Baker Hughes 2007 Annual Report Download - page 110

2007 Form 10-K 27
provide to our customers and in excess of the increase in raw
material and labor costs; our ability to meet our growth objec-
tives in areas where the lack of transparency in the market
makes operating under the Deferred Prosecution Agreement
more difficult; and the strength of the North American markets
and our ability to protect pricing in markets in which demand
for oilfield services and industry capacity are more closely bal-
anced. Other factors include, but are not limited to, our ability
to: recruit, train and retain the skilled and diverse workforce
necessary to meet our business needs; expand our business
in areas that are growing rapidly with customers whose spend-
ing is expected to increase substantially (such as NOCs), and in
areas where we have market share opportunities (such as the
Middle East, Russia and the Caspian region and India); manage
increasing raw material and component costs (especially steel
alloys, copper, tungsten carbide, lead, nickel, chemicals and
electronic components); continue to make ongoing improve-
ments in the productivity of our manufacturing organization
and manage our spending in the North American market
depending on the relative strength or weakness of this market.
Compliance
We do business in over 90 countries including approxi-
mately one-half of the 30 countries having the lowest scores,
which indicates high levels of corruption, in Transparency Inter-
national’s Corruption Perception Index survey for 2007. We
devote significant resources to the development, maintenance
and enforcement of our Business Code of Conduct policy, our
FCPA policy, our internal control processes and procedures and
other compliance related policies. Notwithstanding the devo-
tion of such resources, and in part as a consequence thereof,
from time to time we discover or receive information alleging
potential violations of laws and regulations, including the FCPA
and our policies, processes and procedures. We conduct internal
investigations of these potential violations and take appropri-
ate action depending upon the outcome of the investigation.
We anticipate that the devotion of significant resources
to compliance related issues, including the necessity for inves-
tigations, will continue to be an aspect of doing business in a
number of the countries in which oil and natural gas explora-
tion, development and production take place and in which we
are requested to conduct operations. Compliance related issues
have limited our ability to do business and/or have raised the
cost of operating in these countries. In order to provide products
and services in some of these countries, we may in the future
utilize ventures with third parties, sell products to distributors
or otherwise modify our business approach in order to improve
our ability to conduct our business in accordance with laws
and regulations and our Business Code of Conduct.
Our Best-in-Class Global Ethics and Compliance Program
(“Compliance Program”) is based on (i) our Core Values of
Integrity, Performance, Teamwork and Learning; (ii) the standards
contained in our Business Code of Conduct; (iii) the laws of
the countries where we operate; and (iv) our commitments
to the DOJ and SEC. Our Compliance Program is referred
to within the Company as “C2” or “Completely Compliant.”
The Completely Compliant theme is intended to establish the
proper Tone-at-the-Top throughout the Company. Employees
are consistently reminded that they play a crucial role in ensur-
ing that the Company always conducts its business ethically,
legally and safely.
Our Chief Compliance Officer (“CCO”) oversees the devel-
opment, administration and enforcement of our Business Code
of Conduct, as well as legal compliance standards, policies,
procedures and processes. The CCO reports directly to the
General Counsel and the Chairman of the Audit/Ethics Com-
mittee of our Board of Directors. The CCO has ready access
to all of the other senior officers of the Company. Our legal
compliance group of over 30 employees includes our CCO,
our Global Ethics & Compliance Director, four Regional Trade
Directors, FCPA due diligence counsel, and specialized inves-
tigative counsel. The legal compliance group and our other
company attorneys located throughout the world are available
to answer questions regarding the Compliance Program and
provide assistance to employees.
Highlights of our Compliance Program include:
•฀ A฀comprehensive฀employee฀compliance฀training฀program฀
covering substantially all employees. This includes requiring
all employees to take web-based FCPA training and testing
modules which are available in numerous languages; man-
datory global, in-person, specialized training on FCPA com-
pliance for virtually all operations managers (approximately
8,000 employees) and specially designed training for all finance
personnel (approximately 2,000 employees). In addition,
our programs allow us to verify the prompt training of new
employees regarding our Core Values, Business Code of
Conduct and Compliance Standards;
•฀ Comprehensive฀internal฀policies฀over฀such฀areas฀as฀payments฀
to non-U.S. commercial agents, charitable donations relating
to non-U.S. operations; gift-giving and travel and entertain-
ment to non-U.S. government officials. In addition, we have
country-specific guidance for customs standards, export and
re-export controls, economic sanctions and antiboycott;
•฀ We฀have฀a฀compliance฀council฀that฀meets฀quarterly฀and฀is฀
comprised of division compliance officers, key line managers
from our divisions, and senior representatives of the Ethics &
Compliance Group, Finance, Security, Human Resources,
Health, Safety and Environmental, and Internal Audit. This
compliance council is responsible for assisting the CCO with
the strategic direction, ongoing development, coordination,
and implementation of the Compliance Program;
•฀ We฀use฀technology฀to฀monitor฀and฀report฀on฀compliance฀
matters, including a web-based antiboycott reporting tool
and a planned future use of a global trade management
software tool;
•฀ We฀have฀a฀whistleblower฀program฀designed฀to฀encourage฀
reporting of any ethics or compliance matters without
fear of retaliation including a worldwide Business Helpline
operated by a third party and currently available toll-free
in 150 languages;
•฀ We฀have฀established฀a฀Blue฀Ribbon฀Panel฀comprised฀of฀well-
known outside experts advising us in the areas of securities
and compliance laws;
•฀ We฀have฀significantly฀reduced฀the฀number฀of฀our฀non-U.S.฀
commercial agents that we use to conduct our business. For
the non-U.S. agents we continue to use, we employ extensive
pre-retention FCPA due diligence requirements, as well as