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Compliance

ComplianceCompliance

General Business Principles of the Diehl Group

Preliminary Remark

Diehl carries out its business activities both in agreement with the laws and regulations of public authorities  in the countries  where  its  employees  work  and  in  accordance  with  the  principles  described here. All employees on all hierarchical levels, as well as the executive bodies, are to comply with them without exception. Unfair or even illegal practices are not compatible with our business principles.
 
We therefore attach importance to a working environment in which employees address compliance issues openly and discuss them with their superiors as well as with the Compliance Organization. Our goal is to sensitize all employees to compliance in their daily work by means of sustainable communication.
 
For the Executive Board   

Dipl.-Wirtsch.-Ing. Wolfgang Weggen 
Executive Vice President / CFO
(Corporate Department Finance and Controlling)

Dipl.-Kfm. Dr.-Ing. Martin Sommer    

(Corporate Department Human Resources)

1. Proper business practices

Diehl bases all its business activities on the principles of integrity and fairness. All business documents must be in accordance with both national laws and Diehl’s own guidelines. No assets are permitted which are not recorded in the company’s books.

1.1 Prohibition of bribery / corruption

Diehl forbids every kind of bribery. No employee may offer, provide, or accept bribes. Bribery is a criminal offense. This includes bribery in business transactions, as well as bribery of any holder of office or granting of advantage. In particular, any direct or indirect offer, promise, provision, or acceptance of inappropriate benefits, whether material or of any other kind, for the purpose of acquiring orders or procuring unlawful advantages is forbidden to all employees.  

1.2 Competition / prohibition of cartels  

All employees must comply with the legal regulations governing antitrust laws and business competition that are applicable in each case.

In particular, employees may not enter into or propose any agreement:

  • with competitors regarding the trade in goods or services with third parties;
  • with customers regarding prices or conditions of supply under which the customer will resell Diehl products or services to third parties.
1.3 Business relations

Relationships  with  other  companies  and  between  employees  and  their business  partners  –  e.g., with suppliers and customers and with governmental offices and their employees, etc. – must be characterized by transparency, especially in the areas of purchasing and sales. This also applies to relationships with former employees and, in particular, to the family members of employees who directly or indirectly supply goods or services to the Group.
 
Based  on  our  compliance  guidelines,  due  diligence  checks  are  carried  out  on  specific  business partners.
 
Employees who are involved in contractual negotiations with authorities must be familiar with the guidelines governing the process of submitting business offers in each respective country and may not violate them.
 
Diehl competes for orders by fair and legal means and carries out contractual negotiations in compliance with all legal provisions.

1.4 Observation of export and import control laws 

Employees involved in the import or export of goods, services or technical information must know and observe the relevant regulations. Furthermore, they have to ensure that the import or export documents are complete.
 
Where the export of products and technical data to a particular country is regulated, the employees must obtain the necessary licenses and other state permits prior to the export.

1.5 Money laundering prevention   

Diehl complies with the legal regulations on money laundering prevention.  

1.6 Avoidance of conflicts of interests

All employees must avoid any situation which could result in a conflict between their own personal interests  and  the  interests  of  Diehl.  A  conflict  of  interest  can  result  when  an  employee  takes  a course of action or pursues interests which can hamper him or her in objectively and effectively carrying out his or her duties and meeting his or her responsibility to Diehl.

1.7 Proper handling of invitations, gifts and other benefits  

Gifts and other benefits may be accepted or granted only after approval by the respective company superior or Corporate Compliance Officer (CCO) and only under the condition that the gifts or benefits do not contravene laws or guidelines, are within proper limits, and are not intended to influence decisions in a dishonest manner. The question of whether gifts or invitations are appropriate is to be decided according to normal business practices and with due consideration, if necessary, for the special customs of each individual country. Every appearance of dishonesty and incorrect behavior is to be avoided.

1.8 Business secrets and protection of intellectual property

Every employee is obliged to treat business information about Diehl or its business partners that is not public knowledge with confidentiality and to protect it from unintentional disclosure.
 
One of Diehl's most significant assets is its intellectual property. This includes patents, business secrets, trademark rights and copyrights. It is Diehl's Group policy to exercise all rights to economically significant intellectual property, and to use, maintain, protect and defend them in a responsible manner. Diehl respects the intellectual property of other natural persons and legal entities and uses  the relevant  information,  computer  programs  or  processes  only  in  accordance  with  the respective license agreements or within the framework of the legal provisions.

1.9 Data protection  

Personal data is collected, processed and utilized only insofar as this is permitted by law, serves legitimate purposes and is necessary for the fulfillment of duties. All employees must handle and protect personal data in accordance with applicable laws.
 
Diehl  uses  security  measures  of  a  technical  and  organizational  nature  to  protect  personal  data against manipulation, loss, destruction or against access by unauthorized third parties. These security precautions are continuously improved in line with the state of developments.

2.    Employees / colleagues

2.1 No harassment (respectful conduct) 

The  personal  dignity,  privacy  and  personality  rights  of  each  individual  are  to  be  respected.  Employees  may  not  be  subject  to  corporal  punishment  or  physical,  sexual,  psychological  or  verbal harassment or abuse.

2.2 Non-discrimination

Cultural differences are recognized and respected. All employees shall be fundamentally assessed only on the basis of the abilities and qualifications required for the job, including the issues of recruitment, promotion, remuneration, additional benefits, further training and qualification, dismissal and termination of the employment contract.

2.3    Health & safety

All employees are guaranteed working conditions meeting the requirements of occupational health and safety, with the relevant statutory regulations representing the minimum standards to be applied. Appropriate measures are taken to prevent accidents at work and occupational diseases.

3.      Social environment / public relations

3.1 Working hours

The working hours shall conform to the statutory regulations or the regulations applicable in the relevant branch of industry, whichever are more stringent.  

3.2 Remuneration

Wages and salaries, including payment for overtime and bonus payments, must be in line with the relevant laws and regulations.

3.3 Freedom of association

Diehl respects the employees' right to freedom of association and collective bargaining.  

3.4 Prohibition of child labor

Child labor in any form is prohibited. If no higher age limit is prescribed by law, no person of school age or under 15 years of age may be employed (exceptions in accordance with the Agreement on ILO Convention No. 138).

3.5 Prohibition of forced labor and human trafficking

Forced labor, slavery and human trafficking of any kind are prohibited. This includes involuntary prison  labor,  servitude  and  similar  forms  of  labor  (in  accordance  with  ILO  Conventions  29  and 105).

4. Environmental protection

All employees are obliged to observe the regulations and standards regarding environmental protection.  Environmental  impact  is  to  be  minimized  and  environmental  protection  continuously  improved.  

5. Observance of the business principles

Superiors and managers have a special role model function and ensure that their employees are familiar with the content of the aforementioned business principles. The managers implement preventive measures in their area in order to prevent violations. All employees at all hierarchical levels, as well as the executive bodies, are themselves responsible for compliance with the aforementioned  business  principles.  Notwithstanding further  civil  and/or  criminal consequences,  violations can be punished with disciplinary measures.  

5.1 Compliance training courses

In all countries in which the Diehl Group is active, compliance training courses (on-site events and e-learning) are held regularly for employees at all hierarchical levels. The contents of these compliance  training  courses  are  the  explanations  of  the  "General  Business  Principles  of  the  Diehl Group", with a focus on corruption prevention / competition law. For certain positions, e.g., sales and purchasing, training courses tailored to these areas are also conducted. 

5.2 Compliance Organization

In order to anchor compliance in the Diehl Group and to enforce the "General Business Principles of the Diehl Group", the Executive Board and Supervisory Board have established a Compliance Organization. The Corporate Compliance Officer (CCO) heads the Group's Compliance Organization.  
 
In order to regularly review our business processes with regard to compliance with these principles, and to identify compliance problem areas and to investigate identified violations, a Compliance Committee has been set up to which members of the Executive Board also belong. Moreover, the CCO regularly reports to the Executive Board.
 
The Compliance Organization at Diehl is supplemented by a neutral external ombudsman (lawyer) who is obliged to maintain strict confidentiality. Diehl employees and third parties can turn to the ombudsman as a neutral body in confidence if they have observed improper business practices in companies of the Diehl Group.
   
Diehl encourages its employees to report suspicious cases in order to prevent damage to the company. The identity of employees who report a possible violation will be treated confidentially. Similarly, no employee may be sanctioned or otherwise disadvantaged as a result of having made such a report.
 
The  contact  details  of  the  CCO,  as  well  as  of  the  ombudsman,  are  published  on  the  Internet (www.diehl.com  /  Group  /  Company  /  Compliance).  The  CCO  may  be  consulted  on  all  relevant matters.

Prohibition of Corruption

The following specifications shall apply in accordance with the provisions on the prohibition of bribery and corruption embodied in the "General Business Principles of the Diehl Group (GBP)".
Diehl protects and supports all employees who comply with the prohibition of corruption that is embodied in the GBP and stipulated in guidelines as well as work instructions and who accordingly refuse to act unlawfully – even if, as a result, a deal does not materialize or the company suffers any other disadvantage.

(Question 3.5) –> The references refer to the questions of the Defence Companies Anti-Corruption Index (DCI) 2019.    

Incentive system

Like all other business activities, Diehl's incentive system is based on the "General Business Principles of the Diehl Group (GBP). Diehl employees are obliged not only generally but also contractually to meet the GBP so that the prohibition of bribery and corruption – also in connection with incentive systems – is firmly laid down in this way as well. Furthermore, the GBP provisions underline the importance of integrity, fairness and law-abidance so that ethical behavior is also stipulated as an indispensable prerequisite for all Diehl employees in the context of incentive systems.
Thus, incentive systems clearly focus on the way objectives are to be achieved. In accordance with a guideline, the Executive Board has the possibility to reduce or cancel bonuses in case Compliance regulations have been violated. Accordingly, attention is paid in all areas with inherent risks, such as sales, that any financial bonuses paid are always proportionate to the respective employee's salary.

(Question 3.4)

Secure handling of invitations and gifts

Flyer: “How to handle invitations and gifts correctly”

(Question 5.3.1)

Compliance training and communication

Compliance training (attendance-based training and e-learning) is regularly conducted for employees on all hierarchical levels in all countries in which the Diehl Group is operating. If required, attendance-based training is accompanied by local lawyers or interpreters. The e-learning program is available in various corporate languages.
Compliance training is concerned with explaining the "General Business Principles of the Diehl Group“ with emphasis on corruption prevention/competition law. The employees concerned are required to repeat the Compliance training every 3 years, where they are also informed about reporting channels, including the ombudsman Dr. Rainer Buchert (whistleblowing reporting).
Especially tailored training courses are provided for certain positions with special inherent risks (e.g. sales and purchasing), for medium-level management as well as the Executive Board – for positions with special inherent risks once a year. These training courses with anti-corruption emphasis take place, for instance, during regularly held sales and purchasing meetings as well as in the context of executive staff and Executive Board meetings.
Training courses provided in the context of management events also address Compliance as a managerial task because executives are the decisive link between top management, Compliance organization and day-to-day business. Executives are trained as multipliers to enhance their employees' awareness of corruption-critical situations in daily business.

(Questions 3.1 and 3.2)

Diehl's Corporate Compliance training and communication program is very extensive, also with respect to corruption prohibition. The training documents contain numerous examples, e.g. giving and accepting gifts and other benefits, and refer to the special requirements in the international environment. Compliance processes are explained and communicated to the employees by means of graphics / charts.
The effectiveness of Compliance training is checked, among other things, by means of the participants' feedback. Sensitized by the training content, it is usual practice that, in case of doubt, employees contact Corporate Compliance to inquire about how to correctly deal with invitations and gifts or how to exactly implement the Compliance guidelines. Moreover, Corporate Compliance systematically obtains feedback about training in personal conversations. This feedback is used to continuously improve training and tailor it exactly to the participants' requirements. In addition, the participants and training contents are documented – so that Corporate Compliance can take appropriate measures, if necessary, to further improve the participation quotas.
Besides numerous attendance-based training courses and the e-learning program, there are also publications in company journals, on the Internet and intranet. Here, too, Corporate Compliance asks for feedback in personal conversations to improve the effectiveness of the communication measures.
Moreover, a Compliance App is currently being implemented, making the anti-corruption guidelines and other documents at any time accessible to employees on their mobile end devices. Thus, employees will anywhere be able to obtain flexible support in the App.
Compliance communication on different channels (attendance-based events, printed and digital media, etc.) provides variety for the users, increases Compliance awareness and the effectiveness of the Compliance measures taken.

(Question 3.3)   

Protection of whistleblowers

Diehl's Compliance organization is complemented by a neutral, external ombudsman (lawyer) who is obliged to maintain strict confidentiality. The ombudsman's contact details are available on the Internet (www.diehl.com / Group / Company / Compliance). The ombudsman acts as neutral, confidential point of contact for Diehl employees and third parties, such as suppliers, joint venture partners, etc., if they have observed improper business practices in companies of the Diehl group. Thus, Diehl employees and other whistleblowers can report suspected violations of Compliance standards without being required to reveal their identity as whistleblowers because any conversation with the ombudsman is subject to the lawyer's duty of confidentiality. This is why both employees and third parties should make use of the opportunity to exchange information with the ombudsman in case of doubt. He can be reached on all usual communication channels – by phone, e-mail, letter mail or fax. Information from abroad is mostly received by e-mail. Information provided in languages other than German or English is translated and answered at short notice. The contact details of the Corporate Compliance Officer (CCO) are also available on the Internet (www.diehl.com / Group / Company / Compliance). The CCO may also be consulted regarding all Compliance-related issues.
No Diehl employee worldwide and no other whistleblower, whether he/she is an employee of a joint venture or of a supplier etc., will be subject to sanctions or put at a disadvantage in any other way due to the fact that he/she has provided any such information. Diehl employees who violate that principle will be subjected to sanctions.
The fact that whistleblowers have used the ombudsman's reporting channel shows that Diehl employees rely on these assurances.

(Questions 3.6 and 3.7)   

Investigation results

Reports on bribery and corruption were received in the past financial year, also through the whistleblowing channel, i.e. our ombudsman Dr. Rainer Buchert. In all cases, investigations were initiated based on the information obtained. The investigation results also led to disciplinary measures, such as dismissals (as of September 2019)

(Question 2.6)

If there are any findings about bribery and corruption incidents within the company, e.g. as a result of internal investigations, they are reported to the Executive Board. It is the responsibility of the Corporate Compliance Officer to check whether criminal offenses must be disclosed to the competent authorities and to ensure such disclosure, when appropriate.

(Question 2.5)


Lobbying

Through its office in Berlin, Diehl is in contact with political and ministerial decision-makers, with partner companies and associations represented there as well as with embassy representatives.
Through its office in Brussels, Diehl is in contact with decision-makers from the European Community, the European Commission, the European Defence Community and NATO, as well as with partner companies and associations represented there.
As published in the EU Transparency Register, Diehl keeps track of the following and other main EU initiatives, policies and legislative files:
Transposition/monitoring of the Defence Package, Preparatory Action on CSDP-related research, SESAR, European Fund for Strategic Investment, regional policy / Structural Funds, Energy Efficiency Directive, Energy Union, ETS reform, Smart Grids/Smart Metering, resource efficiency, Horizon 2020, FP9
Relevant policy implementation, public relations and communication activities such as projects, events and publications:
Bi-annual reception concerning current political topics (last time in 2015).

List of meetings with the European Commission

Participation in EU structures and platforms
Intergroups (European Parliament): Sky and Space Intergroup
Two full-time equivalent employees are involved in the activities published in the EU Transparency Register.
Annual costs related to activities covered by the Register are estimated at 200,000 to 300,000 euros for financial year 2017. During that financial year, Diehl Stiftung & Co. KG did not receive any funding from EU institutions.
Further (financial) information in the interest of transparency:
Diehl Stiftung & Co. KG is a member of several national associations that are also represented in Brussels, either by themselves or through their European associations (e.g. BDI, BDLI, BDSV, Wirtschaftsvereinigung Metalle). The membership fees for these have not been included in the cost calculation of the Diehl office in Brussels to avoid double counting.
By its registration in the EU Transparency Register, Diehl Stiftung & Co. KG has signed the Transparency Register's code of conduct.

Diehl Defence is a member of the following associations:

  • BDI – Bundesverband der Deutschen Industrie (Federation of German Industries)
  • BDLI – Bundesverband der deutschen Luft- und Raumfahrtindustrie (German Aerospace Industries Association)
  • BDSV – Bundesverband der deutschen Sicherheits- und Verteidigungsindustrie e.V. (Federation of German Security and Defence Industries)  
  • DGLR – Deutsche Gesellschaft für Luft- und Raumfahrt (Germany Society for Aeronautics and Astronautics)
  • DWT – Deutsche Gesellschaft für Wehrtechnik (German Association for Defence Technology)
  • FKH – Förderkreis Deutsches Heer e.V. (Association of the German Army)
  • LR BW – Luft- und Raumfahrt Baden-Württemberg e.V. (Forum Aerospace Baden-Wuerttemberg e.V.)
(Questions 5.2.2 and 5.2.3)

Sales representatives and agents

Based on the Diehl Compliance guidelines, due diligence reviews are conducted for defined business partners, such as sales representatives and agents. Accordingly, a corporate guideline on conclusion of consultancy and representative agreements exists.
The integrity of consultants and representatives is indispensable for such a cooperation because Diehl can also be held responsible for their actions. The above-mentioned Compliance guideline is implemented to ensure that the consultants and representatives engaged meet the same high standards of integrity as Diehl in their business activities and transactions. This guideline provides instructions for the engagement and management of representatives and consultants and is to ensure that all representatives and consultants comply with statutory provisions, further applicable regulations and procedures as well as anti-corruption legislation.
Thus, a regular (i.e., every two years or in the case of major changes of business relations) Compliance due diligence review of all current and potential consultants and representatives is obligatory to prevent illegal business practices, such as fraud, bribery or corruption. The due diligence review is performed, using software and other tools, on the basis of a risk assessment carried out before. It covers all information relevant for corruption prevention, especially the qualifications of the business partner, the relations with Diehl and Diehl employees, special incidents in the past (e.g. insolvency, corruption, punishable offenses, antitrust proceedings etc.), modes of settlement as well as determination and verification of the beneficial owner.
The beneficial owner of sales representatives / agents is identified and verified prior to an engagement as well as every two years and in the case of significant changes of the business relations. Like the entire due diligence review, the beneficial owner is determined and verified on the basis of a risk assessment undertaken before, which means all information provided by the representative / agent is verified, e.g. by excerpts from the commercial register. Moreover, a verification is carried out on the basis of independent sources (e.g. external service providers) in the case of high-risk representatives / agents. If the beneficial owner cannot be determined and verified, Diehl will not enter a business relationship with the representative / agent, or Diehl will terminate an existing relationship.
With regard to the entire Compliance due diligence review, all highest-risk representatives and agents are subjected to an extended Due Diligence Review, which means that an extension of the review to include an on-site review, a review carried out by external service providers or constant monitoring may be necessary, depending on the risk assessment carried out.
If risks have been identified in the course of the due diligence review, that cannot be reduced, Diehl will not enter a business relationship with such partners or terminates the business relationship. Thus, the conclusion or extension of an agreement always depends on the results of the Compliance due diligence review carried out before.
This guideline applies to all national and foreign companies of the Diehl Group with respect to their relations with consultants and representatives and provides, inter alia, that

  • the remuneration level must correspond to the scope of services provided;
  • the remuneration must correspond to the commission scale laid down;
  • the remuneration is in any case subject to the CCO's approval or the approval of an authorized representative appointed by the CCO;
  • the remuneration is to be transferred to a first-class bank account in the country where the services are provided or to a bank account in Germany;
  • all services and activities performed by the representative / consultant have to be documented.

In this way it is ensured that the remuneration structure complies with the prohibition of bribery and corruption embodied in the GBP. In any case, the CCO or the authorized representative appointed by him restricts the remuneration so that it is not inappropriately high. Moreover, the remuneration is to be paid only in part payments, based on clearly defined milestones within the agreement.
As a general rule, all consultancy and representative agreements must be made in writing on the basis of the Compliance standard agreements. Among other provisions, these standard agreements contain specific declarations and assurances regarding compliance with all applicable anti-corruption laws and provisions as well as regulations regarding termination without notice for non-compliance.
The term of the agreement shall not exceed two years without prior approval of the CCO or an authorized representative appointed by the CCO. All representative and consultancy agreements shall be administered, executed, renewed and terminated in accordance with this guideline and are available to the CCO.
In addition, all representative and consultancy agreements are subjected to internal audits (Compliance audits) at regular intervals.

(Questions 7.1.1, 7.1.2, 7.1.3, 7.1.5)

Offset

Special Offset Managers are responsible for the coordination of all offset activities at Diehl. They prepare offset proposals, and check and negotiate offset agreements. Moreover, they cooperate with offset authorities.
As offset agreements may involve risks of corruption, all employees in this area are, of course, trained with regard to corruption prevention and bribery prohibition.

(Question 8.1)

High-risk markets

Diehl identifies countries with high corruption risks, based on the Corruption Perception Index (CPI) by Transparency International and further assessment criteria. If Diehl intends to do business in those countries, such activities are subject to an intensive Compliance review.
If the review result shows that corruption risks cannot be reduced satisfactorily by taking Compliance measures, Diehl will not transact that business. Appropriate measures may, for instance, be on-site visits by the CCO in the course of business partner screening, reviews carried out by external service providers or country-specific trainings at the Diehl locations.

(Question 9.1)

 

Organization

In order to implement Compliance within the Diehl Group and to enforce the "General Business Principles of the Diehl Group", the Executive Board and Supervisory Board have established a Compliance Organization. Diehl's Compliance Organization is headed by Attorney Esser (Corporate Compliance Officer).

A Compliance Committee, also including members of the Executive Board, has been set up to regularly check the business processes for compliance with the "General Business Principles of the Diehl  Group", to identify Compliance issues and to investigate recognized violations. Moreover, the Corporate Compliance Officer (CCO) regularly reports to the Executive Board.

In addition, the Compliance organization includes a neutral, external ombudsman who is obliged to maintain strict confidentiality (Attorney Dr. Rainer Buchert). Diehl employees and third parties may contact him in confidence if they have observed improper business practices within companies of the Diehl Group.