Foreign Corrupt Practices Act

The FCPA is a US Federal Statute prohibiting US companies and their officers, directors, employees and agents from:

• giving, promising or offering anything of value, whether directly or indirectly, to
• any foreign official (including an official of a public international organisation)
• with the intention of obtaining or retaining business or obtaining an improper business advantage

2. Record‑Keeping and Internal Accounting Controls

The FCPA also requires US companies such as ERHC to:

• keep books and records that accurately reflect transactions and dispositions of assets and to
• maintain a system of internal accounting controls

3. Penalties for Breach

Where the anti-bribery provisions of the FCPA are breached, the following penalties may be imposed:

• Fines of up to US$2 million against the company
• Prison terms of up to five years and fines of up to US$100,000 per violation for individuals involved
• The Securities and Exchange Commission (“SEC”) may seek further civil penalties.

Without prejudice to the foregoing requirement for written approval an ERHC person must promptly contact the President when questions arise concerning the FCPA’s anti-bribery provisions including whether:

• a particular individual or entity must be treated as a “foreign official”
• whether something qualifies as anything of value
• whether a proposed payment would be made or seen to be made to obtain, retain or direct business

6. Due Diligence and Third‑Party Certification

To avoid being held liable for corrupt third‑party payments, ERHC and any ERHC person acting on its behalf must exercise due diligence at all times and take all necessary precautions to ensure that business relationships are formed only with reputable and qualified partners, agents and representatives. In negotiating any business relationship, it shall be recommended practice for ERHC or any ERHC person acting on ERHC’s behalf to require potential partners, agents or representatives to provide FCPA‑compliance certification. Such certification shall include a covenant by the person providing it not to make or cause to be made any unlawful offer, promise, or payment to a foreign public official and not to do anything that would cause ERHC to be in violation of the FCPA.

7. Record Keeping

All transactions involving ERHC funds or assets should be recorded accurately and in reasonable detail. The record must completely reflect the transactions and asset dispositions of ERHC wherever they take place.

8. Prohibition of Improper Accounting

Direct or indirect participation by any ERHC person in any “improper transaction” or deviation from established ERHC accounting practices, including omitted or falsified expense reports, is strictly prohibited.

9. Compulsory Compliance

Every ERHC person shall comply with this Policy and be familiar with the Guidelines appended hereto. ERHC may require ERHC persons to undergo such FCPA-compliance training or to obtain such FCPA‑compliance certifications as ERHC may deem necessary from time to time.

10. Chief Compliance Officer

The President is the Chief Compliance Officer of ERHC on FCPA matters. Any question regarding activities under consideration with regard to the FCPA or this Policy should be promptly directed to the President.

11. Sanction for Breach

This Policy is an integral part of ERHC’s Compliance Program. Any breach of this Policy by an ERHC person may result in disciplinary action, termination, disengagement, civil proceedings, criminal prosecution or such other remedial or punitive action as shall be appropriate in the circumstances. Such action may be taken or initiated by ERHC, governmental authority or other competent body. ERHC will not directly or indirectly pay any fine imposed on any individual as a result of breach of the FCPA or of this Policy.

12. Zero Tolerance

The FCPA was originally enacted by the US Congress in 1977 and has been amended several times since. The FCPA is aimed at preventing corrupt practices by US business organisations doing or seeking business in foreign countries. In recent years, a number of large US companies involved in bribery in Nigeria, India, Venezuela, South Korea and elsewhere have been sanctioned by the US Government under the FCPA.

The FCPA prohibits ERHC and any ERHC person, whether acting in the United States or abroad, from giving or offering bribes to foreign officials in order to obtain or retain business, secure an improper advantage or direct business to any person. The business obtained or retained does not need to be with a foreign government or foreign government instrumentality in order for the FCPA to apply.
2. Prohibited Conduct

For the avoidance of doubt, the elements of forbidden conduct under the anti‑bribery provisions are as follows:

• Knowingly paying, offering, promising or authorizing to pay
• Money or anything of value
• Directly or indirectly
• To any foreign official or political party
• With the intention of influencing
• The obtaining or retaining of business or otherwise securing any improper business advantage

The use of the phrase “anything of value” means that the FCPA forbids not only money bribes but also bribes constituting such things as:

• Stock
• Entertainment
• Gifts
• Discounts on products and services not readily available to the public
• Offer of employment
• Assumption or forgiveness of debt
• Payment of travel expenses
• Personal favors

3. Directly or Indirectly

The payment, offer or promise to pay does not have to be made directly by ERHC or an ERHC person. It is sufficient that it was made through an intermediary such as a broker, representative (including a stockholder when acting on behalf of ERHC), joint‑venture partner or subsidiary. It is also sufficient to breach the FCPA if the payment is made to an intermediary of a foreign official or foreign political party.

The FCPA defines a “foreign official” as any officer or employee of a foreign government or any department, agency, or instrumentality of a foreign government. The term also includes any officer or employee of a public international organization such as the World Bank or the African Union. Furthermore, any person acting in an official capacity for any foreign‑government agency, department or instrumentality, or for a public international organization is a ‘foreign official.’ An entity hired to review bids on behalf of a government agency would be covered by the term.

The DOJ has also stipulated that the following persons would be included in the definition of “foreign official”:

• Officers and employees of foreign state‑owned companies
• Uncompensated honorary officials if such officials can influence the awarding of business
• Members of royal families who have proprietary or managerial interests in industries and companies owned or controlled by the government

The FCPA also prohibits bribes to foreign political parties and their officials as well as to candidates for foreign political office.

The FCPA permits the payment of small sums to facilitate routine, non-discretionary government functions. However, each ERHC person should always remember that under ERHC’s FCPA Policy, facilitating payments cannot be made without the prior written approval of the ERHC President and Chief Executive Officer (“President”).

The FCPA lists the following examples of routine governmental action:

• Issuance of permits, licenses, or other official documents
• processing governmental papers, such as visas and work permits
• providing police protection and mail pick-up and delivery
• providing phone service, power and water supply, loading and unloading cargo, or protecting perishable products
• scheduling inspections associated with contract performance or transit of goods across country

It is a defense to a charge under the FCPA that the payment was lawful under the written laws of the foreign country or that the money was a bona fide, reasonable expense for the promotion of a product or performance of a contractual obligation. These are "affirmative defenses." It is the responsibility of any person that has made such payments to prove that the payments met the requirements for the defenses.

The following criminal penalties may be imposed for violations of the FCPA''s anti‑bribery provisions:

• ERHC may be fined up to US$2,000,000
• Any ERHC person found in violation is subject to a fine of up to US$100,000 and imprisonment for up to five years

The Attorney General or SEC, as the case may be, may bring civil proceedings for a fine of up to $10,000 against ERHC and any ERHC person who violates the anti‑bribery provisions. In a SEC enforcement action, the court may impose an additional fine not to exceed the greater of (i) the gross amount of the pecuniary gain to the defendant as a result of the violation, or (ii) a specified dollar limitation. The specified dollar limitation depends on the seriousness of the violation and will range from $5,000 to $100,000 for a natural person and $50,000 to $500,000 for any other person.

The Office of Management and Budget (“OMB”) has guidelines under which any person or entity found in violation of the FCPA may be barred from doing business with the Federal government. The mere fact of indictment can lead to suspension of the right to do business with the US government.

Apart from the compliance with its anti‑bribery provisions, the FCPA requires ERHC to abide by the provisions of the Act that require:

• Maintenance of books and records which in reasonable detail, accurately and fairly reflect each transaction and disposition of ERHC assets
• Maintenance of a system of internal accounting controls sufficient to provide reasonable assurances that, among other things, transactions have been executed in accordance with management’s specific authorization and recorded in accordance with generally accepted accounting principles (“GAAP”).

2. Criminal Offence in Breach

Breach of the record‑keeping and accounting provisions of the FCPA are currently punishable as follows:

• Imprisonment of up to 20 years and fines of up to US$25 million for individuals
• Fines of up to US$25 million for companies