ENTERASYS NETWORKS, INC.
Foreign Corrupt Practices Act Compliance Policy
Enterasys Networks maintains a corporate policy prohibiting all improper or unethical payments to government officials anywhere in the world. Our policy is:
No company officer, employee or agent has authority to offer payments to a foreign official to induce that official to affect any government act or decision in a manner that will assist the Company or any of its subsidiaries or divisions to obtain or retain business. Furthermore, every officer, employee and agent is obligated by company policy and federal law to keep books, records, and accounts that accurately and fairly reflect all transactions and disposition of Company assets.
Anti-Bribery Provisions of the FCPA
The Foreign Corrupt Practices Act ("FCPA") generally applies to all US corporations, partnerships and other business organization (generically, a "company"), as well as all persons acting on behalf of those entities. For purposes of this discussion, suffice it to say that the FCPA applies to Enterasys and its corporate subsidiaries, as well as their officers, directors, agents and shareholders.
The FCPA prohibits any payment or offer of payment to a "foreign official" for the purpose of influencing that official to assist in obtaining or retaining business for a company. The Act applies to any act or event that is "in furtherance of" a payment to a foreign official. Further, the "payment" clause of the FCPA is broadly phrased. It covers not only the actual payment of money but also an offer, promise or authorization of the payment of money and an offer, gift, promise or authorization of the giving of "anything of value." The Act also applies to payments to foreign officials, foreign political parties, officials of foreign political parties and candidates for foreign political office.
Record Keeping Requirements of the FCPA
In addition to its anti-bribery provisions, the FCPA also imposes certain accounting requirements on companies. Specifically, the FCPA requires that a company maintain books, records and accounts that, in reasonable detail, accurately reflect the transactions and dispositions of that company. In order to comply with these requirements, it is imperative that Enterasys employees, agents and others acting on its behalf maintain complete and accurate records with respect to all transactions undertaken on behalf of Enterasys.
Guidelines for FCPA Compliance
The consequences of failing to comply with the FCPA are potentially disastrous for a company and its employees. Violation of the FCPA and related laws by an Enterasys employee can result in millions of dollars in fines against the Company and can subject the employee to prosecution, criminal fines, and imprisonment, as well as disciplinary action by Enterasys, including dismissal. Note that the FCPA states that fines and penalties imposed upon individuals may not be paid directly or indirectly by any corporation for which they may have acted.
Accordingly, we have developed guidelines for complying with the FCPA and related laws. The purpose of these guidelines is to ensure full compliance with the FCPA and related laws and continuation of our fine record in maintaining lawful and ethical dealings with governments throughout the world.
General Rules
The following rules have been established for all employees, directors, agents and shareholders acting on behalf of Enterasys and its affiliates:
Except as expressly provided elsewhere in this statement of policy, no payment or gift of any kind whatsoever may be promised, offered or made to any foreign official.
Notwithstanding the foregoing, expenditures for meals, entertainment and other normal social amenities with respect to foreign officials are permitted provided they are not be extravagant and otherwise conform to the laws and customs of the country in which the expenditures are incurred.
Similarly, gifts may be given to foreign officials only if the gifts are of modest value and conform to laws and normal social customs in the official's country.
Complete and accurate records sufficient to show compliance with the above rules, the FCPA generally, and any other policies of Enterasys must be maintained at all times.
Other Considerations
Grease Payments. In certain parts of the world it is common for government employees to receive so-called "grease," "facilitating" or "expediting" payments to expedite or secure the performance of routine governmental action by a foreign official. The exception, however, does not cover any payment intended to influence the decision or action of a foreign official in a decision concerning the awarding of new business or continuation of existing business.
Political Parties or Officials. All contributions of money or services to political parties or officials thereof or to candidates for political office outside the United States are expressly prohibited.
Retaining Agents. Because the actions of a third party acting as an agent or representative of a company can expose that company to liability under the FCPA, great care should be taken in the retention of such agents and representatives. A sufficient investigation should be undertaken to ensure that any such representative does not intend to engage in any improper practices. In determining whether to engage a particular representative, factors such as the representative's reputation and qualifications, the manner and reasonableness of compensation, the relationship, if any, between the owners and employees of the representative and a foreign official, the presence or absence of any secret partners, the willingness of the representative to fully disclose its relationship with us and the legality of the relationship under local law must be considered.
Government-Owned Businesses. In many countries it is a common practice for government officials to own or operate business enterprises. While the FCPA and related laws do not prohibit legitimate business relationships with business enterprises owned or controlled by foreign officials, great care must be taken to avoid any association with any such enterprise in circumstances that might constitute an evasion of the FCPA.
Retention of Professionals. No person acting on behalf of Enterasys may enter into any transaction with agents, contractors, consultants, lawyers or other persons that is intended or designed to permit such persons to circumvent currency, tax or other laws of a foreign country. Any transaction that has the appearance of permitting any person to circumvent such laws must be avoided. Particular care must be taken in respect to "split payments" (i.e., payments for services that are made outside the country in which the services are performed, other than payments in the country in which the provider of the services is incorporated and has an established presence, or payments inside the country in other than the local currency).
Reporting Requirements.
Any transaction, no matter how seemingly insignificant, that might give rise to a violation of the FCPA must promptly be reported to the Company's Director of Internal Audit or, if the employee so desires, such report may be made through the HR Hotline. All such reports will be treated as confidential, to be used only for the purpose of addressing the specific problem they address. Such reports will be shared by Enterasys management and other authorized individuals only on a need-to-know basis. As long as a report is made honestly and in good faith, Enterasys will take no adverse action against any person based on the making of such a report. Employees must note, however, that failure to report known or suspected wrongdoing of which an employee has knowledge may, by itself, subject that employee to disciplinary action.
Further Information
Any questions concerning the FCPA and related reporting requirements may be addressed to the Legal Department.