Tractafric Network Seminar – RC Africa Compliance

The importance of a working CMS in a high risk

environment

Image license: blackred/iStockphoto via Getty Images

1 Introduction

2 Typical shortcomings of a
Compliance Management System

3 Compliance @Daimler

4
Screening and Due-Diligence
of key parties
in a high risk environment
Image license: blackred/iStockphoto via Getty Images

Daimler AG Tractafric Network Seminar Page 2

Introduction & Contact

Stephan Lutz
Legal & Compliance Officer
Daimler Commercial Vehicles MENA & Central
Africa

• Bachelor of Laws from the university of applied science Pforzheim and a

Master of Science in International Finance from the HWR in Berlin.

• Forensic Investigator at Deloitte Germany: Conducting investigation related

to bribery or corruption within global acting corporation.

• Senior Associate at Deloitte Forensic for 1.5 years in Singapore: Review of

the effectivity of the Anti-Money Laundering controls within large banks.

• Since 2017 Compliance Officer for Daimler Commercial Vehicles

MENA/Africa: Responsible for the implementation and maintenance of an
effective Compliance Management System in this region.

Daimler AG Tractafric Network Seminar Page 3

Introduction & Contact

Merlyn Pamela D'Souza

Legal & Compliance Officer
Daimler Commercial Vehicles MENA & Central
Africa

• Bachelor of Commerce from Mangalore University and PG Diploma in

Business Administration (Finance) from Symbiosis Centre for Distance
Learning, Pune, India

• Previously worked in the Investment Banking operations with JP Morgan,

Goldman Sachs, HSBC

• Associated with Daimler India Commercial Vehicles since 2017 and joined
as Local Compliance Specialist in 2018

• Since Oct 2021 Local Compliance Specialist for Daimler Commercial

Vehicles MENA/Africa: Responsible for the implementation and
maintenance of an effective Compliance Management System in this region.

Daimler AG Tractafric Network Seminar Page 4

Introduction & Contact

Anand Guruswamy
Legal & Compliance Officer
Daimler India Commercial Vehicles

• PG Diploma in Business and Corporate Law from Symbiosis Pune, India.

• Previously working in the Telecommunication and Financial Industry.

• Feb 2013 Compliance Risk Assessment at Daimler Financial Services India:

Implementation of a systematic approach for risk identification and risk-
oriented mitigation.

• Since Dec 2020 Local Compliance Specialist for Daimler India Commercial
Vehicles. Implementation and maintenance of an effective Compliance
Management System in India.

Daimler AG Tractafric Network Seminar Page 5

Corruption Risk Ratings in RC Africa – CPI 2020
The CPI scores and ranks countries/territories based on how corrupt a country’s
public sector is perceived to be by experts and business executives. It is a
composite index, a combination of 13 surveys and assessments of corruption,
collected
Daimler by a variety of reputable institutions. The CPI is the most widely used
Country
indicator of corruption
Risk Threshold
(based on CPI)
worldwide.
(Source: https://www.transparency.org/en/cpi)

CPI > 55
2 Low RISK
COUNTRY (Image license: iStock.com/janrysa)
Seychelles (66), Cape Verde (58)

CPI ≤ 55
11 Medium
RISK COUNTRIES Benin (41), Burkina Faso (40), Ghana (43), Mauritius (53), Rwanda (54), Sao Tome and Principe (47), Senegal (45), Tanzania (38),
Ethiopia (38), Gambia (37), Côte d´Ivoire (36)
CPI ≤ 35
28 High RISK
COUNTRIES Angola (27), Burundi (19), Cameroon (25), Central African Republic (26), Chad (21), Comoros (21), Congo Republic (19),
Democratic Republic of the Congo (18), Djibouti (27), Eritrea (21), Equatorial Guinea (16), Gabon (30), Guinea (28), Guinea-
Bissau (18), Kenya (31), Liberia (28), Madagascar (25), Mali (30), Mauritania (29), Niger (32), Nigeria (25), Sierra Leone (33),
Somalia (12), South Sudan (12), Sudan (16), Togo (29), Uganda (27), Western Sahara (n/a)

(Source: https://www.transparency.org/en/)

Daimler AG Tractafric Network Seminar Page 6

1 Introduction

2 Typical shortcomings of a
Compliance Management System

3 Compliance @Daimler

4
Screening and Due-Diligence
of key parties
in a high risk environment
Image license: blackred/iStockphoto via Getty Images

Daimler AG Tractafric Network Seminar Page 7

 “
IF YOU THINK
COMPLIANCE IS
EXPENSIVE, TRY NON-
COMPLIANCE
- PAUL MCNULTY, FORMER U.S. DEPUTY ATTORNEY GENERAL

Daimler AG
” Tractafric Network Seminar Page 8
Typical shortcomings of a Compliance Management
System
Shortcoming of a Compliance System:
- Lack of Transparency
- Missing Segregation of Duties
- No Tone from the Top
- Non functioning Whistleblower System
- Incomplete Compliance Management
System (CMS)

Daimler AG Tractafric Network Seminar Page 9

1 Introduction

2 Typical shortcomings of a
Compliance Management System

3 Compliance @Daimler

4
Screening and Due-Diligence
of key parties
in a high risk environment
Image license: blackred/iStockphoto via Getty Images

Daimler AG Tractafric Network Seminar Page 10

Integrity, Legal and Compliance at Daimler:
Shape the future, protect the company

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Our Compliance Management System (CMS) serves as
the foundation
Our compliance activities focus on
• complying with anti-corruption regulations,
• maintenance and promotion of fair competition,
• compliance of our products with technical regulatory
stipulations,
• respect for and the protection of human rights,
• adherence to data protection laws,
• compliance with sanctions,
• prevention of money laundering.

Our CMS consists of basic principles and measures for the promotion of compliant behavior throughout the Group. The CMS is based
on national and international standards and is applied on a global scale at Daimler AG and all Group companies. The CMS consists of
seven elements that build on one another.

Daimler AG Tractafric Network Seminar Page 12

1 Introduction

2 Typical shortcomings of a
Compliance Management System

3 Compliance @Daimler

4
Screening and Due-Diligence
of key parties
in a high risk environment
Image license: blackred/iStockphoto via Getty Images

Daimler AG Tractafric Network Seminar Page 13

Daimler AG
The risks of Business Partners are often hidden

How do you find out whether a business partner

can live up to your standards of integrity?
What risks do you need to look out for?
And how can you mitigate those risks?

At first glance, a new business partner may appear

trustworthy and enticing.

If you want to uncover the risks posed by a

potential partner, you need to look beneath the
surface and do your homework.

Careful integrity screening will shed light on the subject.

Image license: Thinkstock

Daimler AG Tractafric Network Seminar Page 15

Key Components of
Sales Business Partner Integrity Management1)
SALES BUSINESS PARTNER DUE DILIGENCE CONTRACT CLAUSES

Advance risk Anti-corruption

assessment n provisions
ctio

C afeg
Business partner le

on u
e
ls
Audit rights

s
tr ar
evaluation
u
ef

ac d
r

tu s
Decision on
Ca Termination

al
partnership provisions
Cycle
Monitoring, Audit & Response Measures
at Daimler COMMUNICATION AND AWARENESS

O
pe &
ra re
Regular audits
s&n

tio sp
e s

na ons
en atio

lc e
Corrective/ r
a iz

on
remedial action Aw nsit

tr
Communication/
se

ol
Examination of any conveyance of
integrity concerns corporate values

Assessment of Business partner

Penalties
individual transactions Permanent monitoring by Sales Compliance dialogue

1) These approaches can also be applied to other business partners (with appropriate adjustments if necessary)

Daimler AG Tractafric Network Seminar Page 16

The Due Diligence process is an integral part of Daimler’s
Sales Business Partner Integrity Management1)
SALES BUSINESS PARTNER DUE DILIGENCE CONTRACT CLAUSES

Advance risk Anti-corruption

assessment n provisions
ctio

C afeg
Business partner le

on u
e
ls
Audit rights

s
tr ar
evaluation
u
ef

ac d
r

tu s
Decision on
Ca Termination

al
partnership provisions
Cycle
Monitoring, Audit & Response Measures
at Daimler COMMUNICATION AND AWARENESS

O
pe &
ra re
Regular audits
s&n

tio sp
e s

na ons
en atio

lc e
Corrective/ r
a iz

on
remedial action Aw nsit

tr
Communication/
se

ol
Examination of any conveyance of
integrity concerns corporate values

Assessment of Business partner

Penalties
individual transactions Permanent monitoring by Sales Compliance dialogue

1) These approaches can also be applied to other business partners (with appropriate adjustments if necessary)

Daimler AG Tractafric Network Seminar Page 17

BPIM provides a holistic view on Sales Business Partners and in case
of concerns it enables "just-in-time" remediation
BP Onboarding BP Lifecycle Management

Review & Decision

Questionnaire

Evaluation
BP Data

URA

Permanent Monitoring
!
Clarification & Remediation

Daimler AG Tractafric Network SeminarPage 18

Contracts are an integral part of Daimler’s Sales
Business Partner Integrity Management1)
SALES BUSINESS PARTNER DUE DILIGENCE CONTRACT CLAUSES

Advance risk Anti-corruption

assessment n provisions
ctio

C afeg
Business partner le

on u
e
ls
Audit rights

s
tr ar
evaluation
u
ef

ac d
r

tu s
Decision on
Ca Termination

al
partnership provisions
Cycle
Monitoring, Audit & Response Measures
at Daimler COMMUNICATION AND AWARENESS

O
pe &
ra re
Regular audits
s&n

tio sp
e s

na ons
en atio

lc e
Corrective/ r
a iz

on
remedial action Aw nsit

tr
Communication/
se

ol
Examination of any conveyance of
integrity concerns corporate values

Assessment of Business partner

Penalties
individual transactions Permanent monitoring by Sales Compliance dialogue

1) These approaches can also be applied to other business partners (with appropriate adjustments if necessary)

Daimler AG Tractafric Network Seminar Page 19

Contract clauses to address specific aspects of the
agreement, e.g.:
Anti-corruption provisions
Ensure Compliance with Anti-corruption laws

Audit rights
Reserve the right to audit Business partner

Termination provisions
END Allow a party to terminate the Agreement

Direct Sales Guideline (if applicable)

All transactions to governmental customers in highest risk countries have to be
conducted directly between Daimler AG and the end-customer

Daimler AG Tractafric Network Seminar Page 20

Communication is an integral part of Daimler’s Sales
Business Partner Integrity Management1)
SALES BUSINESS PARTNER DUE DILIGENCE CONTRACT CLAUSES

Advance risk Anti-corruption

assessment n provisions
ctio

C afeg
Business partner le

on u
e
ls
Audit rights

s
tr ar
evaluation
u
ef

ac d
r

tu s
Decision on
Ca Termination

al
partnership provisions
Cycle
Monitoring, Audit & Response Measures
at Daimler COMMUNICATION AND AWARENESS

O
pe &
ra re
Regular audits
s&n

tio sp
e s

na ons
en atio

lc e
Corrective/ r
a iz

on
remedial action Aw nsit

tr
Communication/
se

ol
Examination of any conveyance of
integrity concerns corporate values

Assessment of Business partner

Penalties
individual transactions Permanent monitoring by Sales Compliance dialogue

1) These approaches can also be applied to other business partners (with appropriate adjustments if necessary)

Daimler AG Tractafric Network Seminar Page 21

Daimler conducts a Business Partner
Compliance Dialogue
Increase awareness and Introduce Daimler’s key principles of
responsibility towards a Compliance Management System
Compliance & Integrity and discuss the extent of suitable but
efficient compliance measures for the
Business Partner, considering its as-
is-situation
Enable Daimler’s Business
Partners to assess compliance
risks and to mitigate them

Exchange information regarding risk

Have a dialogue with our Partners to areas to understand local/cultural
understand and to evaluate their as-is- challenges and to increase awareness
situation e.g. status of implemented for red flag situations
compliance standards, local challenges etc.

Daimler AG Tractafric Network Seminar Page 22

Business Partner Compliance Dialogues
6 Principal Compliance Elements

1. Compliance Risk Assessment/Ongoing Monitoring

2. Business Partner Due Diligence and HR Integrity

3. Whistleblower Hotline, Investigation and Sanction Processes

4. Policies and Procedures, Training and Communication

5. Compliance Function within the Organisation

6. Board Oversight of Compliance and Risk Issues

Daimler AG Tractafric Network Seminar Page 23

Monitoring measures are an integral part of Daimler’s
Sales Business Partner Integrity Management1)
SALES BUSINESS PARTNER DUE DILIGENCE CONTRACT CLAUSES

Advance risk Anti-corruption

assessment n provisions
ctio

C afeg
Business partner le

on u
e
ls
Audit rights

s
tr ar
evaluation
u
ef

ac d
r

tu s
Decision on
Ca Termination

al
partnership provisions
Cycle
Monitoring, Audit & Response Measures
at Daimler COMMUNICATION AND AWARENESS

O
pe &
ra re
Regular audits
s&n

tio sp
e s

na ons
Corrective/ en atio

lc e
r
a iz

on
remedial action
Aw nsit

tr
Communication/
se

ol
Examination of any
conveyance of
integrity concerns
corporate values
Assessment of
individual Business partner
Penalties
transactions Permanent monitoring by Sales Compliance dialogue

1) These approaches can also be applied to other business partners (with appropriate adjustments if necessary)

Daimler AG Tractafric Network Seminar Page 24

Daimler takes various control and
monitoring measures, e.g.:
Regular audits
• Contracts contain audit rights: Exercise audits on a risk based approach in
respect of Business partner’s compliance with its obligations under the contract

Corrective / remedial action

• Warning letter

Examination of any integrity concerns

• Permanent Monitoring and automated daily screenings in news data bases and sanctions lists
• For existing partnerships, this check is to be performed on a regular basis and always when
doubts about integrity arise or significant changes occur, e.g. in the ownership structure.

Assessment of individual transactions

• Relevant entities conduct a Transaction Check before giving a binding offer
• Targets on the prevention of corruption regarding certain sales transactions with Compliance Officer
customers in medium and high risk countries reserves the veto right

Daimler AG Tractafric Network Seminar Page 25

Transaction Check scope

Conduct a Transaction Check if all 4 scope conditions apply:

1. Entity Scope 3. Country Scope

A Daimler entity is classified as … to a customer in a high or medium

Transaction Check relevant … risk country …

2. Product Scope 4. Risk Scope

… and sells the following products … … and one of the following risks appears:
 New vehicles or  Transaction with high value or
 Parts tender or  Bodybuilder has no DD* or
 Service tender or  Exception from DSG** or
 Separate service contract  Red Flags
* Due Diligence
**Direct Sales Guideline

Daimler AG Tractafric Network Seminar Page 26

A check against sanctions lists always is the very first step
before any business transaction can be initiated

• As a global corporation, we comply with

national and international economic
sanctions
• We support the community of states to
fight against money laundering and
terrorism financing.
• Employees of the involved units are
required to always keep up to date on
current sanctions lists.
• The employees responsible for the
business processes are obligated to design
these in such a manner that they prevent
all forms of financial crime.

Daimler AG Tractafric Network Seminar Page 27

Outlook

New Data Protection

regulation is coming
in UAE?!
Sourc
e : http
s://ww
w.kas
h wani
law.c
om/si
te/en/
s_pos
t.p hp?id
=394

Daimler AG Tractafric Network Seminar Page 28

 Q&A: Time for your
QUESTIONS

Daimler AG Tractafric Network Seminar Page 29

THANK YOU

Image license: blackred/iStockphoto via Getty Images

Daimler AG Tractafric Network Seminar Page 30