Improper Payments

GE has long taken a leading role in pushing for transparency and integrity in the international marketplace. GE’s policy against improper payments in business transactions is a key element of The Spirit & The Letter, and represents a core belief in how we do business.

Never before have the risks been higher. Aggressive enforcement of the U.S. Foreign Corrupt Practices Act by the SEC and Department of Justice is the new norm. The number of cases being brought and the penalties imposed for violations continue to grow. Enforcement is not limited to companies — individuals are increasingly facing prosecution and lengthy terms of imprisonment for breaking the law. Investigation techniques like wiretaps and undercover operations, previously limited to “traditional” criminal activity like organized crime and narcotics, are increasingly being deployed to gather evidence of criminal activity in foreign business deals. Prosecutors continue to focus on industries like healthcare and energy, and on emerging markets such as China and Russia, where GE’s presence is rapidly expanding.

Nor are these trends limited to the United States. Global enforcement of anti-corruption laws is more robust than ever. Global enforcement is increasingly interconnected and tightly coordinated. Even a single transaction can expose a company to prosecution in multiple jurisdictions.

Greater attention is being paid to the effectiveness of corporate compliance programs in preventing improper payments. New anti-bribery laws in the United Kingdom and upcoming changes to the U.S. Sentencing Guidelines reflect this trend. GE’s approach to compliance in this critical area is multifaceted. Among its key features are:

• Corporate policies and procedures that reflect the Company’s approach by prohibiting improper payments in every transaction, whether with the government or a with private party
• Extensive controls over third-party intermediaries such as commercial agents and representatives, distributors, and service providers, including thorough due diligence, careful screening, and training on GE policies
• Heightened attention to key risk areas such as gifts and entertainment, travel and living expenses, donations, and facilitating payments
• Extensive training of GE employees on improper payments
• Robust internal controls and accounting processes designed to prevent and detect violations of Company policy relating to improper payment risks and to assure accurate books and records relating to transactions
• Increased emphasis and enhanced due diligence concerning improper risk associated with mergers, acquisitions and joint ventures
• Strategic use of Corporate Audit Staff to identify and assess potential improper payments