ANTI-BRIBERY AND CORRUPTION POLICY

Starin, as a Midwich Group Company, requires all associates in addition to the U.S. Foreign Corrupt Practices Act (FCPA) to understand and be bound by the U.K. Anti-bribery Act 2010. The below provides a background to the U.K. Act and forms part of this Anti-bribery and Corruption policy.

Background

The U.K. Bribery Act 2010 came into force on 1 July 2011 and there are four possible offenses:

1. the general offense of paying a bribe (bribing another person).
2. the general offense of receiving a bribe (being bribed).
3. the bribery of foreign public officials, and
4. the failure of commercial organizations to prevent bribery.

The Bribery Act offenses:

1. Paying bribes / bribing another person: the offering, promising or giving of a reward to induce a person to perform a relevant function or activity improperly (a relevant function or activity can include any activity of a public nature or any activity connected to a business).
2. Receiving bribes / being bribed: the acceptance of, or agreeing to accept, or requesting a reward in return for performing a relevant function or activity improperly.
3. Bribery of foreign public officials:  trying to influence a foreign public official with the intention of obtaining or retaining business where the public official was not permitted or required by law to be influenced.
4. Failure of commercial organizations to prevent bribery: a corporate offense where a company fails to stop anyone who is operating on its behalf (including business partners and subsidiaries anywhere in the world) from being involved in bribery.

An overseas employee, agent or a foreign subsidiary of a U.K. company may cause its U.K. parent company to become liable under the Act, where the foreign subsidiary commits an act of bribery whilst performing services for the U.K. parent. In contrast, a foreign subsidiary acting entirely of its own account would not make the U.K. parent liable, as it would not then be performing services for its U.K. parent.

The company may be guilty, even if no one within the company knew of the bribery. The company's defense is limited to showing that it had "adequate procedures" to prevent bribery. That effectively creates a burden for Midwich Group plc to ensure that our anti-corruption procedures are sufficiently robust to stop any employees, agents or other third parties acting on our behalf, from committing bribery.

Penalties

• The Act includes a maximum jail term for bribery by an individual of 10 years and/or an unlimited fine.
• A company convicted of failing to prevent bribery could receive an unlimited fine.
• A company convicted of failing to prevent bribery could be permanently debarred from tendering for public sector contracts.
• A company convicted of failing to prevent bribery could be obligated to hand back the profits from any contracts deemed to have been won as a result of a bribe.

POLICY

1. Standards and Behaviors

You must not offer, give or receive bribes for any purpose whether directly or via a third party. This prohibition applies to all employees, subsidiaries, business partners, suppliers, agents and anyone else acting for or on behalf of Starin, a Midwich Group Company. This policy applies to every part of our business and to every country in which we operate. The U.S. Foreign Corrupt Practices Act (FCPA) makes it a crime to pay, offer, or give “Anything of Value” to foreign governmental officials, a foreign political party or its representatives or a candidate for foreign office.  Additionally, the U.K. Bribery Act of 2010 makes it an offense to pay or receive a bribe (bribing another person or being bribed), bribe a foreign public official and corporate failure to prevent bribery.

All Starin officers, directors, employees and agents must comply with the FCPA, the U.K. Bribery Act 2010 and related anti-corruption laws of other countries in which Starin does or will do business.

You should always act in accordance with the following standards:

• do not offer or accept bribes.
• behave honestly, be trustworthy and set a good example.
• use the resources of Starin in the best interests of Starin and do not misuse those resources.
• make a clear distinction between the interests of Starin and your private interests to avoid any conflict of interest. If such conflict does arise you should report it to your manager, HR or the Controller immediately. For example, you should declare if, as part of your role at Starin, you have dealings with a third party in which you have a personal interest, such as a potential supplier, which is owned by you or a family member or friend; or if you are paid to provide consultancy or other services to one of Starin’s customers or suppliers during your spare time;
• confidentially report all incidents, risks and issues which are contrary to this policy to your manager, HR or the Controller.

Starin will always support its employees who are acting in accordance with this anti-bribery policy. We will not penalize any employee for refusing to accept or pay a bribe or engage in any form of fraudulent or corrupt activity, even if that refusal results in a loss of business to Starin.

We recognize that it is not always easy to spot when a situation may involve behavior which could constitute bribery or corruption.  If you are concerned about a situation and think it may be unethical, try asking yourself the following questions:

• Is it legal?
• Is it in accordance with values of Starin?
• Would I feel comfortable with telling someone else what I had done?
• How would our customers react?
• How would our competitors react?
• How would Starin feel if this was reported in a national newspaper?

Your answers to these questions should help you to decide whether to proceed. In Appendix A we have detailed some Q’s and A’s that may apply specifically to Starin which you may find useful. If you are still unsure, further guidance can always be sought from your line manager or the Controller.

Compliance with the Starin anti-bribery and corruption policy is regarded as part of your terms and conditions of employment. We will ask all employees to acknowledge their understanding of, and commitment to, the policy by signing the attached form and returning it to HR.  If you fail for any reason to follow the rules set out in the policy this may result in disciplinary action being taken against you, which could result in your dismissal.

2. Starin bribery prevention procedures

As part of our ongoing commitment to ensure a culture of anti-corruption, eradication of bribery and maintaining the highest ethical standards, we will provide:

1. top level commitment – the Policy has been written and fully endorsed by the Directors of the Midwich Group, creating a culture where we all view bribery as unacceptable.
2. a central point of contact – the Controller is the appointed person, so individuals know who to turn to in confidence if they were to encounter bribery/corruption or have any questions in connection with such matters.
3. information & awareness on anti-corruption -this will be ongoing and will be available to all employees who may potentially be involved in situations where bribery/corruption could occur.
4. regular reviews & audit of policies and procedures – to ensure we remain vigilant on a day to day basis, as well as reflecting current legislation.
5. due diligence – our customers terms and conditions will be amended to include a paragraph requiring customers to have an active anti bribery policy which is applied to all Starin transactions. We will also write to our vendors to outline the principles of our policy and how these should be applied in their dealings with Starin.
6. contractual terms for employees which clearly express that engaging in activities associated with bribery / corruption is viewed as a serious case of gross misconduct and will not be tolerated at any level.
7. risk assessments for anti-corruption will be carried out and regularly reviewed, to determine the potential risk of bribery / corruption occurring and identify actions that should be taken to reduce any such risk(s).

3. Procedures that should be followed in the event bribery / corruption is, or may be, taking place.

If you suspect bribery or corruption is taking place, or you have been offered a bribe from any person who has a connection with Starin, you must report this immediately.  Starin recognizes the decision to report a concern can be a difficult one to make.

For this reason, reassurance is if anything reported in this regard will be treated with the upmost confidentiality and sensitivity. On this basis, you should initially raise your concern either verbally or in writing with one of the following:

1. Your line manager.
2. Your department head.
3. The appointed person responsible for anti-corruption i.e. the Controller.
4. A member of the HR team.
5. As a last resort, if you feel unable to raise your concern with any of the above, you should follow the procedure as confirmed within the Company’s Whistleblowing policy.

Your concerns will be fully investigated, and you will be required to provide a full account and clarification of the bribery / corruption you believe to have taken, or be taking place, which may involve face to face meetings.  Following an investigation, a decision will be made in terms of the most appropriate action moving forward.  No employee will suffer adverse consequences for refusing to pay or take a bribe or kickback, or engage in other activities that violate this policy, even if it results in the loss of business to Starin.  Starin will not tolerate any retribution or retaliation against anyone for raising a concern in good faith about a potential violation of this policy, or for cooperating with an investigation.  When you raise a concern, we will maintain your confidentiality to the extent permitted by law. 

Summary

In summary, Starin regards these matters very seriously and is intent in ensuring that all our business dealings are totally free of any suggestion of bribery / corruption.  For absolute clarity, the following do’s and don’ts seek to make Starin’s position very clear for all stakeholders:

1. Starin neither condones nor encourages bribery or corruption.
2. Starin will never expect an employee to offer or receive a bribe as part of their employment responsibilities.
3. Employees must conduct themselves with dignity and responsibility at all times.
4. Employees must report any instances of bribery and corruption immediately, where they become aware of anything associated with such matters.
5. Employees should seek advice from their manager when in doubt.

Appendix A

Question 1: Are Gifts prohibited under this policy?

Answer:

You should always consider whether the giving or receipt of a gift is appropriate. The key factor will often be the reason why the gift is being offered.  If it is in order to influence the outcome of transactions or decisions relating to Starin’s business, it will be prohibited. This applies to both the giving and receiving of gifts.

Factors that will suggest the gift is intended to influence the outcome of transactions or decisions relating to Starin’s business are:

1. The gift is in cash or is non-cash and of more than a nominal value. It is difficult to define a nominal value, but any non-cash gifts of a market value of >$50 per person may appear excessive. For the avoidance of doubt, the receipt or giving of gifts of >$50 in value will require disclosure from staff in the company ‘Register of Interests’ – see below;
2. The gift is one of a number of regular gifts from or to the same source. In this event, even if the gift is valued at <$50, where more than one gift has been offered to, or received by, the same person, it should be disclosed in the ‘Register of Interests’.
3. The transaction has no transparency within the organization of either the donor or the recipient and has not been authorized at an appropriate level.
4. The gift is offered at a sensitive time during commercial negotiations i.e. during a tender process.
5. Bribery rules regarding public officials are stricter and so no gifts at all should change hands between Starin staff and public officials.

The company is introducing the ‘Register of Interests’ in order to ensure there is complete transparency of all transactions over $50 and all transactions where more than one gift of a value of <$50 has been offered or received by the same person. These transactions will, in future, require electronic sign off by your Line Manager (i.e. email) before they can take place and the Register updated. In addition, the Register will regularly be audited by the Controller to ensure appropriate decisions have been made in line with this policy.

The Register will require the following information:

• The name of the Starin employee(s) concerned.

• The name of the third-party company concerned.
• The name of the employee of the third party.
• The nature and value of the gift.
• The reason for the gift.
• If the gift is for the benefit of an employee of a third party, evidence of approval thereof by the Line Manager of the third-party employee or, if the third-party employee is a Director.

Examples of the kind of gift transactions expected to be disclosed on the Register of Interests are:

• Electrical and other goods worth more than $50 at RSP i.e. AirPods, iPads* etc.
• Vouchers.
• Holidays and free use of holiday houses / apartments.
• Services paid for on behalf of a third-party employee i.e. driving lessons, auto insurance, gym classes.

* Including ‘freebies’ that are offered to individual customers to sweeten the terms of an individual deal. Excluding goods that are offered across the customer base, as part of a promotion i.e. ‘Buy 10 get 1 free.’

Sundry items such as pens, memory sticks, pads will not require disclosure in the ‘Register of Interests’.

The sign off decision will be based on the factors mentioned above. Clearly, the higher the value of an individual transaction or the frequency of transactions between the same organisations and individuals, the lower the likelihood there is of approval.  

If an employee receives a gift with a value greater than $50 prior to sign off via the ‘Register of Interests’ and is not able to return this to the original source, then the gift will be put into a central pot and raffled out to staff at the end of the year.

Question 2: Are Vendor incentives prohibited under this policy?

Answer:

Vendor incentives (vendor funded rewards in return for units or $ sold) align the commercial objectives of the vendor with those of Starin. As such, they do not present employees with a conflict of interest between their own objectives and those of Starin and are, in principle, not prohibited.

However, these schemes must satisfy all of the following conditions:

• There must be complete transparency of the schemes within both organizations, with authorization taking place at an appropriate level – see below.
• The schemes should be open to all relevant staff.
• All relevant staff should have an equal chance of success.
• The bonus is ‘earned’ with the criteria for success easily understood and measurable.

It is imperative that all such agreements are approved internally via the ‘staff incentive forms’ prior to the commencement of the scheme and receipt of the incentives. All potential incentives should be detailed on the form in order to ensure that the incentives offered are not disproportionate to other staff compensation.

Question 3: Are reseller incentives prohibited?

Answer:

Reseller incentives (Starin funded rewards in return for units or $ sold) should be designed to align the commercial objectives of the reseller with those of Starin. As such, they should not present employees of the reseller with a conflict of interest between their own objectives and those of their employer. In principle, therefore, they are not prohibited.

However, these schemes must satisfy all of the following conditions:

• There must be complete transparency of the schemes within both organizations, with authorization taking place at an appropriate level – see below.
• The schemes should be open to all relevant staff.
• All relevant staff should have an equal chance of success.
• The bonus is ‘earned’ with the criteria for success easily understood and measurable.

It is imperative that all such agreements are approved internally via the ‘Reseller Incentive Approval form’ prior to the commencement of the scheme.  All potential incentives should be detailed on the form, together with evidence of approval of the scheme by the reseller, the deliverables required to win the incentive and the availability of the incentive to all relevant staff.

Question 4: Is entertaining of or by third parties prohibited?

Answer:

Guidance on this issue from the Department of Justice states:

“Bona fide hospitality and promotional, or other business expenditure which seeks to improve the image of a commercial organisation, better to present products and services, or establish cordial relations” is acceptable, and reasonable and proportionate expenditure of this nature will not be unlawful.

However, hospitality that is overly “lavish”, and not of “genuine mutual convenience”, is at risk of being viewed as a bribe. In this regard, reference will be had to “standards or norms” of the business sector in question.

The more lavish the hospitality, the higher the expenditure, and the more unusual it is by reference to industry norms, then the greater the risk is.

In addition, if a third party has arranged an entertaining event for Starin staff, staff from the 3^rd party should be present at the event in order to demonstrate mutual benefit.

The simplest way to assess the risk of hospitality being considered to be a potential bribe, based on the above principles will be to ask, in relation to each item of hospitality, “would my competitors think this hospitality is excessive/suspicious?” If so, best practice would be to refrain, or reduce the scope of the hospitality to a more proportionate level.

As with gifts, any entertaining events which are expected to cost over $250 in total or $80 per person should be logged in the ‘Register of Interests’.

The Register will require the following information:

• The name of the companies involved.
• The nature and estimated value of the entertaining.
• The likely individual participants (both Midwich and third party) in the entertaining.
• The business reason for the entertaining.