John Browne

1
BPs Business PoliciesFacilitation Payments
Political Contributions

• John Brownes note of February 11, 2002 sets out
  the following policy changes and other
  developments in BPs Ethical Conduct Policy
• Facilitation Payments
• With effect from 14 February 2002 our policies
  are amended to provide that no facilitation
  payments should be made directly or indirectly by
  any BP company or employee worldwide.
• (the slides in this file address the context and
  forward process related to this policy)
• Political Contributions
• With effect from 1 April 2002 our policies are
  amended such that no BP corporate political
  contributions or commitments should be made
  anywhere in the world (including the US and
  Canada).
• Regional Ethics Committees
• In order to reinforce the focus on ethical
  conduct and to review significant ethical
  dilemmas, Regional Ethics Committees will be
  established.
• These Regional Committees will be chaired by a
  Regional GVP, and will include a Legal
  Representative nominated by the Group General
  Counsel, and an Assurance Representative
  nominated by the Director of Business Ethics.

2
Facilitation Payment Policy - Context

• Facilitation payments - small payments or
  benefits to low-level government officials, whose
  duties are essentially administrative or
  clerical, to ensure that one receives the
  standard of treatment that one would reasonably
  expect to receive but otherwise might not.
• Made by BP or agents or consultants on BPs
  behalf.
• CURRENT POLICY
• Facilitation payments (FPs) have been discouraged
  in BPs Ethical Conduct Policy but not
  specifically prohibited.
• Must be legal, approved accounted for
  properly.
• POLICY CHANGE (effective February 14, 2002)
• It has been decided that facilitation payments
  will no longer be permitted.
• WHY?

3
Facilitation Payments - UK Legal Changes

• UK corruption legislation dates back to 1889
  1906. Needs to be aligned with the 1997 OECD
  Convention on Bribery which makes it a criminal
  offence to offer any undue advantage to a foreign
  official, either directly or indirectly.
• The Anti-Terrorism, Crime Security Act 2001
  includes new law on bribery. This comes into
  effect on Feb. 14 2002.
• Extends the old laws to prohibit UK-registered
  companies UK nationals from corrupting public
  officials anywhere in the world. Penalties -
  fines imprisonment.
• The old laws do not differentiate between bribery
  and facilitation payments (grand and petty
  corruption).

4
Definition of Corruption 1889 Act

• It is an offence to give, promise or offer any
  gift, loan, fee, reward or other advantage to any
  member, officer or servant of a public body as an
  inducement to do, or not do, anything in
  relation to any matter in which the public body
  is concerned.
• Bribes, including facilitation payments, are
  covered by this definition of corruption.
• UK companies UK nationals are liable if
• - they make bribes directly
• - they intentionally use agents to make bribes
  
• - they know that bribes are being made by agents
  

5
Facilitation Payments new BP approach

• BP currently complies with the US Foreign Corrupt
  Practices Act which permits facilitation
  payments.
• The new UK legislation goes beyond the FCPA -
  facilitation payments are illegal.
• BP has amended its Ethics Policy from 14
  February to cover both UK companies (to comply
  with the law) and non-UK companies. Ensures
  consistency across the BP Group.
• Assurance will be sought at end2002 that the new
  policy is being complied with.

6
Facilitation Payments New BP Policy

• With effect from 14th February 2002 no
  facilitation payments should be made directly or
  indirectly by any BP company or employee
  worldwide.

7
FPs Elimination - Process Proposal

• Identification categorisation of FPs
• - FPs made directly by BP
• - Known FPs made by agents
• - Possible FPs made by agents
• Listing to include description, recipient,
  amount, frequency, and, if applicable, the agent
  degree of BP knowledge.
• BUs/FUs with many FPs may wish to appoint a
  project manager

contd.
8
FPs Elimination - Process Proposal (contd.)
PHASE I FPs paid by BP FPs known to be paid
by agents
Assessment
Consider changing the nature of the transaction
to make the activity legal,
Assess the business risk of eliminating each
payment high, medium and low.
Review possible remediation actions
Complete an action plan for each payment

1. Lobbying with other major companies for official
   action on corruption
2. Increasing number of staff/agents to process
   licenses through officials
3. Reporting corrupt officers to more senior
   officials
4. Using low-cost lunches/entertainment to build a
   relationship with officials.

1. Convert FPs to contractual payments to official
   bodies.
2. Transfer location of transaction

1. EITHER stop immediately -no other action
2. stop with remediation OR
3. change nature of the transaction to make it
   ethical/legal.

Assurance
2002 Certification will include assurance on
the level of compliance with the new policy
Discuss agree the action plan with GVP by
end-Q2.
Action plan completed by end-2002.
9
FPs Elimination - Process Proposal (contd.)

• PHASE II Possible FPs made by agents
• For the other payments which are possible FPs
  made by agents, enquire of the agents
  consultants whether they do make FPs on BPs
  behalf. For those FPs identified
• Assess business risk of eliminating each FP with
  the agent develop remediation plans to reduce
  the risk if necessary
• Complete an action plan for each FP either
  stop immediatelyno other action, stop with
  remediation or change nature of the
  transaction to make it ethical/legal.
• Discuss agree the action plan with GVP by
  end-Q2 2003.
• Action plan completed by end-year 2003
• 2003 Certification will include assurance on
  the level of compliance with the new policy.

10
Facilitation Payments - Categories
Licenses Permits payments for work permits,
operational permits, permits for explosives,
meet greet services at airports, retail site
construction permits, travel or lunch allowances
for officials
Taxation payments to prevent unfair harassment by
tax officials or to speed up tax repayments
Legal Penalties Payments to senior officials to
restrict the scale of penalties on minor
procedural breaches of regulations
Relationships Payments or gifts outside of GE
policy to maintain a good relationship with an
official to ensure that future issues are handled
effectively
any gift, loan, fee, reward or other advantage
to any officer of a public body as an inducement
to do, or not do, anything in relation to any
matter in which the public body is concerned.
Customs Clearance payments to speed up clearance
of goods overtime payments to customs officials
Police Military payments or gifts to the police
or military to obtain their co-operation in
protecting BP plants/staff, in conducting raids
on counterfeiters, in recovering stolen cash.
Payments to police charities?
Negotiations Lunch or travel allowances paid to
entice officials to attend negotiating sessions
paying for trips to BP sites to persuade
officials to adopt BP standards for projects.