding upon it or its property, other than (except in the case of laws relating to corruption and bribery) such noncompliance as would not reasonably be expected to have a Material Adverse Effect.” Autorizations; Compliance with Laws (COVENANTS) “The Borrower will obtain and maintain in force (or where appropriate, promptly renew) all Authorizations necessary for carrying out [the Project and] the Borrower’s business and operations generally including, without limitation, those Authorizations required under this Agreement [, the other Transaction Documents and the Project Documents], and at all times comply with all applicable laws and regulations relating to the Borrower[, and] its business [and the Project] other than (except in the case of laws relating to corruption and bribery) such noncompliance as would not reasonably be expected to have a Material Adverse Effect.”

  14. Specific Process • Office of General Counsel receives information re: Red Flags • Determines measures to be taken on case by case basis • Techniques may include investigation, long form declarations, documentation, outside support, turn-down, etc. • Standard of “proof”

  15. Accomplishments (Programs) • Rolled out Short Term Anti-Corruption Program • Design Medium Term: Finance: introduce this summer • Working on Anti-Corruption Program for Equity • Participation in Recent Business Integrity Workshops (Ottawa, Montreal, Toronto (May 22), Calgary, Vancouver)

  16. Accomplishments (Process) • EDC alert to problem of corruption and has taken concrete anti-corruption measures • There is an on-going commitment to meet or exceed OECD ECA anti-corruption measures, going forward • EDC engaged in public anti-corruption process (see website: FAQ)

  17. Looking Forward • Finalize programs • Examine ways of capturing data (countries/companies) • Anti-Corruption booklet • Continue to speak out publicly against corruption and educate customers • Follow legal developments/Attend conferences • Acquire expertise (best practices as appropriate) for dealing with perceived corruption

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