an empea professional development webcast · 3/29/2012 · investor/shareholder perspectives ngo...

An EMPEA Professional Development Webcast

Anti‐Corruption Policies: What Every EM PE P titi Sh ld KPractitioner Should Know

An EMPEA Professional Development Webcast with 3i, Norton Rose, Shearman & Sterling, SJ Berwin, and White & Case

Anti-Corruption Policies: What Every EM PE Practitioner Should Know An EMPEA Professional Development Webcast – 29 March 2012

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EMPEA Upcoming Events Save the Dates!• 11 April 2012 – Professional Development Webcast: LP Outlook for Emerging Markets ‐Preview of EMPEA’s 2012 LP Survey Results• Exclusive preview of the findings from EMPEA’s soon‐to‐be released 8th annual global LP Survey and the

results of recent study of Asian LP attitudes

• EMPEA Members and qualified institutional investors receive complimentary event registration

• 14‐16 May 2012 – IFC’s 14th Annual Global Private Equity Conference in association with EMPEA ‐Washington, D.C. • Qualified institutional investors receive complimentary registrationQ p y g

• May 14 2nd Annual Institutional Investors‐Only Summit

• May 14 EMPEA Members‐Only Reception

• May 15–16 Main Conference Program

• May 17 EMPEA’s Inaugural Fundraising Masterclass

• 23‐24 October 2012 – Capital Impact 2012 & 4th Annual Private Equity in Africa Leadership Summit – London


Summit London • Qualified institutional investors receive complimentary registration

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Agenda

I. Panelist Introductions

II. Topic Overview: Key Bribery Issues in EM PE

III. Practical Applications: Hypothetical Scenariospp yp

IV. Q&A

V A Additi l R f I l ti A tiV. Annex: Additional Resources for Implementing an Anti‐Corruption Compliance Program


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Panelist Introductions

SHAISTAH AKHTARPartner, SJ Berwin

BILL CURRIERPartner, White & Case

KEVIN DUNNGeneral Counsel & Company Secretary, 3i

SAM EASTWOODPartner, Norton Rose

LAURA FRIEDRICH Partner Shearman & Sterling

a t e , o to ose


Partner, Shearman & Sterling

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Key Bribery and Corruption Issues in Private Equity

SFO: “private equity has a responsibility to ensure that companies in which they have a shareholding operate to the right standards”which they have a shareholding operate to the right standards

Fund Managers – exposure re third parties, e.g. placement agents

Portfolio companies present greatest risk of improper payments

Successor Liability

Confiscation of proceeds of crime

Investor/shareholder perspectives

NGO activism

Fund Managers actively involved in management of portfolio companies could face criminal exposure.


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Overview of Relevant Anti‐Corruption Statutes

UKBA FCPA

Facilitation payments No exception De minimis payments accepted in order to p y p p y pexpedite or secure performance of ‘routine governmental action’

Promotional expenses No specific exception Defence for reasonable bona fide business expenses

Corporate liability for failing to prevent bribery

Yes, subject to the ‘adequate procedures’ defence

No, though a corporate can be held vicariously liable for the acts of employees or agents

Third party liability Yes Yes

Extraterritorial jurisdiction Yes YesExtraterritorial jurisdiction Yes Yes

Liability for failing to keep accurate books and records

No Yes

Criminal penalties Corporates: unlimited fineIndividual: Up to 10 years

Corporates: fine of up to $2 million per violationIndividuals: fine of up to $250,000 per violationIndividual: Up to 10 years

imprisonment and unlimited fineIndividuals: fine of up to $250,000 per violation plus up to 5 years’ imprisonmentFurther sanctions available for breaches of books and records provisions


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Practical Applications: Hypothetical Scenarios

Scenario 1 Fundraising

Scenario 2 Pre-bidding

Scenario 3 Due diligence

Scenario 4 Facilitation payments

Scenario 5 Instructing an Agent

Scenario 6 Post-Closing


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Scenario 1: Fundraising, Hospitality

Claire:

E l f P• Employee of Penamore

• Penamore is in the process of raising their newest fund.

• Claire is organizing an onsite visit from a sovereign wealth fundClaire is organizing an onsite visit from a sovereign wealth fund delegation conducting due diligence on the fund.

Penamore’s local agent has suggested that Claire organize an outing to an expensive golf club.

Golf is a very expensive activity in this location.

The local agent suggests that because of cost, golf days for business are extremely rare.


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are extremely rare.

Scenario 1: Fundraising, HospitalityWhat should Claire do?

A Go on the golf day ‐ the extravagant cost is negligible in comparison to the possible reward.

Incorrect. It's Penamore policy that staff must not offer extravagant or lavish hospitality ‐ this is always evaluated in terms of the local market, not in relation to the magnitude of the business under negotiation. Such hospitality would be out of line with local market practice.

B Suggest instead that they meet for dinner at a local restaurant suitable for business entertainment.

Correct.

It's OK to offer hospitality, as long as it is not lavish in the context of the local market ‐hospitality should be 'unremarkable'.

C Make the booking to save embarrassment. The cost is not much more than the cost of a weekend that some of her colleagues are occasionally invited to by actuarial firms in her own country.

Incorrect. It's Penamore policy that staff must never offer hospitality that is lavish in the context of the local market as would be the case here


market ‐ as would be the case here.

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Scenario 1: Hospitality, General Points

The overriding principle of Penamore’s gifts and hospitality rules is that you (and your connected persons) must never offer or receivethat you (and your connected persons) must never offer or receive gifts or hospitality to or from Penamore business contacts if it may:

Improperly influence a business decision; Improperly influence a business decision;

Impair independence or judgment;

Create a sense of obligation; org ;

Be misconstrued or misinterpreted by others as a bribe.


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Scenario 1: Hospitality, General Points

OK OK

Which of these items would be prohibited by Penamore's Gifts and Hospitality Rules?

Cash Mug with company logoConference reception

OK OK

Shopping vouchers Tickets to a rugby matchTickets to the theatre

MAYBE? MAYBE?


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Scenario 2: Pre‐Bidding

Roberto:

f• Employee of Penamore

• In initial stages of preparing bid for new private equity investment in mining company, Metallicon (Project Python)g p y, ( j y )

Recent bribery scandal at competitor companyy p p y

Financial adviser to Metallicon calls Roberto saying:

“I’m behind your bid. If it’s helpful, I’ll give you their bid evaluation criteria. There’ll be a small admin fee for my time, but we can discuss this later.”


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Scenario 2: Pre‐BiddingWhat should Roberto say?

A “As Penamore is already the preferred bidder, it won't be an unfair advantage and I can authorise payment.”

Incorrect. Regardless of whether we really are the preferred bidder, this request for payment in exchange for information to maintain our position is a bribe. Accepting this offer would be illegal and would be contrary to our core values and Penamore policy.

B “It's company policy not to accept offers which could give us an unfair business advantage.”

Correct. Penamore strives to maintain it's competitive advantage ‐ but only through fair and legal means. This offer for information is a bribe that would put us at an unfair advantage over our competitors. It is illegal and goes against our policy.

C “Yes, but first I'll need confirmation that this isn't being offered to our competitors.“

Incorrect. This offer for information in exchange for payment is a bribe and is illegal. It is against Penamore


policy to accept such an offer.

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Scenario 2: Pre‐Bidding, Anti‐Bribery Policy

Roberto declines the consultant's offer (Answer B).

R b t h k th P ti b ib li Roberto checks the Penamore anti‐bribery policy:

“Never offer, give or receive (directly or indirectly) any payment, benefit or gift intended to be, or that may be construed as a bribe.”

He makes a record of the call and reports it to Group Compliance.


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Scenario 3: Due Diligence, Corruption Risk

High (Red

Risk Tiering Protocol

High (Red Flags)

Key risk criteria :

1. Geographic risk

Medium (Higher Risk Parties)

2. Sectoral risk

3. Transactional risk)

Low (Most Third Parties)Low (Most Third Parties)


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Metallicon is in a country that Roberto thinks may be high risk.

R b t f t T I t ti l’ C ti P ti

What is the risk of corruption?

Roberto refers to Transparency International’s Corruption Perception Index (CPI) to determine the perceived level of public sector corruption for the location.

• The index ranks countries from 0 (highly corrupt) to 10 (very clean).

• Roberto identifies that the country has a CPI rating of 2.8 – a very highRoberto identifies that the country has a CPI rating of 2.8 a very high perceived level of corruption.

0 Metallicon = 2.8 10

Highly corrupt Very clean


Highly corrupt Very clean

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Source: Transparency International, 2011 Corruption Perception Index, cited by The Guardian, using Google Fusion tables.

Scenario 3: Due Diligence, Responsible Investment

1. Roberto carries out an initial assessment of Metallicon to identify and rate bribery risks (as well as any other business

Responsible Investor Policy

and rate bribery risks (as well as any other business, environmental and governance (ESG) matters as required by Penamore's responsible investor policy), which is submitted to the Investment CommitteeInvestment Committee.

2. Investment Committee discusses any risks to be addressed as a condition of proceeding.

3. Due diligence carried out from publicly available sources and business references.

4 Forensic accountants investigateMetallicon’s books and4. Forensic accountants investigateMetallicon s books and records for any unexplained or suspicious transactions.


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Given Metallicon’s high bribery risk profile, whether DD reveals any bribery incidents or not, Penamore should consider the following inbribery incidents or not, Penamore should consider the following in investigating any issues that do arise:

A h hi i d lf i d i i i i k? Are they historic and self‐contained, or a continuing systemic risk?

Should a report be made to the SFO/DOJ?

Is there a money‐laundering issue and should a report be made?Is there a money laundering issue and should a report be made?

Should Penamore continue with the transaction or walk away?

[Bear in mind potential senior officer liability if Penamore principals are to sit on Metallicon Board.]


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If Penamore continues with the investment in Metallicon:

Suitable warranties and indemnities must be included in acquisitionSuitable warranties and indemnities must be included in acquisition documents, including covenants containing:

C i i d ff i i b ib li Commitment to introduce effective anti‐bribery policy;

Requirement to carry out DD on Metallicon’s associates and include contractual protections where appropriate; and

Reporting and monitoring procedures to enable Penamore to monitor Metallicon’s compliance and require remedial action to be taken where necessarytaken where necessary.


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Scenario 4: Facilitation PaymentsOverseas travel

Roberto travels to the high risk location to visitMetallicon’s HQ for DD purposes.

He takes required ID and documentation as advised by the Foreign OfficeHe takes required ID and documentation as advised by the Foreign Office.

Roberto is stopped at passport control and asked to pay a cash fee (equivalent to£12) in order to enter.

Roberto explains that he will need a receipt to claim the expense.

He is told receipts are not issued for such payments.

Should Roberto pay the fee?Should Roberto pay the fee?

Correct Answer: No, this is a demand for a facilitation payment.

Roberto knows that he has all the necessary ID and paperwork to legitimately enter theRoberto knows that he has all the necessary ID and paperwork to legitimately enter the country, so he's correct to hear the alarm bells ringing at this unexpected demand for payment. Even through the amount being asked for is small, he should not pay the fee ‐which is in fact a bribe. Roberto refuses the request for payment. When he asks to speak to an airport manager he is allowed through the passport check without further delay


to an airport manager he is allowed through the passport check without further delay.

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Scenario 4: Facilitation Payments

Which of these are facilitation payments?

A Request by government officials for the payment of an unofficial surcharge on work permits to be issued to new employees at a Penamore subsidiary company ‐ Yesy p y

B Fee charged by a registry for filing a certified legal document ‐ No

C Offer by a customs official to arrange for the quick release of ITC Offer by a customs official to arrange for the quick release of IT equipment belonging to a Penamore portfolio company which is held up at customs in exchange for a cash payment expediter’s fee Yes‐ Yes

D Charge of a set published amount for a consulate to fast track the visa issuing process ‐ No


sa ssu g p ocess o

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Scenario 4: Facilitation Payments Roberto’s colleague Claire has also travelled overseas to meet locallawyers and tax advisers and discuss the structuring of a new debt fundvehicle.

Claire also visits a high risk jurisdiction.

Her car is stopped by local police officers at a temporary road block.

The police ask to see her ID documents, permits and vehicle paperwork,and for a payment.

Claire recognises this as a facilitation payment demand However the

Is it OK for Claire to make the payment?

Claire recognises this as a facilitation payment demand. However, theofficers are armed and their manner is threatening.

Correct Answer: Yes

Penamore will support staff who make a facilitation payment in circumstances where their liberty and safety could be at risk. In this situation, Claire feels that there is a threat to her personal safety she makes the payment and is allowed on her way In line with policy as soon as she is


safety; she makes the payment and is allowed on her way. In line with policy, as soon as she is able to, she records the details and reports the event to her manager and Group Compliance.

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Scenario 5: Instructing an Agent

Claire then meets with a few prospective local placement agentswho can find investors for the new debt fund.

Penamore policy is to only engage third parties if they are known toact with company consistent standards.

Certain third parties present a potentially higher bribery risk – these Certain third parties present a potentially higher bribery risk – theseare subject to Penamore’s integrity DD procedure.

Check for no conflict of interest;

Clear rationale for engagement;

Sign a written contract containing anti‐bribery provisions; and

Claire considers the requirements

Clear rationale for engagement;

Set out terms of engagement;

Carry out DD on reputation andexperience of the third party;

y p ;

Ensure all money is properly accounted.


experience of the third party;

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Scenario 5: Instructing an Agent

Be alert where a third party: S h f i d d di l b i

Claire reminds herself of some of the list of “red flags” found in the integrityDD procedure.

Suggests that an amount of money is needed to expedite normal business processes;

Requests payment in cash or through unusual means such as an off‐shore account;

Provides services in a sector or country which has a reputation for corruption;

Requests an unusual up‐front payment of performance‐related bonus or commission;

Is being considered due to his connections with, or due to recommendations from, a public official.

Would Claire need to remain alert to these red flag indicators if the country was low risk on TI’s CPI? YesCPI? ‐ Yes

Even if the services are to be provided in a low risk country, Claire must consider all the red flag indicators in the Integrity Due Diligence procedure to see how many are relevant to her proposed engagement


engagement

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Scenario 5: Instructing an Agent The local tax adviser has recommended a small local boutique firm, Taxim.

The firm is renowned for its connections with Mr. Parry, the head of alternative Investmentsfor the State Investment Fund – a fund targeted by Penamore.

Which of the following statements are true?

A Claire can’t use the firm as there is a conflict of interest

B Claire can use the firm but must be alert as it has connections with a public officialp

C Claire must not use a local placement agent because the country has a reputation for corruption

Only the second statement (B) is true; Claire can consider the placement agent, but should be alert because he is being recommended due to his connections with a public official. In this case,alert because he is being recommended due to his connections with a public official. In this case, there is no conflict of interest. Even in countries with a reputation for corruption, it is acceptable ‐ and often essential ‐ to use local agents.

However, the fact that:• the agent is being recommended due to his contact with a public official; and • the country has a reputation for corruption;

are red flag indicators that should put Claire on alert. The fact that two red flags are triggered th t Cl i ill h t l t ifi d l l f d dili th t


means that Claire will have to complete a specified level of due diligence on the agent.

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Scenario 6: Post Closing, Compliance Roberto and his team are in a celebratory mood following thesuccessful bribery‐free win of Project Python when a colleague alertshim to a comment in the board papers for Philet – a portfoliohim to a comment in the board papers for Philet a portfoliocompany with HQ in France but with international operations:

• Philet manufactures and markets disposable systems for hazardouschemicals

Board papers show the awareness of management of suspiciouspayments made by Philet’s Chinese subsidiary in connection with

chemicals.

the award of some key sales contracts.

• Initial reports suggest the payment to scientists employed atgovernment‐owned laboratories in China of significant travelg gexpenses for exotic holiday destinations.

Roberto is reminded that his anti‐bribery responsibilities i f i h b l d


continue, even after an investment has been completed.

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Scenario 6: Post Closing, ComplianceWhat should Roberto do?

A He should check at the board meeting that Philet is getting advice from its lawyersits lawyers.

Incorrect. B Roberto must contact Penamore Legal or Group Compliance immediately

i h i f i Philwithout informing Philet.

CorrectThe unusual payments flagged up in the report could be suspicious and may indicate that bribery is taking place The first and third options are ultimately sensible actions but Roberto should firsttaking place. The first and third options are ultimately sensible actions but Roberto should first contact Penamore Legal or Group Compliance who will help him consider his, and Penamore's, responsibilities and what steps to take next.

C H h ld k t t t f th lt f th i t lC He should make a note to request a copy of the results of the internal investigation in due course.

Incorrect.


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Scenario 6: Post Closing, Compliance

Roberto reports his suspicions to Penamore Legal (Answer B) Penamoremust take appropriate steps to deal with the situation…

• The board should give full consideration to this issueThe board should give full consideration to this issue.• Penamore should give Philet proper legal advice. • Carry out a full investigation to understand the evidence.• Agree an action plan, the management of internal and external g p , g

communications, board oversight of the investigation and approval of any associated costs.

Roberto follows the advice of Penamore Legal and takes the gnecessary action.• The impact on the value of Penamore’s investment is unclear.

Roberto is satisfied that Philet is dealing with the incident properly and that the board is fully supportive of implementing any necessary remedial actions identified in the investigation.


g

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Elements of an Anti‐Corruption Compliance Program

Internal Comms.Trainingg

Due Response

Standards Policies

Procedures

Diligence protocols

Response Mechanisms

Procedures

MonitoringMonitoring Audit

Internal Reporting

Risk Tiering


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Private Equity Best Practice

Compliance with anti‐corruption legislation (such as the FCPA and the Bribery Act 2010) is critical.C id th b d t t it i l h f ti ti Consider the broad extra‐territorial reach of anti‐corruption legislation.

Ensure:Ensure:

Formalised risk assessment process.

F i t b ib ll b ib f f i bli ffi i l Focus on private bribery as well as bribery of foreign public officials.

No exemption for facilitation payments.

Consideration of impact of passive bribery.p p y

Consideration of exposure to risks associated with third parties.


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Prudent fund managers should:

Conduct pre‐investment DD and enhanced DD if in high risk jurisdiction.

Include anti‐corruption warranties and indemnities.

Ensure portfolio company has appropriate anti‐corruption compliance programme.compliance programme.

Actively monitor: • the operations of portfolio companies; and

• the developing legislative landscape.

Consider appropriate actions if bribery is suspected or uncovered.


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Prudent investors should:

U d t k h i ht d DD F d M ’ ti d Undertake heightened DD on Fund Managers’ practices and procedures prior to committing to a fund.

Build contractual protections into shareholders’ or limited hpartnership agreements.

Monitor compliance to ensure inappropriate behaviour is not taking place at the Fund Manager or Portfolio Company level.


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EMPEA Webcast SeriesLaunched in 2008, EMPEA has hosted 25 webcasts to date drawing more than 2,700 participants from 75 countries and more than 500 unique firms.

Webcast Topics have included:

• Managing Risk in EM PE TransactionsManaging Risk in EM PE Transactions

• Changing Landscape of EM PE Fund Formation

• The MENA Region: An Overview and Update

• The Impact of the AIFM Directive on PE and VC in Emerging Markets

• Private Equity in North Africa: What Every LP Must KnowPrivate Equity in North Africa: What Every LP Must Know

• The Impact of the Dodd‐Frank Act on Investment Adviser Regulation in the U.S.

• Private Equity Investing in the Middle East, North Africa and South Asia

• Evolving Key Terms & Conditions in Today’s EM PE

• Managing Environmental and Social Risks and OpportunitiesManaging Environmental and Social Risks and Opportunities

• How Will the ILPA Principles Shape GP‐LP Relationships in Emerging Markets?

• Catching the Rising Tide of Chinese RMB Funds

• Strategies to Address and Prevent LP Defaults

• Broken BRICs (a four‐part series)Broken BRICs (a four part series)

• Role of the Secondaries Industry in Emerging Markets Private Equity

• Corporate Governance in Emerging Markets Private Equity

• Marketing Your Fund to LPs in Today’s Market Conditions

• Risk Management in Emerging Markets Private Equity


• Risk Management in Emerging Markets Private Equity

• Recruiting and Talent Management in Emerging Markets Private Equity

EMPEA Contact InformationFor follow‐up questions on this or other webcasts, please contact Shannon Stroud at [email protected] or +1.202.333.8171.

Please also visit www.empea.net for further information.


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Annex: Political Contributions Following satisfactory DD checks on Taxim, Claire meets the representative from

the placement agent

Th t ti ti th t M P i i f l ti it d k– The representative mentions that Mr. Parry is running for re‐election as city mayor and asksif Claire would like to contribute

Should she say:

A “W ld ’ ll k li i l d i b ld d hi ff”A “We wouldn’t normally make political donations but we could do this as a one off”

Incorrect. Making a payment of this kind could be seen as a bribe and contravenes Penamore's anti‐bribery policy.y p y

B “I cannot authorise a donation as this is against Penamore company policy”

Correct Staff must not use either their own or Penamore funds toCorrect. Staff must not use either their own or Penamore funds to incentivise any public or government official who can influence any decision that would benefit Penamore or our portfolio businesses (such as investing in Penamore funds or transacting with Penamore or our portfolio


businesses).

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Annex: Political Contributions Claire declines the offer in accordance with Penamore policy, but the

representative continues…

“…not to worry, if it’s contrary to Penamore’s policy, I’ll invoice Penamore a higher amountfor my fee and I will make the payment”

Would this make the payment acceptable?

No. It is not acceptable to allow any third ( l d ) ffparty (including agents) to offer or pay

bribes on Penamore's behalf. This includes political contributions as well as facilitation payments. p y


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Annex: Political Contributions Claire declines this offer in accordance with Penamore’s anti‐bribery policy which

states that:

1) Y t t1) You must not:

Use Penamore funds to make political contributions … or

Use Penamore funds or your own funds to make political d ti i th U it d St t d t US t i ti hi hdonations in the United States, due to US restrictions which apply to Penamore’s fund management activities

2) You must:

Ensure that all interactions with government and public officials are conducted in a manner that adheres to the anti‐bribery policy and Penamore’s core values and complies with all relevant laws


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Annex: Charitable Donations During their visit, Metallicon’s directors put forward a request for

Penamore to make a charitable donation as part of Penamore's bid.

What should Claire say?What should Claire say?

A "Penamore supports charitable contributions ‐ there shouldn’t be a problem with us making a donation. First we will need to carry out DD checks and get approval from the company Charities Committee ”company Charities Committee.

Incorrect.

B “Penamore likes to support the community and contributes to many charities. However, it's company policy that any donations we make do not influence the bid processit s company policy that any donations we make do not influence the bid process, so in this case, we must decline.“

Correct. In this situation, the charitable contribution is being assessed as part of the bid process and will have an influence on Metallicon‘s decision. p

C "Penamore shares your ethos of community support and contributes to many charities ‐what would be an appropriate amount?“

Incorrect.


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Annex: Charitable DonationsRules on charitable contributions

Penamore’s rules for charitable contributions are set out in the anti‐bribery policy:

“Do not make a charitable contribution as an incentive or reward for obtaining a businessadvantage.

Turn down any request for a charitable contribution where someone has implied it willTurn down any request for a charitable contribution where someone has implied it willbenefit Penamore or has issued a threat in connection with that request.

Ensure the charitable body is legitimate, that there is no conflict of interest for Penamoreand the funds will not be applied for another purpose ”and the funds will not be applied for another purpose.

Penamore do not make a charitable donation.


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Annex: Gifts The Metallicon directors are impressed with Penamore’s bid and the investment proceeds successfully.

Eleanor Price, financial adviser to Metallicon, sends Roberto a gift of a pocket watch by way of celebration. The same gift has been sent to all board members of Metallicon and key advisers to the transaction. Roberto estimates the gift’s value to be about 400 Euros.

A Seek approval from his line manager first before accepting or declining the gift.

Correct. For gifts with a value of £250 or above you must seek approval from your line manager before

What should Robert do?

Correct. For gifts with a value of £250 or above, you must seek approval from your line manager before accepting. Since the deal has now concluded, there is no longer any prohibition on Robert accepting the gift. In some jurisdictions or in other circumstances, a gift of this value may be inappropriate. The additional step of line manager approval is to ensure that each case is considered on its merits.

B Politely return the gift on the grounds that at 400 euros it is too extravagantB Politely return the gift on the grounds that at 400 euros it is too extravagant.

Incorrect. Although the gift's value is high, Robert may not have to return it. However, since it is Penamore's policy not to accept gifts that are extravagant, Robert will need to take further steps and consider all the relevant circumstances before deciding what to do with the gift.

C Accept the gift and call Eleanor Price to say thank you.

Incorrect. The gift's value is too large to accept without first taking further steps.


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Annex: GiftsGifts register

Roberto contacts his Line Manager and together they refer to the obligations set out

R b t ’ id it i t f R b t t t th ift b

in Penamore’s gifts and hospitality rules.

– The gift is not on the prohibited list.

Roberto’s manager considers it appropriate for Roberto to accept the gift because:

– The expense is not directed solely at Roberto – key persons in the transaction received the same gift;

– The financial adviser is based in the UK – culturally the giving of a gift to celebrate a successful deal is not remarkable;

– The value, although high, is not out of context in the UK market or Penamore’s ongoing relationship with this financial adviser; and

– The value of the pocket watch is not significant to Roberto personally – he could easily afford to buy such an item himself.


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Annex: Hospitality A week later, Claire is back in her office…

• Claire is making arrangements for Metallicon’s directors to visit her to discuss Project Pythonto visit her to discuss Project Python.

• Due to exceptional circumstances, the costs of the director’s hotels and flights are being met by PPenamore.

• This has been approved by Claire’s manager.

Claire receives a call from the PA to one of the directors ofMetallicon: Claire receives a call from the PA to one of the directors of Metallicon:

"Hi Claire, Mr. Phillips’ wife will be accompanying the group and would like to stay in the same hotel. Could you please book her a seat on the same flights and change the hotel reservation to include another guest?"


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Annex: Hospitality What should Claire do?

A Explain that it is Penamore policy that no friend or family member can travel at the company’s expense. Provide the Metallicon PA with the information he/she needs to make the preservation and changes him/herself.

Correct. It is Penamore policy that friends and family travelling with the person being hosted must not travel at Penamore's expense. The rules relating to "hosting expenses"hosted must not travel at Penamore s expense. The rules relating to hosting expenses are covered in the Penamore gifts and hospitality rules.

B Book the additional flights and change the hotel reservation, paying for them through P E l i th t it i P li th t f i d f il b t l t thPenamore. Explain that it is Penamore policy that no friend or family member can travel at the company’s expense so ask that Metallicon reimburses Penamore.

Incorrect.

C Do as the PA requests and amend the booking

Incorrect.


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