Copyright © 2014 Raytheon Company. All rights reserved. Customer Success Is Our Mission is a registered trademark of Raytheon Company.

International Forum onBusiness Ethical Conduct

and theGlobal Principles

Timothy Schultz

Acting Vice President

Ethics and Business Conduct

Vice Chair, IFBEC

June 4, 2014

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-corruption6/4/2014 2

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 principles6/4/2014 3

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 teeth6/4/2014 4

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 practices6/4/2014 5

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 advisors6/4/2014 6

Managing Conflicts of Interest andRespect 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 information6/4/2014 7

Global Principles of Business Ethics for theAerospace 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 industry6/4/2014 8

IFBEC is Founded

IFBEC formed in 2010

Charter developed

Governance structure established• Steering Committee

– Subcommittees

Engagement with stakeholders

Organizational structure to guide our progress6/4/2014 9

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 10

International Forum on Business Ethical Conduct

Pedro MontoyaSenior Vice-President, Group Ethics & Compliance Officer

DII 2014 Best Practices Forum , 4-6 June 2014

1. Foster outreach activities to increase the number of companies, both prime and

subcontractors, that act ethically and in accordance with IFBEC’s Global Principles.

2. Enhance governance to become more effective: New working groups and a new

facilitator for IFBEC key topics.

3. 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)

4. Create and consolidate an external communication strategy to engage key

stakeholders, such as NGOs, national governments, and international organizations in

coordination with the facilitator.

12

Boosting IFBEC for the future:

Settle a long term Engagement Strategy: ethical business as

competitive advantage, recognized by our key stakeholders

Set clear priorities to address risks:

i. Responsible Supply Chain

ii. Compliance risks in Offset Programmes

13

IFBEC way forward

Position IFBEC as the international leader forum for business ethics in aerospace and defence