International Forum on Business Ethical Conduct and the Global Principles Timothy Schultz Acting Vice President Ethics and Business Conduct Vice Chair, IFBEC June 4, 2014

Industry collaboration on anti-corruption The Path to IFBEC 2004 - 2005 Preliminary discussions between defense contractors, enforcement officials, other stakeholders to join in a common strategy to fight corruption as an industry and level the playing field in international defense procurements AIA encourages initiative 2005 - 2007 Engagement with TI-UK Creation of International Coordinating Council of Aerospace Industry Associations (ICCAIA) Round Table on Business Ethics Europe develops Common Industry Standards (CIS) Industry collaboration on anti-corruption 6/4/2014

A path forward with agreed upon principles The Path to IFBEC 2008 Preliminary discussions held between ASD Anti-Corruption task force and AIA Ethics Task Force 2009 Drafting and signing of the Global Principles of Business Ethics for the Aerospace and Defense Industry A path forward with agreed upon principles 6/4/2014

Signatory Commitments To implement the Global Principles with comprehensive policies and integrity programs promoting awareness and compliance through communication and training To encourage reporting of concerns by employees relating to compliance with the Principles and the integrity program To sanction non-compliance in appropriate cases Programs implementing the Principles have teeth 6/4/2014

Zero Tolerance to Corruption Compliance with applicable anti-bribery laws No things of value to obtain or retain business, gain improper advantage. Keep appropriate, traceable books and records Internal controls and training to comply with integrity policies Business partners required to comply with integrity policies Seek to eliminate facilitation payments even where not prohibited by law Strong stance against corrupt practices 6/4/2014

Signatories agree to closely govern advisors Use of Advisors Written policies govern use and payment of agents, consultants, intermediaries engaged in business development Due diligence assessments required for advisors Remuneration of advisors must be for legitimate services rendered and be properly recorded Awareness program for advisors concerning integrity policies and anti-bribery laws Written agreements with advisors require compliance with anti-bribery policies and laws Regular reports from advisors on their activities should be required Signatories agree to closely govern advisors 6/4/2014

Managing Conflicts of Interest and Respect for Proprietary Information Follow applicable laws, regulations regarding employing former public officials to properly manage conflicts of interest. Maintain related policies Safeguard proprietary information entrusted to them according to non-disclosure agreement terms Will not solicit or accept third party’s proprietary information unless agreed upon with owner of the data Unauthorized receipt of third party’s proprietary information will be handled by not disseminating or reviewing it, destroying or returning it, and the third party owner should be informed Level playing field: conflicts, proprietary information 6/4/2014

Principles are a unifying achievement for the industry Global Principles of Business Ethics for the Aerospace and Defense Industry Shared executive level commitment Multi-year, sustained effort by Working Group to achieve alignment and draft Principles Journey toward common framework noted differing points of departure and emphasis Process built greater trust and understanding, plus recognition that the Principles are a starting point not an endpoint Principles are a unifying achievement for the industry 6/4/2014

Organizational structure to guide our progress IFBEC is Founded IFBEC formed in 2010 Charter developed Governance structure established Steering Committee Subcommittees Engagement with stakeholders Organizational structure to guide our progress 6/4/2014

IFBEC BEST PRACTICE FORUMS Berlin 2010 Washington, DC 2011 Madrid 2012 Washington, DC 2013 Brussels (Nov 6-7) 2014 Sharing to inspire program excellence for members 6/4/2014

International Forum on Business Ethical Conduct Pedro Montoya Senior Vice-President, Group Ethics & Compliance Officer DII 2014 Best Practices Forum , 4-6 June 2014

Boosting IFBEC for the future: Foster outreach activities to increase the number of companies, both prime and subcontractors, that act ethically and in accordance with IFBEC’s Global Principles. Enhance governance to become more effective: New working groups and a new facilitator for IFBEC key topics. Improve internal communication tools (newsletters, blogs, publication releases, public commitments, webinars, monitor policy development and implementation), and IFBEC milestone documents (IFBEC Charter, Global Principles, Public Accountability Report) Create and consolidate an external communication strategy to engage key stakeholders, such as NGOs, national governments, and international organizations in coordination with the facilitator.

IFBEC way forward Settle a long term Engagement Strategy: ethical business as competitive advantage, recognized by our key stakeholders Set clear priorities to address risks: Responsible Supply Chain Compliance risks in Offset Programmes Position IFBEC as the international leader forum for business ethics in aerospace and defence