Anti-Corruption Policy Afghan Development Association (ADA) House #264-265, Kabul River Bank, Pule-e-Surkh, Karta-echar, and Kabul, Afghanistan

Updated September 2011

TABLE OF CONTENTS SCOPE

2

SUMMARY

2

POLICY

2

OPERATIONAL GUIDANCE

3

BE ALERT TO “WARNING SIGNS”

3

GIFTS, MEALS AND ENTERTAINMENT

3

FACILITATING PAYMENT

4

BOOKS AND RECORDS AND INTERNAL CONTROLS

4

APPENDIX A

5

COMMON CORRUPTION WARNING SIGNS

5

GENERAL INDICATORS

5

USE OF AND PAYMENTS FOR AGENTS OTHER PAYMENTS GIFTS AND ENTERTAINMENT CHARITABLE CONTRIBUTIONS PAYROLL

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SCOPE This policy applies to Afghan Development Association and all wholly-owned subsidiaries (collectively, the organization).

SUMMARY ADA is committed to conducting its business fairly, honorably, with integrity and in compliance with all laws in all jurisdictions where it conducts business. The purpose of this policy is to set forth the Organization’s commitment against corruption and to ensure all directors, sectors head, managers, officers and employees to understand their individual responsibilities for compliance.

POLICY The basic tenets of ADA’s anti-corruption policy are: -

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ADA does not make any payments or provide anything of value to government officials, private or public company executives, representatives or to anyone to unfairly obtain or retain business or to gain an inappropriate advantage (“bribes”) or take any actions that create a sense of obligation by the recipient. ADA does not make bribes directly and indirectly through agents or other third parties. ADA avoids even the appearance of making bribes. We do not provide lavish meals, excessive entertainment or material gift-giving. Furthermore, government entities or commercial companies may have more restrictive policies in place that prohibit providing any gift, entertainment or meal regardless of value. ADA maintains detailed and accurate books, records and internal controls. The organization does not have any “off books” arrangements and does not falsify its books and records for any purpose.

The prohibition against paying bribes to government officials includes paying bribes to country, province/districts or local government regulators or business, tax, customs or other government employees or representatives to obtain regulatory advantage or favorable treatment. It also includes any offers to pay such bribes directly or indirectly through any agent, distributor, system integrator or any other third party. Organization policy extends this prohibition to all customers, including commercial establishments, NGOs or any other private companies. All directors, sectors heads, managers and employees should be aware of what their agents and other third party representatives (including vendors, suppliers, prime or subcontractors, etc.) are doing on the organization’s behalf and making best efforts to ensure that such entities are P a g e | 2| Anti-Corruption Policy for ADA

not paying bribes or engaging in other corrupt or illegal activities. Willful ignorance is no excuse and all directors, sectors heads and employees are expected to follow both the spirit and letter of this policy. Directors, sectors heads and employees violating this policy will be subject to severe discipline, up to and including termination. Compliance with this policy is especially important because Afghan Development Association is a Local NGO. As such, all directors, sectors heads and employees are potentially criminally liable for violating the Afghanistan Anti-corruption law for government agencies and Local NGOs a law that extends to bribe paying activity both within and outside the territory of the Afghanistan.

OPERATIONAL GUIDANCE Be Alert to “Warning Signs” Part of responsibility for compliance with this policy includes being alert to “warning signs.” These are facts or combinations of facts that might indicate a potential for corrupt activity to occur. Examples of “warning signs” include: -

Doing business with a company or NGO with well-known historical corruption problems Being advised by a customer representative or government official that you must work through a specific agent in order to obtain business Invoices or requests for payment that are unusual or outside the normal and wellknown vendor authorization, approval or payments processes

In potential bribery situations, there is normally more than one “warning sign.” Additional warning signs are attached at Appendix A. All directors, sectors heads, officers and employees should be alert for such warning signs and report any concerns about potential corrupt activity to their supervisor, the Managing Director of ADA or any member of the management team.

GIFTS, MEALS AND ENTERTAINMENT Payment for reasonable business-related meals and entertainment and nominal gift giving may be permissible under certain circumstances. Gifts to any government official are always under public scrutiny, so we strive to avoid giving gifts to government officials other than when it is a matter of protocol. In general, gifts, meals and entertainment must be appropriate and consistent with ADA’s business meals and entertainment policy. The following general rules apply: -

Local Law or Regulations – Gifts, meals, entertaining or other expenses must be legal under the laws and regulations of the country of the recipient. If you are uncertain

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whether something is permitted in the local country, please contact the ADA management for help. There must be a legitimate business purpose that justifies the expense. Under no circumstances should customary gifts, meals, entertainment, travel or lodging be given as an exchange for favorable business treatment by a customer. No Cash - Gifts should never be given in cash. Token gifts branded with Company logos or product information is preferred. Document Expenses – Expenses incurred under the policy must be fully documented in writing and properly approved. Accurately Reflected in ADA’s Books and Records – Extra care should be taken to ensure that the documentation and recording of a payment associated with any gift, meal or entertainment expenditure is accurate and clearly reflects the purpose of the payment.

FACILITATING PAYMENT Here is a narrow and complex exception for payments to government officials to facilitate or expedite the performance of “routine government action” to which a party is already entitled. -

Obtaining permits, licenses, certificates or work orders Providing police protection, mail pickup or delivery Providing phone services, power and water supply, loading and unloading cargo, protecting perishable products Scheduling inspections or facilitating in-country transit of goods

Books and Records and Internal Controls This organization must maintain detailed and accurate books and records and a system of internal controls that ensures accountability for all shareholder assets. “Off-the-books” payments and any fraudulent accounting practices or knowing falsification of the organization’s books and records to cover up any improper payment are strictly prohibited. Examples of falsified books and records that violate this policy include the payment of a false or fraudulent invoice, the miscoding of an improper payment in the general ledger, or a falsified expense report to hide improper entertainment of a government official. Every employee has an obligation to report truthfully all transactions and ensure no payments are made based on false documentation. Compliance for accurate reporting is monitored by the Admin & Finance Directorate and Internal Audit.

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APPENDIX A Common Corruption Warning Signs General Indicators     

Lack of documentation or vagueness of documentation for particular transactions Sloppy bookkeeping and poor financial controls over disbursements Lack of cooperation by employees in providing answers related to questionable payments Payments made from out-of-country sources or payments made to out-of country bank accounts Use of any “off-the-books” bank accounts

Use of and Payments for Agents        

Excessive use of and/or fees paid to agents dealing with government agencies Use of new and unknown agent with no prior relationship with organization for dealings with government agencies Use of agent with minimal skills, education or experience for work described in contract or invoices Hiring of agent to perform tasks that require no special knowledge or skills and could have been performed directly by ADA employees at organization facilities Lack of documentation of work to be performed or services rendered by agent, e.g., no written contract or invoices only stating: “For services rendered.” No summary report or deliverable summarizing the work Lack of clarity/knowledge on why agent was hired and what he/she was paid to do Agents hired at the strong suggestion of a government official Agent is a former government official dealing with his former agency

Other Payments        

Payment classified as expenditure to government is made to an individual Payment classified as expenditure to government is all made in cash Payment classified as facilitating payment, but does not meet definition Cash payment for which there is no clear, reasonable or appropriate purpose Lack of supporting documentation for payments Checks cut to “Cash” without supporting documentation High volume and weak controls over petty cash Payments to third parties associated with government business for which there does not appear to be a legitimate business purpose

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 

Travel expenses for customers, particularly government customers for which there is not a legitimate business purpose Travel expenses for families/friends of customers, even if the travel expense for the customer has a legitimate business purpose

Gifts and Entertainment   

Lavish gifts provided to customers, supplies, particularly government customers, other than items containing the company’s or organization logo and of a value at or just below the maximum permitted by the gift policy Providing more than one gift to an individual during any calendar year Excessive entertainment (value or frequency) provided to any customer

Charitable Contributions  

Charitable contributions made to any organization having any affiliation with a government official, customer or customer representative Charitable contributions made on behalf of a government official, customer or customer representative

Payroll 

Unexplained bonuses or commissions of unusual quantity and timing

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