Anti-Bribery and Anti-Corruption Training

1. Anti-Bribery and Anti-Corruption Training Karen C. Bruntrager Director of Regulatory Compliance

2. International Anti-Bribery and Anti-Corruption Measures • OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (adopted in 1997, amended in 2009) • 38 Signatories including: • Australia • Argentina • Brazil • Canada • Japan • Mexico • Spain • Turkey • United States

3. International Anti-Bribery and Anti-Corruption Measures • OECD (continued) • Signatories establish that it is a criminal offence under the law for any person to offer, promise or give money to a foreign public official in order to gain business or other improper advantages • It is a criminal offense whether the bribery is direct or done through third parties • It is a criminal offense for anyone to incite, aid, abet or authorize bribery of a foreign public official

4. International Anti-Bribery and Anti-Corruption Measures • UN Convention Against Corruption (2003) • Requires signatories to criminalize a wide range of corrupt acts including bribery, influence peddling and money laundering • Strengthened international anti-corruption efforts by requiring signatories to provide mutual assistance to extradite and prosecute offenders • 140 signatories

5. International Anti-Bribery and Anti-Corruption Measures • G-8 Anti-CorruptionMeasures • In 2003 the G-8 released an action plan to fight corruption, and conditioned budgetary support and trade agreements on tackling corruption, encouraging transparency, and passing anti-corruption laws • G-20 Anti-Corruption Measures • In 2009 the G-20 called for stronger enforcement of anti-corruption measures, ratification of the UN Convention Against Corruption and adoption of a mechanism to measure compliance with the UN Convention

6. U.S. Foreign Corrupt Practices Act • In 1977 the U.S. Congress passed the Foreign Corrupt Practices Act (FCPA) • The FCPA prohibits payments to foreign officials or foreign governments for the purpose of obtaining or keeping business • The FCPA applies to U.S. firms and individuals doing business anywhere in the world

7. 5 Elements of an FCPA Violation • Who is Liable • Corrupt Purpose • Payment • Recipient • Business Nexus

8. Who is Liable • Any firm, officer, trustee, employee or agent who violates, orders, authorizes or assists someone else to violate the FCPA • USP, employees, and agentsmay be liable even if the entire transaction takes place overseas

9. Corrupt Purpose • Intent to induce the recipient to use his or her official position or influence for an act, omission or decision that affects an outcome or secures an advantage • “Intent” includes conscious disregard or deliberate ignorance

10. Payment • Authorizing, offering or promising to pay money or anything of value either directly or through a third party • Third parties include agents and distributors or deliberate ignorance

11. Recipient • Foreign official • Foreign political party or party official • Candidate • Member of a legislature • Official in a state-owned or state-funded organization • Individual with dual capacity in a government agency and a private business • Any charity whose founder is a government official

12. Business Nexus • Payment is made to: • Obtain or keep business • Direct business • Obtain other government benefits that increase profits or provide a competitive advantage • Example: payment made to obtain or renew a contract

13. Sanctions for Violations of the FCPA • Corporations may be subject to: • Monetary penalties of up to $2,000,000 • Debarment from doing business with the US government • Denial of export licenses • Other bars and exclusions • Individuals may be subject to: • Monetary penalties of up to $100,000 • Jail for up to five years

14. USP Policy • USP's officers, trustees, volunteers, employees and representatives are required to comply with the U.S. anti-bribery and anti-corruption laws and comparable laws in other countries. • USP's officers, trustees, volunteers, employees and representatives may not directly or indirectly engage in bribery, kickbacks, payoffs, or other corrupt business practices, including offering or giving government personnel anything of value for the purposes of influencing them to misuse their official capacity or to gain an improper advantage.

15. USP Policy • USP officers, trustees, volunteers, employees and representatives involved in international operations must be familiar with these laws and adhere to all USP procedures relating to these laws. • Any suspicion that a payment is being used for such improper purposes should be immediately reported to USP leadership, USP's General Counsel or in accordance with USP's Whistleblower and Non-Retaliation Policy.

16. Guidelines • USP anti-bribery policy • Business gifts and entertainment • Travel and living expenses • Selection and appointment of agents, distributors, consultants and third parties, including: • Due Diligence • Contract provisions

17. No Bribes • Bribery is illegal in all countries • USP and its employees do not pay bribes • USP does not authorize any agents, contractors or third parties to pay bribes

18. Business Entertainment • Business entertainment is permitted provided: • It is ordinary and reasonable • It is in accord with local custom and practice • It avoids the appearance of impropriety • It is permissible under the agency’s or customer’s guidelines

19. Giving Business Gifts • Gifts to government officials or customers are permitted provided: • No cash is given • The gift is a courtesy, token of regard, or in exchange for hospitality • The gift is permissible under the local laws of the country and rules of the agency or organization • It is for business rather than personal use • The expense is properly recorded

20. Appointment of Agents and Distributors • Prior to contracting with, or renewing contracts for, agents or distributors, the agent or distributor must complete the USP Due Diligence Questionnaire • Management and the Legal Department will use the questionnaire to assess the appointment of the agent or distributor

21. Due Diligence Questionnaire • Corporate legal status • Owners, subsidiaries and affiliates • Government affiliations • Principal services or products • Annual revenue or sales • Financial references • Business references • History of government enforcement actions • Compliance certification

22. Revised Contract Language • Beginning in June 2009, USP incorporated new FCPA provisions and certifications in all distributor agreements

23. Revised Contract Language • Representations and warranties that bribery will not occur • Remedies for breach of the representations and warranties including: • Withholding further goods and services • Limitations of liability • Audit rights • right of termination

25. Export Control and Economic Sanctions Training Ken Alexander Assistant General Counsel

26. Overview of U.S. Export Control Laws • U.S. export control laws follow goods and technology after they leave the U.S. • U.S. law defines “exports” very broadly to mean: • Shipment of products or services to a customer or end-user outside of the U.S. • Shipment of products or services to a foreign customer or end user in the U.S. • Provision of technical information (documents, oral presentations, discussions, etc.) outside the U.S. or to non-U.S. citizens

27. Overview of U.S. Export Control Laws • Export control laws and regulations restrict where items may be shipped and/or require licenses based on: • Technical characteristics of the item • The country where the item will be imported • The person to whom the item will be shipped • The nature of the end use

28. Technical Characteristics • Certain USP Reference Standards are restricted based on their classification as a chemical weapon or dual-use item • Reference Standards listed on the Commerce Control List (CCL) • Sodium fluoride • Trolamine • Reference Standards listed on the United States Munitions List (USML): • Chlorambucil • Cyclophosphamide • Mechlorethamine HCL • Melphalan HCL • Uracil Mustard

29. Sanctioned Countries • USP may not export if it knows, or has reason to know, that the transaction is with a person or entity in a country embargoed by the U.S., including: • Cuba • Iran • North Korea • Sudan (northern territories, including Khartoum) • Syria • Libya*

30. Prohibited Activities • Prohibited activities include: • Exporting goods to, or importing goods from, an embargoed country • Engaging in financial transactions with the government of an embargoed country • Transferring money or property to a person or entity in, or a foreign national of, an embargoed country • Engaging in travel-related transactions in an embargoed country • “Informational materials” such as USP publications are an exception and may generally be shipped to sanctioned countries

31. Persons Who Will Receive Items • Items may not be shipped to certain end users designated by the U.S. on: • Denied Parties List • EAR Entity List • Persons or entities who divert exports to prohibited persons or to prohibited destinations

32. Nature of End Use • Items may not be shipped if USP knows, or has reason to know, the item will support a prohibited end use, including: • Nuclear proliferation • Missile technology proliferation • Chemical or biological weapons proliferation

33. Knowledge • USP may be held liable for actions of its distributors that violate U.S. sanctions and export control laws • USP has a legal obligation to investigate possible sanctions or export violations • This may include an audit of records • Even if local law does not sanction a country, U.S. law applies to the distributor’s sales of USP reference standardsand publications

34. USP Policy • As an organization that provides products and services globally, USP must abide by the laws of all countries in which it operates, including those that govern its international activities. • The U.S. and many governments have laws and regulations that restrict trade and business transactions with other countries, including restrictions on exports and imports of certain goods, technology and services.

35. USP Policy • Officers, trustees, volunteers, employees and representatives involved in such transactions shall adhere to all applicable laws and USP procedures to ensure compliance in this area.

36. Licenses • Items or technical data subject to export control may be exported with a proper license from the U.S. Department of Commerce or U.S. Department of State—difficult • Items may be exported to sanctioned countries with a proper license from the U.S. Treasury, Office of Foreign Asset Control

37. Sanctions for Violations of Export Control Laws • Corporations and individuals are subject to criminal penalties of: • $1 million per violation • Jail • Denial of future export privileges • Corporations and individuals are subject to administrative penalties of: • $50,000 per violation • Denial of future export privileges

38. Contract Provisions • USP distributor contracts contain the following terms: • Distributor will comply with national and international regulations designed to control items considered to be dual use, chemicals or weapons • Distributor will strictly comply with U.S. sanctions and export control laws and regulations