This presentation was delivered at the ISO 37001 & Anti-Bribery PECB Insights Conference by Ralph Haddad, Global Compliance Leader at Anti-Corruption at CAE Inc.

1. Mitigating Corruption
Risk in a Global Market
Ralph El-Haddad
Global Compliance Leader at CAE Inc.

2. 2
Agenda
 Familiarization with CAE’s background and anti-
corruption laws applicable to its operations
 Summary of CAE’s Anti-Corruption Policy and processes
 Description of CAE’s preventive measures and corporate
culture
 Reporting tools and support available for employees

3. 3
CAE Background
 CAE is a global leader in training for the civil aviation,
defence and security, and healthcare markets
 Founded in 1947, CAE expanded its sales internationally
in the 1980s, became the world leader in the sale of
flight simulators in the 1990s, launched a network of
training centres in early 2000s
 Today, CAE has over 8,500 employees in over 35
countries, and operates 67 training locations
 CAE’s business is divided in three core business
sectors, each led by a Group President:
 Civil Aviation
 Defense and Security
 Healthcare

4. 4
Anti-Corruption Laws
 Any corporation is bound by anti-corruption laws of the
origin country as well as any country in which said
corporation has presence.
 Along with local anti-corruption laws, CAE is mostly
concerned with three anti-corruption legislations:
1. The Corruption of Foreign Public Officials Act (CFPOA)
2. The Foreign Corrupt Practices Act (FCPA)
3. The UK Bribery Act (UKBA)
 It is important to note that a “foreign official” in the
context of CAE’s operations means any officer or
employee of a state-owned enterprise, or even a
corporation with a majority share owned by the
government.

5. 5
Corruption Risk Profile
 CAE’s company profile places it in a position where there is a high
risk of exposure to corruption or unethical behavior for the following
reasons:
 Presence in countries with a high corruption index
 Independent offices expose CAE to risks of unauthorized payments
 Contact with government officials
 Use of third parties such as foreign representatives and consultants
 There are two main avenues that could put CAE at risk:
Foreign
Reps
Unauthorized
Payments

6. 6
Foreign Representatives
 Foreign reps are third parties hired in countries where CAE has
minimal employee presence as they are a cost-effective alternative.
Their main task is to assist CAE in marketing activities and in selling
its products and services.
 As CAE is expanding its worldwide presence, the need for
representatives is diminishing. The CAE Compliance Office is
tasked with managing all rep agreements by working in conjunction
with the business unit:
 The business unit determines the need for a representative
 The Compliance Office conducts a detailed due diligence and
determines the amount that should be paid to the
representative
• Who are the reps? Are they related to government officials?
• Do they have any red flags associated to them?
• What services do they provide for the fee that they are earning?

7. 7
Processes and Safety Measures
 Reps go through a rigorous process in order to be hired by CAE
 In addition, our foreign rep agreements contain safety measures to
ensure that reps will not use the fees paid as bribes:
 Agreements are only signed by the Group President of the applicable
business unit after obtaining approval from the Chief Compliance
Officer
 The fee is only paid after a contract is awarded to CAE
 The fee is paid to a bank account with the rep’s name using the project
milestones
 The fee amount is calculated based on the services provided
 Reps go through anti-corruption training and sign anti-corruption
certifications prior to being hired
 Rep agreements are only valid for one year, and if they are to be
renewed, the rep must undergo the above process upon renewal
Justification Interview
Due
Diligence
Training and
Certification
Agreement

8. 8
Business Courtesies
 Business courtesies help corporations develop and maintain
relationships with customers. However, it is important to understand
the rules concerning the exchange of business courtesies in order to
avoid misconduct and the risk of unauthorized payments.
 A business courtesy is deemed unacceptable when it is:
 Money or a cash equivalent
 Requested by recipient
 Extravagant and luxurious
 Exchanged with the same party multiple times a year
 Provided solely to a spouse or close relative
 In CAE’s Anti-Corruption Policy, there are spending limits attributed
to business courtesies. These limits vary depending on what the
purpose is, who the recipient is and in what country the business
courtesy is being exchanged.

9. 9
Prevention
 To mitigate the risk of unauthorized payments, CAE requires
employees to present proper justification before using company
funds. There has to be a detailed and valid explanation for the use
as well as prior approval from the employee’s supervisor and the
Finance department.
 In addition, CAE’s Internal Audit and the Compliance Office conduct
regular audits and risk assessments of areas that could potentially
be compromised, such as employee spending or fees paid to third
parties.
 Our Anti-Corruption Policy and related processes are subject to
continuous improvement in order to adapt to the everchanging
landscape.
 CAE’s Political and Charitable Contributions Policy prohibits
employees from making any political donations in CAE’s name, and
all charitable contributions must be made by the Global
Communications department.

10. 10
Red Flags
 Here are some of the red flags to watch out for:
 Country has a reputation for corruption
 Signs of collusion between suppliers and customers
 Third parties requesting gifts or cash payments
 Excessive or lavish expenses incurred
 Frequent complaints about an individual or party
 Although these alone are sometimes not enough to
make deductions, they are a signal that prompts us to
investigate further.

11. 11
Management Tone
 At CAE, our CEO, as well as all the executive
management committee are continuously vocal about
the importance of ethical conduct.
 The Chief Compliance Officer reports monthly to the
management committee on all compliance matters and
reports quarterly to the Board of Directors.
 CAE is also a member of the UNGC in support of social
responsibility and ethical practices.

12. 12
Training
 Employees are required to go through the online Anti-
Corruption training annually.
 In addition to online training, the Compliance Office
conducts live training to several departments. This
training would be customized based on the activities
of each department.
 In addition, employees are required to annually certify to
the Code of Conduct.
 An anti-corruption manual is distributed to employees for
a quick reference on policy requirements.

13. 13
Whistleblowing
 CAE’s Whistleblower Policy encourages employees to
report any suspicious activities that they may witness.
Under this Policy, CAE is not allowed to retaliate against
any whistleblower.
 EthicsPoint is an anonymous reporting tool that CAE
offers to its employees.

14. Thank you!