Compliance aspects of contracts with agents
Binding models for contracts with agents are available on the intranet, together with explanations and a company organisational directive for agency contracts. These include the following products of RUAG's efforts to combat and avoid corruption:
- Detailed, easily comprehensible anti-corruption clause.
- RUAG's right to immediately dissolve the contract and claim compensation if the agent violates the ban on corruption.
- RUAG's right to regular reporting from the agent on past and upcoming activities. If the agent fails to fulfil this obligation, a contractual penalty will be forfeited and the agent should expect the contract to be dissolved.
- At RUAG's request, the agent must produce a statement from an independent, local legal expert confirming that the contractually agreed activity of the agent and the compensation to be provided is admissible under the law governing the activity.
- RUAG has set an upper limit for the agent's commission, which usually is determined by a percentage of the contractual volume brokered. In addition, for high-volume customer contracts RUAG specifies a declining scale of commission, and in certain cases requires a cap on the agent's commission in absolute numbers.
- Specific and, in particular, verifiable information on the paying agent for commission claims from the agent.
Due diligence when selecting and instructing agents
RUAG has a well-established process for selecting and instructing agents whose (sole) task is to broker opportunities for business deals: agents are screened situationally, and with particular regard to country/nationality, using an in-house company organisational directive for agency contracts. Specifically, screening is done by calling in external companies specialized in obtaining "background information" on individuals and businesses. The same procedure applies when existing contracts with agents come up for renewal (or at the latest after three years).
As part of the preparation for agent relationships, relevant information on the selection process, the agent themselves and the planned content of the agreement needs to be submitted to the Compliance Board or its committee. In addition, a specific list of questions aimed at gauging the risk of corruption must be answered ("red flag topics"). Contracts with agents may only be concluded on the basis of a precisely specified standard contract text. This will contain, inter alia, provisions concerning the amount of commission, the paying agency for commissions, the duty of the agent to provide regular reporting and, of course, an effective ban on corruption clause. In each and every case, agent contracts and renewals/extensions of such contracts require the prior approval of the Compliance Board or the Compliance Board committee with particular expertise in this area.