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Fine Tuning Anti-Corruption

InitiativesBrian Baldrate

Senior Counsel, International and Washington Operations

November 19, 2015

RAYTHEON MOST PRIVATE

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Benchmarking Raytheon to DOJ / SEC’s “Hallmarks of Effective Compliance Programs” In A Resource Guide to the U.S. Foreign Corrupt Practices Act, released November 2012, DOJ / SEC

have listed “Hallmarks of Effective Compliance Programs” which they believe should be included in an effective FCPA compliance program

Team compared Raytheon’s current FCPA practices to the list– Raytheon has all policies, processes or procedures expected under the 10 DOJ / SEC Hallmarks

DOJ / SEC “HALLMARKS” RAYTHEON POLICIES AND PROCEDURES

1 Commitment from Senior Management and a Clearly Articulated Policy Against Corruption Tone at the top and commitment to compliance, statements in Company’s Code of Conduct,

training programs, ethics policies, etc.

2 Code of Conduct and Compliance Policies and Procedures Code of Conduct and policies and procedures addressing anti-corruption, robust finance policies, processes and internal controls, Contracts and Supply Chain policies and procedures

3 Oversight, Autonomy, and Resources Integrated compliance structure – General Counsel is Chief Compliance Officer

4 Risk Assessment Internal Audit, business process owners and at enterprise level

5 Training and Continuing Advice Annual ethics and compliance education along with function specific FCPA training; on-line and in-person; video vignettes; General Counsel and Ethics as part of integrated compliance structure

6 Incentives and Disciplinary Measures System of reporting for concerns of misconduct with swift disciplinary actions imposed on employees who violate Raytheon’s Code of Conduct or applicable policies

7 Third-Party Due Diligence and Payments Due Diligence performed by General Counsel RWO: International Representatives & Consultants and Offset Providers; international supplier and customer due diligence procedures; due diligence for international transactions

8 Confidential Reporting and Internal Investigation Ethics Hotline, quarterly certifications, investigations, and reporting to senior leadership and the Board of Directors

9 Continuous Improvement: Periodic Testing and Review Internal Audit, FCPA audits, annual self assessments, and quarterly anti-corruption certifications, policies updated taking into account recent developments of anti-corruption laws and regulations

10 Mergers and Acquisitions: Pre-Acquisition Due Diligence and Post-Acquisition Integration Robust diligence integration procedures related to anti-corruption

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INTE

RN

AL

AU

DIT

Manage location self-assessments Identify gaps/process

improvements Develop action plans, Reporting to Anti-Corruption

Sustainment Team

R E S P O N S I B I L I T Y

Corporate Oversight Team (COT)VP GC, VP CFO, VP HR, VP Contracts/Supply Chain, VP Internal Audit

Anti-Corruption Sustainment TeamVP Legal International, VP Controller/CAO, Senior Counsel International, Asst. Controller, Director Compliance Contracts/Supply Chain, Mgr. Int’l HR, General Counsel and Controller

Representative from each Business

Anti-Corruption Business & Functional Structure

CEO

Oversee overall direction of Anti-Corruption Program

Communicate lessons learned and best practices

Self-assessment process Quarterly certifications Financial and accounting controls Risk-based assessment to

identify/prioritize risk Anti-corruption policies & internal

controls to address/mitigate risk Function-specific education keyed

to policies and controls

SAS

•Legal•Finance•Contracts/ Supply Chain

•Human Resources

GBS / RII /Corporate

•Legal•Finance•Contracts/ Supply Chain

•Human Resources

IDS

•Legal•Finance•Contracts/ Supply Chain

•Human Resources

IIS

•Legal•Finance•Contracts/ Supply Chain

•Human Resources

MS

•Legal•Finance•Contracts/ Supply Chain

•Human Resources

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Raytheon Anti-Corruption Program Organization

Apprise management of specific FCPA /Anti-Corruption Risks

Participate on Anti-Corruption Sustainment Team Complete FCPA reviews across Raytheon as part

of audit plan

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Has an unwavering commitment to the highest standards of ethical business conduct;

Demonstrates that commitment through a resolute tone at the top; and

Maintains effective internal controls, education, policies and procedures that appropriately deter and detect violations of the FCPA and other applicable anti-corruption laws

Goal – Ensure that Raytheon and each individual Raytheon business:

Raytheon’s Anti-Corruption Sustainment team meets weekly and has focused on Anti-corruption controls; enhancing

certain Company policies and underlying procedures; anti-corruption training and self-assessment process for anti-corruption controls

III. Identify ImprovementOpportunities

II. ReviewCurrent

Practices

I. Identify Best Practices

V. MonitorCompliance

IV. ImplementChanges

Goal: Ensure Anti-Corruption

Program is Comprehensive

and Effective

Raytheon’s Anti-Corruption Sustainment Program

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Sustainment Team

Anti-Corruption Training

Compliance Certifications

Self-Assessment Process

Policies / Processes

Internal Audit

Cross-functional team created

Face to face in-country training

Team expanded to include OGC and Finance representatives from each Business

FCPA Aware launched Q4 2010 and refreshed on ongoing basis

Expanded criteria for training rqmts

Quarterly certification process implemented to ~450 certifiers

Completed annually at all Entities

IDS Pilot

Self-Assessment developed

Revision of existing policies (i.e. Proposals, Int’l Procurement, BCAR, Political Contributions, Contributions, Offsets)

New: General Ledger

Requirements

New: Due Diligence for Int’l Parties

New: Local Hiring & Overarching Anti-

Corruption

Quarterly certification of Self-Assessments

Core working group weekly

meetings Raytheon published external web content

Added FCPA Resource Guide training for Acctg.

Functional specific training created

New: Int’l BD Partner Policy & Monitoring

Raytheon’s Continuing Anti-Corruption Journey

Raytheon constantly focused on best in class Anti-Corruption program

IA Moves into OGC

2010 2011 2012 2013 2014 2015 Ongoing

Conduct country reviews with FCPA focus

“Well Controlled” Audit of 2012 Self-

Assessment process