Business Ethics and Conduct Policy
Revised, August 2018
This Policy sets forth the basic guidelines which Xcoal Energy & Resources and its subsidiaries and affiliates (the “Company”) expects its officers, managers, employees and contractors (collectively, “personnel”) to follow in dealing on behalf of the Company with the Company’s customers, creditors, suppliers, the general public, competitors, and with fellow Company personnel.
No policy can be complete in all respects. Good judgment based upon an understanding of the laws, regulations and canons of ethics is the best safeguard against improper or unethical conduct. Each employee is expected to attain a level of understanding of this Policy which will permit the proper exercise of such judgment, and to seek guidance from their immediate supervisor in those circumstances where such judgments could be questioned.
The Company’s Legal Department will monitor compliance with the Policy to assure that the Company conducts itself in a manner consistent with its obligations to society and its owners. In addition, those with management responsibilities within any area covered by this Policy will periodically be required to complete the “Statement of Compliance Form” – a written assurance of compliance with the legal and ethical principles set forth in this Policy.
A. GENERAL POLICY
The Company and its personnel will at all times transact business in full compliance with the law and in accordance with the highest principles of business ethics and conduct. These Policy guidelines are to be strictly adhered to at all times and under all circumstances. Policy violations may result in disciplinary action, including, if appropriate, discharge from employment.
It is the obligation of all employees to notify the Company if they become aware of a violation of this Policy by any other employee, contractor, or affiliate of Xcoal Energy & Resources and to assist and cooperate in any investigation of a potential violation of these rules or other Company policies.
The guidelines set forth in this Policy apply to all Company personnel and all Company-related transactions. Every officer and employee must be familiar with and apply this Policy. Moreover, those with supervisory responsibilities must ensure that employees under their direction or control are acquainted with applicable portions of the Policy. The Company’s commitment to full compliance applies to all applicable laws, regulations and judicial decrees of the United States (federal, state and local) and of other countries where the Company transacts its business. Portions of the Policy concentrate on laws and regulations which are particularly relevant to our business activities; however, this special emphasis on relevant areas of law does not limit the general policy requiring full compliance with all applicable laws and regulations.
In addition to compliance with all legal requirements, each officer and employee must adhere to the overriding ethical and professional standards generally governing the conduct of business. The Company’s interests are not served by any unethical practice or activity even though not in technical violation of the law.
C. EFFECT OF POLICY VIOLATION
Any knowing violation of the laws, regulations, or principles of ethics set forth in this Policy will be grounds for disciplinary action or dismissal from employment, and may subject the employee or former employee to civil liability and/or criminal prosecution under appropriate law. Any employee who knowingly authorizes or permits another to engage in a violation will also be subject to disciplinary action, dismissal, and other penalties. Those who receive this Policy shall be considered informed, and violations will be considered “knowing.”
D. EMPLOYEE RESPONSIBILITIES AND RIGHTS UNDER POLICY
Every employee is obliged to strictly adhere to this Policy at all times and under all circumstances. Any employee who is aware of violations or potential violations has a duty to advise his or her supervisor. Further, any uncertainties regarding legal or ethical issues involving Company affairs requires the employee to seek the advice of their immediate supervisor for clarification. An error in failing to secure advice or report policy violations could be costly to the individual and to the Company. Each employee should also be aware that the legal implications arising from each of their acts, as well as everything that they write, might be scrutinized at some future date by government officials or third parties. It is the right of every employee to report another person’s individual or Company Policy violations or seek the advice of their supervisor without risk to the employee’s job status or position by reason of such report or inquiry. To secure this right, each person to whom a report is made or from whom advice is sought shall use every reasonable means available to keep confidential the identity of any employee who requests such protection. The Company has zero tolerance for retaliation of any kind against any individual who in good faith makes inquiries, reports concerns, or participates in investigations of a potential violation of this Policy or associated applicable laws. No disciplinary action will be taken against an employee who in good faith reports a suspected violation or participates in an investigation.
II. CONFLICTS OF INTEREST OR VIOLATIONS OF TRUST
All personnel shall avoid any conflict between their personal interests and the interest of the Company in dealing with suppliers, customers, and all other organizations or individuals doing or seeking to do business with the Company. Similarly, employees in a position to control or influence action by the Company which will beneficially affect other businesses should be aware that any investment or financial interest by such employees or their family members in such other businesses could disqualify the employees from performing their jobs. All personnel should avoid outside business activities which may conflict with their ability to devote their efforts full-time to the business of the Company, unless those activities have been approved by their supervisor.
In many cases, a potential conflict of interest or violation of trust may be avoided by making a full disclosure of the facts prior to any transaction thereby permitting the Company to make an informed, independent decision regarding the transaction. Such disclosure should be made to the Chief Executive Officer or the President of the Company.
B. SPECIFIC EXAMPLES OF CONFLICTS OF VIOLATIONS
It may be considered to be in conflict with the Company’s interest or a violation of trust for an officer or employee or any immediate member of their family:
- to have an undisclosed interest in or involvement with any organization which has business dealings with the Company where there is an opportunity for preferential treatment to be given or received, except where such an interest comprises securities in widely-held corporations which are quoted and sold on the open market and the interest is not material (less than one percent of the outstanding securities or $50,000, whichever is lower);
- to buy, sell or lease any kind of property, facilities or equipment from or to the Company or to any company, firm or individual who is or is seeking to become a contractor, supplier or customer without disclosing (and obtaining permission) prior thereto;
- to accept commissions, a share in profits (other than dividends or interest in securities of widely-held corporations) or other payments, loans (other than with established banking or financial institutions), services, excessive entertainment and travel, or gifts of more than nominal value, from any individual or organization doing or seeking to do business with the Company; or
- to take advantage of any opportunity for personal gain that rightfully belongs to the Company. This would include business opportunities of which an employee becomes aware because of their employment by the Company. Such opportunities must be offered to the Company.
C. SENIOR FINANCIAL OFFICERS
Xcoal Energy & Resources’ principal executive officers must engage in honest and ethical conduct, including the ethical handling of apparent conflicts of interest between personal and professional relationships. These officers must avoid conflicts of interest.
Xcoal Energy & Resources requires full, fair, accurate, timely and understandable disclosure in reports, documents, and any other public communications made by the Company.
D. EFFECT OF VIOLATIONS
As with any other violation of Policy, a violation of the above conflict of interest provisions will be grounds for disciplinary action, including possible dismissal from employment, and may subject the employee or former employee to civil liability and/or criminal prosecution under appropriate law. Even so, not every potential conflict of interest is a Policy violation – under some circumstances following a full disclosure by the employee, the Company may independently determine to engage in a particular transaction which is beneficial to the Company notwithstanding the potential conflict. In such a case, the above conflicts of interest provisions are not violated. Therefore, the effect of a particular conflict of interest or violation of trust will depend upon the nature of the conflict or violation; its disclosure by the employee, its effect upon the Company, the severity of the violation, and the means available to recompense loss or prevent future injury.
III. ANTITRUST AND TRADE REGULATION
Antitrust laws can be complex. In general, however, there should not be any discussion or agreement with competitors or potential competitors about commercial issues such as pricing, rates, customers, or business plans. Any questions regarding dealings with competitors should be directed to the Legal Department.
Every officer and employee of the Company shall at all times abide by the antitrust laws and trade regulations of the United States and, to the extent applicable, foreign antitrust and competition laws of foreign countries within which the Company does business. Violations of the antitrust laws or trade regulations may subject the Company to fines, injunctions and substantial monetary damages. Moreover, violations of certain antitrust laws are now considered felonies, exposing an employee to the risk of fine and/or imprisonment.
IV. GOVERNMENTAL REGULATIONS AND ANTI-CORRUPTION COMPLIANCE
A. COMPLIANCE WITH GOVERNMENTAL AUTHORITY
The Company shall comply with the laws, regulations, decrees, and orders of every governmental agency, regulatory authority, and judicial body having jurisdiction over it. Without limiting the generality of the foregoing, the Company will comply with the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”) as well as all laws relating to bribery or corrupt business practices in the countries where we do business. We will comply with the export control laws of the United States and any other country from which we export products, including the handling of boycott requests. The Company shall cooperate with governmental agencies in the proper performance of their duties to the fullest extent permissible under this Policy, even when not mandated by law or judicial decree.
B. PROHIBITION ON BRIBERY OF FOREIGN OFFICIALS
The Company’s relationship with Foreign Officials shall in all respects be of such a nature that the integrity and reputation of the officials and the Company shall not be impugned in the event full details of the relationship, including any gifts or entertainment, become a matter of public discussions.
The Company prohibits its personnel from making, offering, promising, or authorizing any payment or transfer of anything of value, either directly or through another party, to a Foreign Official in order to obtain or retain business or to secure any improper business advantage for the Company. Such conduct may expose personnel and the Company to criminal prosecution in the United States and in other countries in which the Company operates or has business ties. The senior management of the Company will fully support any officer or employee who declines to engage in conduct that would violate this Policy, even if the result is the loss of a business opportunity.
The term “anything of value” has been defined broadly by U.S. authorities. It includes, but is not limited to, cash or cash equivalents, entertainment, meals, travel, gifts, political or charitable contributions, reimbursement of expenses, personal favors, forgiveness of debt, offers of employment, tax advantages, and educational placement.
The term “Foreign Official” includes any officer, employee, or person acting in an official capacity for or on behalf of a non-U.S. government or any department, agency, or instrumentality thereof, or a public international organization. This term also includes non-U.S. political parties and their officials, and candidates for non-U.S. political office. It is defined broadly to include the employees and officers of companies and entities owned or controlled, in whole or in part, by a non-U.S. government, such as state-owned energy companies or public utilities, and anyone acting on behalf of a government entity.
The FCPA focuses on corrupt payments to individual Foreign Officials. The FCPA does not prohibit the Company from engaging in legitimate business transactions with government entities, but there is increased risk associated with such transactions. The Legal Department should be consulted prior to doing any business with Foreign Officials or entities that may be owned by Foreign Officials.
C. PROHIBITION ON FACILITATION PAYMENTS
A facilitating payment is a payment made to a Foreign Official to expedite routine and non-discretionary governmental actions. In those rare cases where a facilitating payment is legally permissible and required to be made to a Foreign Official whose duties are essentially of a minor ministerial or clerical nature, such payment must be insubstantial in amount, customary and legal where made, necessary to prevent a normal and fully legitimate transaction from being impeded, and properly reported and recorded as such in the Company’s books and records. Written pre-approval of any such facilitating payment must be obtained from the Chief Executive Officer or President prior to the payment of any funds.
D. PROHIBITION ON CONTRIBUTIONS IN FEDERAL OR LOCAL ELECTIONS; COMMUNITY/CHARITABLE GIVING
No Company funds, property, time or any other thing of value shall be contributed, expended, or reimbursed for any campaign purpose or to any candidate in connection with any election, primary election, political convention, or caucus in which a candidate or nominee for any federal, state or local office is to be voted upon or otherwise selected, nor under such circumstances shall the Company provide any indirect payment or support, in any form or through any means, such as through consultants, supplies, customers, employees, or other third parties.
The above prohibition on Company disbursements shall not prevent the Company from advocating a position, expressing a view, or taking other appropriate action with respect to any legislative or political matters affecting the Company or its interests. In those cases where political contributions or other support is permitted by law, no Company funds, property, time, or any other thing of value shall be given except upon the prior written approval of the Chief Executive Officer or President.
E. NO PROHIBITION ON INDIVIDUAL ACTIVITY
Individual officers and employees, acting in their individual capacity and at their own expense, are not constrained by this Policy from engaging in political activity, making political contributions, expressing views or taking other appropriate action on any political or legislative matter, provided that they do not seek reimbursement or other payment from the Company for such expense.
F. MEALS, GIFTS, TRAVEL, AND ENTERTAINMENT PROVIDED TO FOREIGN OFFICIALS
The FCPA permits the payment of reasonable and bona fide expenditures on behalf of a Foreign Official and directly related to the promotion, demonstration, or explanation of products or services or the execution or performance of a contract with a non-U.S. government or agency thereof. Accordingly, although providing anything of value to a Foreign Official must be approached with caution, the Company permits providing certain marketing materials or travel, meals, entertainment, or gifts to a Foreign Official provided full records are kept regarding the same.
Guidelines for Travel
Any travel or related expenses provided to a Foreign Official must be pre-approved and meet the following guidelines:
- it serves a legitimate Company business purpose;
- it is of the type and value that is reasonable;
- invitations to a Foreign Official are transparent, in writing, and clearly state the business purpose of the trip;
- no payment is made directly to a Foreign Official either through an advance or reimbursement for expenses (the Company should directly purchase travel or lodging from those who provide them, utilizing a travel agent or other third party if possible);
- providing “per diem” fees or expenses is avoided, particularly where meals are already being provided;
- no cash payments to a Foreign Official are made whatsoever;
- travel and lodging expenses are only provided for the identified Foreign Official and not for spouses, family, or friends of the Foreign Official;
- travel arrangements are directly between the place of residence or employment of the Foreign Official and the intended destination of the business travel, with no non-business side trips;
- no reimbursements are paid without presentation of appropriate receipts;
- providing the travel or lodging is permitted under local law and regulations and guidelines of the recipient’s governmental entity (note that some customers have strict policies against receiving gifts); and
- other than the travel or lodging identified above, the Foreign Official is not compensated for his participation in the planned trip.
Guidelines for Meals and Entertainment
Any meal or entertainment provided to a Foreign Official must meet the following guidelines:
- it serves a legitimate Company business purpose;
- providing the entertainment is permitted under local law and regulations and guidelines of the recipient’s governmental entity (note that some customers have strict policies against receiving gifts);
- it is of the type and value that is reasonable (not lavish, excessive, or frequent);
- it is in line with the local customs of the country where provided;
- it is of a type that is appropriate (e.g. no gentlemen’s clubs); and
- it is accurately recorded in the Company’s books and records.
Guidelines for Gifts
Any gift or other thing of value provided to a Foreign Official (with the exception of Marketing Expenses, discussed below) must be pre-approved and meet the following guidelines:
- it is of nominal value;
- it is something other than cash;
- it is provided as a courtesy, token of regard or esteem, expression of gratitude, or in return for hospitality in accordance with customs of the country where given;
- giving the gift is permitted under local law and regulations and guidelines of the recipient’s governmental entity (note that some customers have strict policies against receiving gifts);
- it is of the type and value that are customary and appropriate for the occasion; and
- it is fully and accurately recorded in the Company’s books and records.
Guidelines for Marketing Expenses
Marketing materials (such as pens, caps, or mugs) may be provided to a Foreign Official without pre-approval if they meet the following guidelines:
- they serve a legitimate Company business purpose;
- They are of nominal value;
- They are of the type and value that are customary and appropriate for the occasion;
- They are branded with the Company’s name and/or logo;
- They are permitted under local law and regulations and guidelines of the recipient’s governmental entity (note that some customers have strict policies against receiving gifts); and
- They are fully and accurately recorded in the Company’s books and records.
Any Company personnel who violate this section (Section IV) of the Policy, the FCPA, or any other applicable anti-corruption laws may be disciplined, up to and including termination of employment. Penalties for violating the FCPA are severe and may include civil and criminal prosecution resulting in fines, imprisonment, or both. The Company is not permitted to reimburse individuals for fines resulting from FCPA violations. The Company will actively seek to recoup any losses it suffers as a result of a violation of the FCPA or other applicable anti-corruption laws from the individual or entity that caused the violation.
The Company will provide training to personnel on compliance with the FCPA and this Policy as deemed appropriate by the Legal Department.
I. BOOKS AND RECORDS AND INTERNAL CONTROLS
The FCPA requires the Company and all its subsidiaries to (1) maintain books and records that accurately reflect each transaction and (2) maintain a system of internal accounting controls.
J. ADDITIONAL FCPA RESOURCES
For more information about the FCPA, see A Resource Guide to the U.S. Foreign Corrupt Practices Act, a compilation of information about the FCPA, its provisions, and its enforcement. It is available on the Department of Justice’s website at http://www.justice.gov/criminal/fraud/fcpa/guide.pdf.