1. John Browne’s note of February 11, 2002 sets out the following policy changes and other developments in BP’s Ethical Conduct Policy: Facilitation Payments –With effect from 14 February 2002 our policies are amended to provide that no facilitation payments should be made directly or indirectly by any BP company or employee worldwide. (the slides in this file address the context and forward process related to this policy) Political Contributions –With effect from 1 April 2002 our policies are amended such that no BP corporate political contributions or commitments should be made anywhere in the world (including the US and Canada). Regional Ethics Committees –In order to reinforce the focus on ethical conduct and to review significant ethical dilemmas, Regional Ethics Committees will be established. These Regional Committees will be chaired by a Regional GVP, and will include a Legal Representative nominated by the Group General Counsel, and an Assurance Representative nominated by the Director of Business Ethics. BP’s Business Policies: Facilitation Payments & Political Contributions

2. Facilitation Payment Policy - Context Facilitation payments - small payments or benefits to low-level government officials, whose duties are essentially administrative or clerical, to ensure that one receives the standard of treatment that one would reasonably expect to receive but otherwise might not. Made by BP or agents or consultants on BP’s behalf. CURRENT POLICY: –Facilitation payments (FPs) have been discouraged in BP’s Ethical Conduct Policy but not specifically prohibited. –Must be legal, approved & accounted for properly. POLICY CHANGE (effective February 14, 2002): –It has been decided that facilitation payments will no longer be permitted. WHY?

3. Facilitation Payments - UK Legal Changes UK corruption legislation dates back to 1889 & 1906. Needs to be aligned with the 1997 OECD Convention on Bribery which makes it a criminal offence to offer any undue advantage to a foreign official, either directly or indirectly. The Anti-Terrorism, Crime & Security Act 2001 includes new law on bribery. This comes into effect on Feb. 14 2002. Extends the old laws to prohibit UK-registered companies & UK nationals from corrupting public officials anywhere in the world. Penalties - fines & imprisonment. The old laws do not differentiate between bribery and facilitation payments – (‘grand’ and ‘petty’ corruption).

4. Definition of Corruption – 1889 Act “It is an offence to give, promise or offer any gift, loan, fee, reward or other advantage to any member, officer or servant of a public body as an inducement to do, or not do, anything in relation to any matter in which the public body is concerned.” Bribes, including facilitation payments, are covered by this definition of corruption. UK companies & UK nationals are liable if: - they make bribes directly - they intentionally use agents to make bribes - they know that bribes are being made by agents

5. Facilitation Payments – new BP approach BP currently complies with the US Foreign Corrupt Practices Act which permits facilitation payments. The new UK legislation goes beyond the FCPA - facilitation payments are illegal. BP has amended its Ethics Policy from 14 February to cover both UK companies (to comply with the law) and non-UK companies. Ensures consistency across the BP Group. Assurance will be sought at end–2002 that the new policy is being complied with.

6. Facilitation Payments – New BP Policy “With effect from 14 th February 2002 no facilitation payments should be made directly or indirectly by any BP company or employee worldwide. ”

7. FPs Elimination - Process Proposal Identification & categorisation of FPs: - FPs made directly by BP - Known FPs made by agents - Possible FPs made by agents Listing to include description, recipient, amount, frequency, and, if applicable, the agent & degree of BP knowledge. BUs/FUs with many FPs may wish to appoint a project manager …contd.

8. Assess the business risk of eliminating each payment – high, medium and low. FPs Elimination - Process Proposal (contd.) Complete an action plan for each payment 1.EITHER ‘stop immediately -no other action’ 2. ‘stop with remediation’ OR 3.‘change nature of the transaction’ to make it ethical/legal. 1.Lobbying with other major companies for official action on corruption 2.Increasing number of staff/agents to process licenses through officials 3.Reporting corrupt officers to more senior officials 4.Using low-cost lunches/entertainment to build a relationship with officials. Review possible remediation actions Consider changing the nature of the transaction to make the activity legal, Discuss & agree the action plan with GVP by end-Q2. Action plan completed by end-2002. 2002 Certification – will include assurance on the level of compliance with the new policy PHASE I – FPs paid by BP & FPs known to be paid by agents Assessment 1.Convert FPs to contractual payments to official bodies. 2.Transfer location of transaction Assurance

9. PHASE II – Possible FPs made by agents For the other payments which are possible FPs made by agents, enquire of the agents & consultants whether they do make FPs on BP’s behalf. For those FPs identified: –Assess business risk of eliminating each FP with the agent – develop remediation plans to reduce the risk if necessary –Complete an action plan for each FP – either ‘stop immediately–no other action’, ‘stop with remediation’ or ‘change nature of the transaction’ to make it ethical/legal. –Discuss & agree the action plan with GVP by end-Q2 2003. –Action plan completed by end-year 2003 2003 Certification – will include assurance on the level of compliance with the new policy. FPs Elimination - Process Proposal (contd.)

10. Facilitation Payments - Categories “…any gift, loan, fee, reward or other advantage to any officer …of a public body as an inducement to do, or not do, anything in relation to any matter in which the public body is concerned.” Licenses & Permits: payments for work permits, operational permits, permits for explosives, ‘meet & greet’ services at airports, retail site construction permits, travel or lunch allowances for officials Customs Clearance payments to speed up clearance of goods; overtime payments to customs officials Police & Military payments or gifts to the police or military to obtain their co-operation in protecting BP plants/staff, in conducting raids on counterfeiters, in recovering stolen cash. Payments to police charities? Taxation payments to prevent unfair harassment by tax officials or to speed up tax repayments Legal Penalties Payments to senior officials to restrict the scale of penalties on minor procedural breaches of regulations Relationships Payments or gifts outside of G&E policy to maintain a good relationship with an official to ensure that future issues are handled effectively Negotiations Lunch or travel allowances paid to entice officials to attend negotiating sessions; paying for trips to BP sites to persuade officials to adopt BP standards for projects.