CHAPTER 4
—Charles Koch
A conflict of interest occurs when personal, social, financial or political activities interfere with our responsibilities to the company. Actual conflicts must be avoided. Even the appearance of a conflict can be damaging and should be avoided. You have a primary business responsibility to the company and are expected to avoid any activity that may interfere, or have the appearance of interfering, with the performance of this responsibility.
The following sections are examples of areas where conflicts of interest may arise.
You may not take personal advantage of business opportunities, or potential business opportunities, that you learn about or develop in the course of your employment with the company. This is true whether it directly benefits you or any other person or business.
While there is no general prohibition against working for other companies, doing so must never interfere with your responsibilities to the company, including taking time away from company duties or misusing company resources. If the second job is with an organization that is a competitor, customer or supplier of goods or services to the company, it raises an actual or apparent conflict. The same considerations apply to working, consulting with or advising for an organization that is seeking to become a customer, supplier or competitor of the company. Before taking a second job with any other company, you should talk with your supervisor to make sure it does not pose a conflict for you.
Except when specifically permitted or approved, you and your close relatives may not engage in any transaction with the company. Examples include the rental, purchase, sale, transfer or use of property or provision of service.
A conflict may arise when a relative or friend works for a competitor, customer or supplier and directly interacts with you or your business group as a part of their role with that company. If you are unsure whether you could be in a situation that might create a potential conflict of interest, consult with your supervisor.
You and your close relatives should not have a substantial interest in any customers, competitors or suppliers. You are required to inform your supervisor about any outside business interests of this nature you have or are considering. In addition to a potential violation of insider trading law, ownership or investments of this kind may impair your ability to make objective business decisions on behalf of the company and divert you from your primary responsibilities to the company.
The hiring of relatives must be pre-approved by the executive human resource leader of the Koch company you are employed by.
We are all expected to commit our full attention to business activities during business hours. Do not let personal activities, including those related to a personal business, take attention away from or interfere with your responsibilities to the company.
Probably so. Our policy on avoiding conflicts of interest obligates all of us to avoid even the appearance of a conflict of interest.
This might be perceived as a conflict of interest or favoritism. You should disclose the relationship and receive advance approval from your local management before pursuing this business arrangement or recommending it to others in the company.
It depends. There are many factors that could cause a conflict to exist. You should contact your supervisor to discuss the facts related to your investment and together determine a course of action.
Behaving with integrity requires that your family business should not try to do business with the company unless and until you have received permission from your local management or your compliance and ethics resource.
Yes, under certain conditions. If you use the Internet for brief, infrequent periods of time, and you are not accessing inappropriate sites, it is generally acceptable. If you have any doubt, consult with your supervisor. You also should refer to the acceptable electronic usage section in this Code.
Yes. It’s generally acceptable for us to make and receive personal calls as long as they are infrequent, brief and do not interfere with the normal flow of business activities.
You are not allowed to solicit from your coworkers during company working time, in work areas, or by using company resources, such as email. You should also refrain from soliciting anyone you supervise. Contact your supervisor or human resources leader to ensure you understand the non-solicitation policy applicable to your location.
Office betting pools, often used to wager on the outcomes of sporting events can be illegal. As such, company assets and resources cannot be used to sponsor or participate in this type of activity. While certain pooling activities may be legal under state law, any such activity that is conducted during working time or involves the use of company assets, such as email or copy machines, is considered inappropriate.
The Code is not designed to cover private matters between employees. However, romantic relationships with others in the workplace can create situations that may be prohibited by the Code. For instance, employees who supervise one another, coworkers who work closely together or who could influence each other’s pay, performance rating, job benefits or other terms and conditions of employment, must avoid even the appearance of a conflict of interest. If you find yourself in a situation that may lead to a potential or actual conflict of interest due to a romantic relationship with a coworker, you are encouraged to bring the matter to your supervisor’s attention or to the attention of human resources.
It depends on many factors, such as whether your product is similar to programs that you develop while employed by the company, and whether company time, material, equipment or proprietary information could be used in developing, marketing or maintaining your product. Before starting your business, you should consult with your supervisor to get a conflict of interest determination, as well as determine whether any company proprietary information or trade secrets are involved.
You must consult with your supervisor. Your board activities should not conflict with your working time and you should not use corporate resources to communicate with others in your capacity as an outside nonprofit board member. Positions on for-profit company boards present additional risks and will require additional review and preapprovals.
We pride ourselves on building strong relationships with customers, suppliers, government officials and other business associates. At times, and where allowed by law, it may be appropriate to exchange modest gifts or entertainment. Good judgment and common sense are also critical in determining the appropriateness of a gift or entertainment. Avoid any relationship that could give the appearance of impropriety or otherwise affect or influence your ability to make good business decisions. Offering, giving, soliciting or receiving any form of bribe or kickback is strictly prohibited.
Gifts are defined very broadly and can include anything of value, such as cash or cash equivalents, travel, transportation, lodging, meals, drinks, entertainment, use of company materials, facilities or equipment not available or offered to the general public, employment offers, a promise of future business opportunities, scholarships and charitable contributions.
Ethical dealings with the government or a state-owned enterprise, requires following guidelines, especially when providing anything of value to a government official. Additional government interaction information, including the definition of “government” is located in the section of this Code on Government Interaction. Do not authorize, offer, provide, or deliver anything of value, either directly or indirectly, for the purpose of rewarding or improperly influencing any political official or government official, or their contractor or agent.
The following additional requirements apply:
The requirements associated with providing anything of value, especially to a government official or employee of a state-owned enterprise, can be complex and may require the involvement of your compliance and ethics resource, Government & Public Affairs office or Legal. You should ensure that you understand these requirements and take appropriate action.
Additional information pertaining to corruption and commercial bribery is located in the section of this Code on Anti-corruption and Commercial Bribery.
No. The limit relates to the value of gifts given at any one time. However, frequent gifts to or from one individual would likely violate the policy.
Generally, yes, but you should advise your supervisor to ensure that there is not even an appearance of impropriety. Generally, you could accept the prize. However, the issue should be raised with management to avoid any potential conflict of interest issues.
Since you are not going to be with the customer to discuss business or otherwise further your relationship, there probably will not be a sufficient business purpose to justify the offer. You may pay the customer fair market value for the condominium after seeking approval from your supervisor or your compliance and ethics resource.
Usually a polite explanation that company policy prohibits you from keeping the gift will be sufficient.
You may let a customer or supplier pay for a meal arranged for the purpose of discussing business. However, it probably is not appropriate to let customers or suppliers repeatedly pay for your meals.
You may accept the gift if it meets each of the following tests: it is unsolicited; it is less than U.S. $100; it is not cash or a cash equivalent; and it will not influence or be perceived as influencing your business judgment. If you are unsure, discuss the situation with your supervisor or compliance and ethics resource.
In either case, you should only attend if there is a reasonable expectation that your attendance will create value for your business, that the event is typical of your industry and your supervisor approves in advance. Participation at such conferences can help build good customer or supplier relations. Participating in events that do not present significant business opportunities is inappropriate.
There must be a reasonable expectation that some business benefit to the company will result. You and your spouse’s travel and entertainment should be treated as a gift and if the value of the trip exceeds U.S. $100, approval must be received prior to your acceptance.
It depends. Providing anything of value, such as “entertaining,” must be consistent with applicable laws in the relevant countries, meet the requirements of the Gifts, Gratuities and Entertainment section of this Code and any additional requirements imposed by your Koch company. If you have any questions, seek the advice of Legal before taking action.
If you think that you may have a conflict, real or perceived, report all relevant details to your supervisor, compliance and ethics resource or Legal. Most conflicts of interest can be resolved in a mutually acceptable way, but they must be addressed.
In the course of your everyday work, you may gain confidential information regarding the business of the company or third-parties, such as customers, suppliers, acquisition targets or venture participants.
The company and its employees are prohibited from buying, selling or otherwise transferring securities of an issuer while in possession of material, non-public information relating to that issuer, or its securities. In addition, you must not “tip” other people; that is, you must not disclose such information to others. If others act on the information you provide, you could both be violating the law and subject to severe penalties.
Your awareness of material, non-public information at the time you purchase or sell a security of an issuer may be enough to violate insider trading laws. It may not matter whether you actually use the information in making the purchase or sale.
Some examples of “securities” are:
Information is considered “non-public” until it has been effectively disclosed to the investing public and enough time has passed for the investing public to be able to evaluate the information.
If you violate the laws regarding insider trading, you and others that you disclose information to may be subject to severe criminal and civil penalties, including substantial fines and imprisonment. In addition, you may expose the company to considerable fines.
These restrictions also apply to your family members and others who live in your household. You are expected to ensure that they comply. These restrictions also apply to any account over which you have control or discretionary trading authority, even if that account is not in your name. If you are designated as an Employee with Access to Sensitive Information, you must follow the pre-trade clearance requirements of your Koch company.
No. Since you are aware of material, non-public information about the publicly traded company, you must not trade in any security of that company or pass along such information to anyone else.
No. You may not purchase this stock until the financial information is known to the investing public. The information may have been entrusted to us in confidence by the customer to help us determine how to best meet the customer’s needs. Using this information for personal gain or disclosing it to others would violate insider trading laws as well as our policies regarding the use of confidential and proprietary information.
No. Your awareness of the expected acquisition would be material, non-public information, and you may not trade in any security of that company or pass along such information to anyone else.
If you are aware of material, non-public information relating to the customer, in addition to violating company policies, you could be violating the insider trading laws if you purchase the security of the customer. If, however, you are not aware of material, non-public information relating to the customer, you might be allowed to purchase the security of the customer if it does not create an actual or perceived conflict of interest. Questions regarding conflicts of interest should be directed to your compliance and ethics resource or Legal.
