bebe stores, inc.
ANTI-BRIBERY & FOREIGN CORRUPT PRACTICES ACT POLICY

 

1. INTRODUCTION

bebe stores, inc. (bebe) is committed to conducting its business ethically and in compliance with all applicable laws and regulations, including the U.S. Foreign Corrupt Practices Act (FCPA) and other laws that prohibit improper payments to obtain a business advantage.

This document describes bebe’s policy prohibiting bribery and other improper payments in the conduct of bebe’s business operations and the responsibilities of employees for ensuring the implementation of the policy (Policy). Questions about the Policy or how it applies to particular circumstances should be directed to bebe’s General Counsel.

 

2. POLICY OVERVIEW

bebe strictly prohibits bribery or other improper payments in any of its business operations. This prohibition applies to all business activities of bebe, its affiliates and subsidiaries, anywhere in the world, whether they involve government officials or are wholly commercial. A bribe or other improper payment to secure a business advantage is never acceptable and can expose individuals and bebe to possible criminal prosecution, reputational harm or other serious consequences.

This Policy applies to everyone at bebe including all directors, officers, and employees, and to our dealings with business partners, including licensees, agents, and other intermediaries acting on bebe’s behalf. Each director, officer, and employee of bebe has a personal responsibility and obligation to conduct bebe’s business activities ethically and in compliance with the law. Failure to do so may result in disciplinary action, up to and including dismissal. bebe also expects our business partners, including licensees, agents, and other intermediaries acting on our behalf, to comply with the FCPA and other applicable anti-corruption laws.

Improper payments prohibited by this Policy include bribes, kickbacks, excessive gifts or entertainment, or any other payment made or offered to obtain an undue business advantage. These payments should not be confused with reasonable and limited expenditures for gifts, business entertainment, and other legitimate activities directly related to the conduct of bebe’s business.

bebe has developed a program for implementing this Policy, through appropriate procedures, guidance, training, risk assessments, investigation, and oversight. The Compliance Team is comprised of the General Counsel, the Chief Financial Officer, the Head of Human Resources, and may include additional members of the management team from time to time. The General Counsel has overall responsibility for the program, supported by the other members of the Compliance Team, and is responsible for giving advice on the interpretation and application of this Policy, supporting training and education, and responding to reported concerns. This Policy is in addition to bebe’s separate policy on Code of Business Conduct and Ethics which remains in effect.

 

3. DEALINGS WITH PUBLIC OFFICIALS

The prohibition on bribery and other improper payments applies to all business activities, but is particularly important when dealing with government officials. Many laws have specific requirements that apply to our dealings with governments and government officials. For instance, U.S. laws govern our dealings with U.S. federal, state, and local government officials. In addition, the FCPA and similar laws in other countries strictly prohibit improper payments to non-U.S. government officials to gain a business advantage and impose severe penalties for violations. Section 4 of this Policy provides a summary of the FCPA that is intended to provide personnel engaged in international activities a basic familiarity with applicable rules so that inadvertent violations can be avoided and potential issues recognized in time to be properly addressed.

 

4. OVERVIEW OF THE FOREIGN CORRUPT PRACTICES ACT

As a U.S.-based company traded on a U.S. public exchange, the FCPA applies to bebe. The FCPA is a criminal statute that prohibits improper payments to non-U.S. government officials to influence performance of their official duties. It makes it unlawful for any U.S. company, its directors, officers and employees or agents to offer, promise, pay, or authorize the payment of “anything of value” to any “foreign official” – a term that is very broadly defined – for a corrupt purpose, such as helping the company improperly obtain or keep business or secure some other “improper business advantage.” This prohibition applies whether the offer or payment is made directly or through another person.

In addition to prohibiting improper payments to foreign officials, the FCPA requires U.S. issuers, including companies traded on U.S. stock exchanges, and their controlled affiliates to keep accurate books and records of the transactions in which they engage and to maintain a system of internal controls that, among other things, can prevent “slush funds” and “off-the-books” accounts that might be used to facilitate or conceal questionable foreign payments. FCPA accounting requirements apply to all business activities, not just those involving foreign officials.

The penalties for violating the FCPA are severe. For a company, potential sanctions range from multi-million dollar fines and “disgorgement” of any business profits from an improper payment to loss of export privileges or eligibility to compete for U.S. government contracts.

These sanctions are in addition to potential reputational damage and investigation and defense costs, which may arise even without a formal government prosecution. The penalties for individuals can be even more severe, including substantial fines and imprisonment.

 

5. COMMON QUESTIONS ABOUT THE FCPA

A. When does the FCPA’s bribery prohibition apply?

The FCPA applies to our dealings with non-U.S. government officials; other laws apply to our dealings with U.S. government officials. The FCPA’s prohibition against bribery applies to improper payments offered or made by a “U.S. person” anywhere in the world, whether or not there is any other connection to the United States. The term U.S. person includes both U.S. companies and individuals who are citizens or permanent residents of the United States. The FCPA also can apply to third parties acting on behalf of a U.S. person. In addition, foreign nationals also may be prosecuted for causing, directly or through a third person, any act in the U.S. in furtherance of a corrupt payment.

B. What does the FCPA prohibit?

The FCPA makes it unlawful to bribe a foreign official to gain an “improper business advantage.” An improper business advantage may involve efforts to obtain or retain business, as in the awarding of a government contract, but also can involve regulatory actions such as licensing or approvals. Examples of prohibited regulatory bribery include paying a foreign official to ignore an applicable customs requirement or to issue a tax refund in excess of what is owed.

The FCPA’s bribery prohibition has been interpreted very broadly. A violation can occureven ifan improper payment is only offered or promised and not actually made, it is made but fails to achieve the desired result, or the result benefits someone other than the giver (for example, directing business to a third party). Also, it does not matter that the foreign official may have suggested or demanded the bribe, or that a company feels that it is already entitled to the government action. While certain limited exceptions may apply (described below), these should never be relied upon without first seeking guidance from the General Counsel.

C. Who is a “foreign official”?

A “foreign official” under the FCPA can be essentially anyone who exercises governmental authority. This includes any officer or employee of a foreign government department or agency, whether in the executive, legislative, or judicial branch of government, and whether at the national, state, or local level. Officials and employees of government-owned or controlled enterprises also are covered, as are private citizens who act in an official governmental capacity. The FCPA prohibition also applies to political parties and candidates, and to officials of public international organizations such as the United Nations.

Foreign official status often will be apparent, but not always. In some instances, individuals may not consider themselves officials or be treated as such by their own governments but nevertheless exercise authority that would make them a “foreign official” for purposes of the FCPA. Personnel engaged in international activities are responsible under this Policy for inquiring whether a proposed activity could involve a foreign official or an entity owned or controlled by a foreign government, and should consult with bebe’s General Counsel when questions about status arise.

D. What types of payments are prohibited?

The FCPA prohibits offering, promising or giving “anything of value” to a foreign official to gain an improper business advantage. In addition to cash payments, “anything of value” may include:

  • Gifts, entertainment, or other business promotional activities;
  • Covering or reimbursing an official’s travel or other expenses;
  • Offers of employment or other benefits to a family member or friend of a foreign official;
  • Political party and candidate contributions;
  • Charitable contributions and sponsorships.

Other less obvious items provided to a foreign official can also violate the FCPA. Examples include in-kind contributions, investment opportunities, stock options or positions in joint ventures, and favorable or steered subcontracts. The prohibition applies whether an item would benefit the official directly or another person, such as a family member, friend or business associate.

E. Does the FCPA prohibit offering or givinganythingto a government official?

The FCPA does not prohibit reasonable promotional or other business activities, including routine meals, legitimate charitable contributions, or sponsorships, that are not offered or given with a corrupt intent. Special care is required, however, when foreign officials may be involved to avoid any appearance that benefits are being offered to improperly influence the performance of official duties.

The FCPA also contains a limited exception for payments expressly authorized under the host country’s written law. This is a very narrow exception, however, requiring prior approval by the General Counsel before it can be relied upon.

F. Does bebe require special approvals before offering or giving something to a government official?

Yes. Business entertainment, gifts, and payment for travel expenses for any officials, including U.S. and foreign officials, are acceptable only upon the written approval of the General Counsel. The General Counsel will approve entertainment only if it has a valid business purpose and is reasonable in view of such business purpose. Entertainment will not be approved if it does not provide an opportunity to address business issues, is lavish, is requested too frequently for the particular official, or might otherwise prove embarrassing for bebe. Gifts will be approved only if they are of token value, are legal and customary in the jurisdiction in which they are given, and will be given openly to the official. Travel expenses, including food and lodging, will be approved only if they are directly related to the promotion or demonstration of bebe’s products or services or related to the execution of a contract. Expenses beyond what is reasonably necessary for the business purpose, including lavish accommodations or expenses for spouses and children, will not be approved.

In all cases that entertainment, gifts, or travel expenses are approved, the expenses must be supported by receipts and accurately recorded in bebe’s books. To the extent possible, all expenses should be paid directly to the vendor of the services. Contact the General Counsel before engaging in these activities.

G. Does bebe prohibit unofficial “facilitating” or “grease” payments customarily requested by low-level officials in some parts of the world to obtain a regulatory approval more quickly?

Yes. bebe generally prohibits facilitating payments. “Facilitating” or “grease” payments are small,unofficialpayments to a low-level official made to secure a “routine government action” that do not involve any discretion by the official such as:

  • Obtaining permits, licenses or other official documents that qualify a person to do business in a foreign country;
  • Processing governmental papers such as visas;
  • Providing police protection or mail service;
  • Scheduling inspections associated with contract performance or shipment of goods;
  • Providing phone, power or water service;
  • Loading or unloading cargo, or protecting perishable products or commodities from deterioration;
  • Other similar actions that are ordinarily and commonly performed by an official.

Facilitating payments do not include – and bebe does not prohibit - payment of official fees to a government entity to expedite a governmental action.

While the FCPA has a narrow exception that allows facilitating payments, these payments may violate local law in the host country or counterpart laws in other countries prohibiting bribery that may not exempt facilitating payments. Because facilitating payments can raise significant legal and business issues, bebe generally prohibits facilitating payments. If there is a threat that bebe’s business is being paralyzed by a government official demanding a facilitating payment, prior to taking any action, contact the General Counsel to discuss the situation and permissible options.

bebe recognizes that on rare occasions payments for health and safety purposes may be unavoidable. Such occasions include where an individual reasonably believes that there is an imminent threat to the health, safety, or welfare of a family member or co-worker. Where such a threat exists or a payment has been made, the General Counsel must be notified as soon as possible.

All facilitating, health, and safety payments remain subject to FCPA accounting and recordkeeping requirements and must be properly described in company records.

H. Can bebe be held responsible under the FCPA for improper payments by third parties?

Yes. The FCPA applies whether a bribe is made directly or through an agent, consultant, licensee, advisor, joint venture partner, or other intermediary acting on a company’s behalf. Under the law, bebe and individual officers or employees may be held liable for improper payments by a third party if there is actual knowledge or reason to know that a bribe will be paid. “Willful ignorance”– which includes not making reasonable inquiry when there are suspicious circumstances – is not a defense, and it also does not matter whether the intermediary is itself subject to the FCPA. All employees therefore must be alert to potential “red flags” in transactions with third parties and alert the General Counsel if a red flag arises.Seesection 6 of this Policy for additional guidance.

I. Are there special accounting and recordkeeping requirements under the FCPA?

Under the FCPA, bebe and its affiliates must keep accurate books and records that reflect transactions and asset dispositions in reasonable detail, supported by a proper system of internal accounting controls. These requirements are implemented through bebe’s standard accounting rules and procedures, which all personnel are required to follow without exception.

Special care must be exercised when transactions may involve payments to foreign officials. Off-the-books accounts should never be used. Facilitation or other payments to foreign officials should be promptly reported and properly recorded, with respect to purpose, amount and other relevant factors. Requests for false invoices or payment of expenses that are unusual, excessive or inadequately described must be rejected and promptly reported. Misleading, incomplete or false entries in bebe’s books and records are never acceptable.

J. Do other countries have similar anti-bribery laws?

Yes. Many countries now have laws similar to the U.S. FCPA that prohibit bribery of foreign officials by their citizens and companies, which can include local subsidiaries and affiliates of a foreign-based company. These laws are comparable to the FCPA, but can differ in important respects – such as the treatment of facilitation payments, which generally are prohibited by local laws. In addition, virtually all countries, including the United States, have domestic laws that prohibit bribery of their public officials. And, some laws, such as the U.K. Bribery Act, also prohibit commercial bribery as well as the acceptance of bribes.

bebe requires all directors, officers, employees and agents to comply in all respects with applicable U.S. and non-U.S. laws and regulations. The laws that apply to particular international business activities include those of the country in which the activities occur, as well as others that (like the FCPA) govern the international operations of national companies and citizens. Employees involved in international operations should consult with the General Counsel to ensure that they are aware of, and are complying with, applicable laws.

 

6. WORKING WITH BUSINESS PARTNERS, AGENTS, AND OTHER THIRD PARTIES.

bebe from time to time may engage the services of an agent, consultant or other intermediary to support its business activities, or may participate with licensees or other business partners in a joint venture or other business structure. These relationships are important to bebe and provide valuable contributions in many areas of business, but can also pose compliance challenges and thus require appropriate measures to prevent bribery.

As noted in Section 5.H. of this Policy, activities of third parties can expose bebe to risks under the FCPA and other anti-corruption laws. This Policy applies in all material respects to business conducted with or through an agent, consultant, licensee, joint venture or other business partner, especially where the third party is likely to interact with government officials on bebe’s behalf. Employees who manage, supervise and/or oversee the activities of third parties working with bebe are responsible for ensuring that such persons or entities understand and fully comply with this Policy, through appropriate measures. Measures appropriate to a particular relationship or transaction may vary.

Appointment of a third party ordinarily requires prior approval by an appropriate senior manager after appropriate diligence, description of the nature and scope of services provided in a written contract, and appropriate contractual safeguards against potential violations of law or bebe policy.

Personnel retaining or working with third parties should pay particular attention to unusual or suspicious circumstances that may indicate possible legal or ethics concerns, commonly referred to as “red flags.” Red flags could include evidence that suggests the third party has engaged in improper activity in the past, connections to governments or government officials, requests for unreasonable or non-transparent payments or other benefits, refusal to agree to comply with anti-corruption laws, or other suspicious facts or circumstances. The presence of red flags in a relationship or transaction requires greater scrutiny and implementation of safeguards to prevent and detect improper conduct. Contact the General Counsel if you identify a potential red flag.

 

7. EMPLOYEE RESPONSIBILITIES

This Policy imposes on all personnel specific responsibilities and obligations that will be enforced through standard disciplinary measures and properly reflected in personnel evaluations. All directors, officers, and employees are responsible for understanding and complying with the Policy, as it relates to their jobs.

  • Every employee has an obligation to be familiar with applicable aspects of the Policy and communicate them to subordinates;
  • Ask questions if the Policy or action required to take in a particular situation is unclear;
  • Properly manage and monitor business activities conducted through third parties;
  • Be alert to indications or evidence of possible wrongdoing; and
  • Promptly report violations or suspected violations through appropriate channels.

The Company’s managers have a particular responsibility to ensure that subordinates and, in some instance where appropriate, agents and other business partners, receive proper training, and to monitor for compliance with the Policy.

 

8. REPORTING POSSIBLE VIOLATIONS

Any director, officer or employee who has reason to believe that a violation of this Policy has occurred, or may occur, must promptly report this information to his or her supervisor, the next level of supervision, or the General Counsel. Alternatively, information may be reported in confidence by calling the Compliance Hotline at 866-232-3199.

Retaliation in any form against an employee who has, in good faith, reported a violation or possible violation of this Policy is strictly prohibited.

Employees who violate this Policy will be subject to disciplinary action, up to and including dismissal. Violations can also result in prosecution by law enforcement authorities and serious criminal and civil penalties.

When seeking guidance and/or reporting concerns, the following contacts and reporting options are available to you:

bebe FCPA Compliance Team
400 Valley Drive
Brisbane, CA 94005
c/o General Counsel
(Tel.) 415-715-3900

Alternatively, you may report information via the Compliance Hotline at 866-232-3199.