Saipem Anti-Corruption Compliance Guideline and relevant procedures

Saipem Anti-Corruption Compliance Guidelineand relevant procedures P. Galizzi – GCLC Meeting, 18th November 2011

Agenda • Introduction • Anti-Corruption Compliance Guideline • Regulations on Intermediary & JV Agreements • Ancillary procedures • Monitoring of Legal Events 2

The Risks: Penalties / Other Adverse Consequences Record-breaking penalties Other Adverse Consequences • Siemens AG ($1.6 billion) • KBR/Halliburton ($579 million) • Snamprogetti Netherlands B.V ($ 398 million) • Technip ($338 million) • JGC Corp. ($218.8 million) • Baker Hughes ($44 million) • Willbros Group ($32.3 million) • Chevron ($30 million) • Titan ($28.5 million) • Vetco International Ltd.($26 million) • Statoil ASA ($21 million) • Fiat S.p.A. ($17.8 million) • Bar from doing business • Appointment of an Independent Compliance Monitor • Appointment of a Judicial Commissioner • Suspension or bar from selling securities in the U.S. • Appointment of a (judicial) compliance consultant • Loss of goodwill, credibility, reputation • Negative impact on stock price 4

Introduction – The Anti-Corruption Laws applicable to Saipem Saipem adhereto the principles of: • the OECD Convention on Combating Bribery of Foreign Officials in International Business Transactions (ratified in Italy by Law No. 300 of September 2000) which applies to 38 Countries. • the United Nations ConventionAgainst Corruption (ratified in Italy by Law No. 116 of August 3, 2009) which applies to 140 Countries. 5

Introduction – The Anti-Corruption Laws applicable to Saipem • Saipem S.p.A., as an Italian company is subject to: • Italian Decree No. 231 of June 2001 (which disciplines the liability of entities and companies for the crimes committed by their officers, employees and agents); • Saipem Subsidiaries are subject to: the Laws of the Countries in which they operate or are incorporated. 6

Introduction –The Anti-Corruption Laws applicable to Saipem Example: Saipem or one of its subsidiary operates or is incorporated in United Kingdom. It will be applicable The UK Bribery Act 2010 • Received Royal Assent on April 8, 2010 (into force July the 1st, 2011) • Is a new comprehensive anti-bribery code (repeals and replaces previous UK laws on bribery). • Applies to UK citizens, UK companies and non-UK companies doing business in the UK. • Fines to companies convicted of failing to prevent bribery are unlimited. Provides 4 offences: • Paying bribes, • Receiving bribes, • Bribing foreign officials, and • Failure of commercial organizations to prevent bribery (most significant departure from old laws: places onus on companies to prove their anti-corruption procedures are robust). 7

The Anti-Corruption Laws applicable to Saipem – U.S.A. Example • The United States is a signatory to and has ratified the OECD Anti- Bribery Convention, the OAS Convention and the United Nations International Convention against Corruption, all with reservations or declarations. The most significant reservations involve declining to specifically provide the private right of action envisioned by the United Nations International Convention against Corruption and not applying the illicit enrichment provisions of the OAS Convention. The United States is also a signatory to the Council of Europe Criminal Law Convention (Criminal Convention) but has not ratified it. • Prohibited acts include promises to pay, even if no payment is ultimately made. The prohibitions apply to improper payments made indirectly by third parties or intermediaries, even without explicit direction by the principal. • Jurisdiction exists over US persons and companies acting anywhere in the world, companies listed on US stock exchanges (issuers) and non-US persons and companies whose actions take place in whole or in part within the territory of the United States

The Anti-Corruption Laws applicable to Saipem • Other examples: • Saipem or one of its subsidiary operates or is incorporated in India. • It will be applicable “The Prevention Of Corruption Act – 1988” • Saipem or one of its subsidiary operates or is incorporated in Nigeria. • “The Corrupt Practices and other Related Offences Act No. 5/2000” • Saipem or one of its subsidiary operates or is incorporated in Brazil. • Law 8429/92 (the “Administrative Misconduct Act”). 9

The New Anti-Corruption Policy • In order to maximise Saipem compliance with its Code of Ethics, on 10° February 2010 Saipem S.p.A. issued: • the Anti-Corruption Compliance Guidelines (STD-COR-LEGA-006-E); and • the first two Anti-Corruption Ancillary Procedures governing, respectively: • Intermediary Agreements (STD-COR-LEGA-001-E), and • Joint-Venture Agreements (STD-COR-LEGA-007-E). • Saipem Code of Ethics long-established principle: any form of corruption is rejected. Bribes, illegitimate favours, collusion, requests for personal benefits, either directly or through third parties, are prohibited without exception. • Rationale of the new Anti-Corruption Policy: • the Guidelines set out the general principles of the new Policy; and • the Ancillary Procedures create a framework for the long-established ethical and anti-corruption rules implemented by Saipem over time to prevent corruption by Saipem Personnel and Business Partners in specific “risk areas”. 10

Principles SAIPEM Values Transparency Honesty Business Ethics Compliance with laws International Best Practices 12

Scope • The Anti-Corruption Guideline • provides a framework of SAIPEM’s anti-corruption system • optimizes SAIPEM’s compliance with the Code of Ethics and with anti-corruption laws • sets out the general provisions to be followed in all SAIPEM’s dealings with, or related to, or involving a Public Official • identifies additional anti-corruption compliance measures (implementing Regulations) 13

Anti-corruption laws • Anti-corruption laws • prohibit both direct and indirect payments, as well as offers or promises to pay or give anything of value, or other advantages to a public official for a corrupt purpose • require companies to make and keep books, records and accounts which, in reasonable detail, accurately and fairly reflect its transactions, expenses (even if not “material” in an accounting sense) and the disposition of its assets 14

Liability under anti-corruption laws • Individuals: fines + imprisonment • Corporations: fines + blacklisting + claims for damages + damages to the reputation • SAIPEM and/or its personnel can be held responsible for • a corrupt offer or payment that … • …anyone acting on behalf of the company makes in connection with Saipem’s business … • …and which Saipem and/or its personnel knew or reasonably should have known was improper 15

Public Officials • Public Officials: means • anyone who performs public functions in a legislative, judicial or administrative capacity; • anyone acting in an official capacity for or on behalf of • a national, regional or local government, • an agency, department or instrumentality of the Europen Union or of an Italian or a non-Italian national, regional or local government • an Italian or a non-Italian government-owned or government-controlled or government-participated company, • a public international organization such as the European Bank for Reconstruction and Development, the International Bank for Reconstruction and Development, the International Monetary Fund, the World Bank, the United Nations or the World Trade Organization, or • an Italian or a non-Italian political party, member of a political party official or candidate for political office. • anyone in charge of providing a public service (the performance of basic ordinary tasks and exclusively manual work is excluded) 16

Statement of Policy (1) • Saipem Personnel must not, directly or indirectly, • offer, promise, give, pay, accept any Public Official’s request for …. • …anything of value to or for a Public Official or his/her family members or designees, for any of the following purposes: • influencing any official act (or failure to act) by a Public Official, or any decision in violation of his lawful duty, or • inducing a Public Official to use his influence to affect any governmental act or decision, or • securing any improper advantage in connection with business or in any case, in violation of the applicable laws 17

Statement of Policy (2) • The prohibition includes: • cash payments • in-kind contributions, such as sponsorships • assistance to or support of Public Official’s family members, and any other benefits or advantages • gifts, entertainment, meals, travel, personal discounts or credits • business, employment or investment opportunities • insider information that could be used to trade in regulated securities or commodities 18

Statement of Policy (3) • Responsibility • Saipem Personnel is responsible for his own compliance • Managers are responsible for: • supervising compliance by employees reporting to them and • taking steps to prevent, detect and report potential violations • No tolerance • No questionable practice can be justified because it is "customary" • No performance goals should be imposed or accepted if they can be achieved only by compromising our ethical standards • Demotion • No Saipem Personnel will be subjected to demotion, or penalty for refusing to make a prohibited payment, even if such refusal results in a loss of business 19

Exclusions • Reasonable and bona fide expenditures for Public Officials are permitted • They are expenses (e.g. transportation and lodging) directly related to: • the promotion, demonstration, or explanation of products or services; or • the execution or performance of a contract with a government or governmental agency • Any reasonable and bona fide expenditure must: • not be a cash payment; • be provided in connection with a bona fide and legitimate business purpose; • not be motivated by a desire to exert improper influence, or the expectation of reciprocity; • be reasonable under the circumstances, tasteful and commensurate with generally accepted standards for professional courtesy; and • comply with the local laws and regulations that apply to the Public Official • They must be approved pursuant to Saipem’s policy on Gifts, Travel, Hospitality and Entertainment 20

The Anti-Corruption Legal Support Unit • The Anti-Corruption Legal Support Unit is part of the Legal Affairs Department and has the following tasks: • over sighting the compliance with anti-corruption laws; • monitoring observance • periodically reviewing the guideline; • supervising the training of Saipem personnel; • receiving any reports of breaches, whether suspected or proven • in the case of a breach, revising where appropriate the Guideline and suggest to the HR Function the best way to proceed; • exchanging information with the Compliance Committee; • providing information and support on the best way to proceed in unclear situations 21

Support • Any questions with respect to: • the content of anti-corruption laws and the Code of Ethics • the financial information and internal controls provisions of the anti-corruption laws • any of the matters discussed in this Guideline or their application to specific situations must be directed to the Anti-Corruption Legal Support Unit 22

Reporting • Requests by a Public Official • must immediately be reported to the direct supervisor and to the compliance Committee • Violations of the anti-corruption laws or of the Guideline • must immediately be reported (even if suspected) to one or more of the following: • the employee’s direct supervisor or the Business Partner’s primary contact at Saipem; • the Compliance Committee and/or the Anti-Corruption Legal Support Unit; • through the channels indicated in Saipem Whistleblowing Policy • The direct supervisor, the Anti-Corruption Legal Support Unit and the HR department will consult to identify the proper course of action • Consequences of the reporting: Saipem Personnel will not discharged, demoted, suspended or in any manner discriminated in relation to any reporting made in good faith 23

Violations of the guideline or of the anti corruption laws • Disciplinary action (among which the termination of employment) against Saipem Personnel • whose actions are found to violate anti-corruption laws or the Guideline, according to the Model 231 and collective employment agreements or other applicable national regulations; • who fail to conduct or complete adequate training, and/or • who unreasonably fail to detect or fail to report such violations or who retaliate against others who report such violations • Contractual remedies against Business Partners. 24

Monitoring and enhancements • Monitoring and enhancements • Any Business Units, the Compliance Committee, Internal Audit and the company’s independent auditors should recommend enhancements to the Guideline if gaps or weaknesses are identified, and as emerging “best practices” development 25

Scope • What are Intermediary Agreements? • Agreements entered by Saipem or any of its subsidiaries with an Intermediary, or with a subject who, notwithstanding any definition to the contrary given by the parties, will carry out the activity of an Intermediary. • Who is an Intermediary? • is an independent individual or a company that Saipem proposes to retain to: • promote the commercial interests of Saipem and/or any of its subsidiaries in relation to a single transaction/project and/or transaction/project in a specific area and/or business; • facilitate the finalization and/or execution of contracts with third parties; and/or • introduce Saipem and/or any of its subsidiaries to one or more other parties for the purpose of bringing/generating or retaining a business 27

Scope • What are Joint Ventures? Incorporated JV: Any jv agreement aimed at establishing legal entities in which the partner have shareholdings or quotas in proportion to their interests in the jv and which have an autonomous legal status Unincorporated JV: Any jv agreement which is not an Incorporated jv Agreement, such as an agreement in which the cooperation among the partners is on a split liability basis 28

Scope • The regulations set forth: • what type of due diligence is necessary before entering into an Intermediary or a JV Agreement; • which clauses, representations and warranties must be included in theagreements • how to implement adequate procedures andcontrol systems once the Intermediary or a JV Agreement is established in order to prevent the commission of corruption and other crimes 29

Due Diligence on the potential Intermediary • Responsibility: • the Manager • Information to be collected: • a questionnaire duly filled out by the potential intermediary or potential partner • a letter with anti-corruption warranties (ONLY FOR INTERMEDIARY) • information on the potential Intermediary’s chain of control/ownership • further information depending on the circumstances (such as the importance of the project, the risk of the country, etc.) • any Red Flags • Possible to obtain independent opinions to confirm compliance with the anti-corruption laws 30

Due Diligence on the potential Partner (JV) • Responsibility: • the Manager • Types of due diligence: • Full due diligence, conducted in accordance with the guidelines above mentioned with reference to the Regulations on the Intermediary Agreement • No/Reduced due diligence depending on the circumstances (due to the customs of the relationship with the partner, its recognized standing, its demonstrated reliability, the Partner’s excellent ethical reputation) and/or in the case the Joint Venture will not: • market or sell products, services to public entities or government customers, nor • engage in lobbying activities before Public Officials, nor • seek regulatory approvals from or be subject to regulatory oversight by Public Officials, nor • have other Relevant Contacts with Public Officials 31

Due Diligence Documents (questionnaire checklist) a) Potential Partner incorporation documents b) Registration documents c) Independent confirmation of ownership d) Curricula of all principals e) Audited Financial Statements f) Criminal records/self declaration g) Potential Partner Code of Ethics or other Compliance related Procedures h) others… 33

Outcome of the Due diligence • Results of the due diligence (to be summarised by the manager in a note): • Why the Intermediary/partner is considered material for the conclusion of the deal; • How the Intermediary or the partner’s selection procedure started, how the Intermediary was selected; • The persons chosen for conducting the negotiation; • The summary of the negotiations conducted to determine compensation; • Information of any current, past or pre-existing relationship with Saipem; • A list of the sources that have been used to verify the information contained in the Questionnaire and to conduct the due diligence. • The description of the activities that will be carried out by the Joint Venture and of the structure of the Joint Venture; • Any Red Flag or particular risk resulting from the due diligence. 34

Red Flags: examples • Unusual circumstances relevant to the Intermediary’s selection; • Country/industrial sector of the Intermediary with bribery reputation or headquarters in a so-called tax heaven/country with a high rate of corruption; • the Intermediary has unusual corporate structure, was recently incorporated or has no activity, no/poor staff, is a “mail-box"; • the Intermediary is owned by or employs a Public Official or a Public Official’s Family Member; • the Intermediary is in conflict of interest, has questionable reputation, has been prosecuted or convicted, debarred or blacklisted; • the Intermediary has no adequate internal control system; • the Intermediary refuses to provide information requested during the due diligence; • the Intermediary’s business scope is not coherent/consistent with the contractual activity or has no/poor experience; 35

Red Flags: examples • The Intermediary requests for payment in cash or to another or into a bank account registered in a country different from the its headquarters country of residence or where the Intermediary provides services • The Intermediary requests for an increase in price during negotiations or for an unusual transaction structure, inclusion of incorrect or unnecessary cost items; • The Intermediary requests for payment before completion of a project or request unusual/not reasonable large payments; • The Intermediary requests for reimbursement of no/poorly documented expenses; • Services not provided directly but through third parties; • Incomplete/inaccurate information in required disclosures for invoices; • Prohibition by the laws of the country to use Intermediary 36

Minimum contents of the Intermediary Agreement • The agreement must contain the clauses indicated in the Regulations, among which: • details on the project/business/deal for which the agreement is to be retained; • description of the services to be provided by the Intermediary; • anti-corruption clauses and representations and warranties; • details on the compensation, billing terms and payments; • right of Saipem to prior approval of any sub-partner; • right of Saipem to carry out audits; • right of Saipem to terminate the agreement, in case of breach of the anti-corruption laws and the anti-corruption obligations, representations and warranties • No waiver or amendments to the standard clauses can be made without the agreement of the Anti Corruption Legal Support unit 37

Intermediary Agreement Form

Minimum contents of the Joint Venture Agreement (1) • Control of Saipem over the joint venture • Saipem shall cause the joint venture to adopt a Code of Ethics, an Organization, Management and Control Model, the Anti-Corruption Compliance Guideline and any other Anti-Corruption procedures • No control of Saipem over the joint venture • Saipem shall use its influence to cause the joint venture • to adopt principles of ethical conduct, including anti-corruption policies, in line with those on which Saipem activity is based and • to meet the standards set up in the Anti-Corruption Compliance Guideline by adopting and maintaining an adequate system of internal accounting standards and controls that are consistent with the requirements established by the anti-corruption laws 39

Minimum contents of the Joint Venture Agreement (2) • The jv agreement must contain the clauses indicated in the Regulations, among which: • commitment by the jv leader and/or each other partner to cause the jv to adopt and to keep in place an internal control system and a compliance program for the prevention of corruption and to implement they; • anti-corruption clauses/representations/warranties by the legal representatives of the jv and by any of the jv partner; • right of Saipem to carry out audits on the jv and the jv leader; • provisions to protect Saipem against the risk of violation of the anti-bribery clauses in case of change of control of each partner; • right of Saipem to approve any transferability of the jv agreement or of some of the obligations and rights contained therein by the partner to third parties; • right of Saipem to terminate the jv agreement, in case of breach by any partner of the anti-corruption laws and the anti-corruption obligations, representations and warranties • No waiver or amendments to the standard clauses can be made without the agreement of the Anti Corruption legal Support unit 40

JV Agreement Form

Evaluation and decision • The Anti-Corruption Legal Support Unit • Reviews the results of the due diligence, the draft of the agreement and any Red Flags; • Suggests any appropriate further actions. • The Board of Directors • Approves the Partner/Intermediary and the joint venture structure. 42

Management of the Intermediary/JV Agreement • Responsibility: • the Manager or the Contract Manager • high reputation • adequate training • Duties of the Manager/Contract Manager: • monitoring the execution of the Intermediary/JV Agreement; • ensuring Intermediary or the partner’s diligence and compliance with Anti-Corruption laws and policies; • pointing out any possible Red Flags and alerting the Anti-Corruption Legal Support Unit; • monitoring the internal control system and compliance program adopted by the jv; • monitoring the relationships with the jv’s counterparties, especially when they are public entities; • drafting a yearly report to be submitted to the Anti-Corruption Legal Support Unit 43

Management of the Intermediary Agreement • Accounting records • Intermediary’s compensation are recorded in a specific book-keeping account • the original documentation related to the Intermediary and the Intermediary Agreement is to be saved for ten years • Payments to the Intermediary • subject to written authorization of the Contract Manager who shall confirm that the service has been rendered • only against invoices or written requests for payments from the Intermediary • exclusively on the bank account in the name of the Intermediary as indicated in the Intermediary Agreement • never on ciphered accounts or in cash, or to a party other than the Intermediary, or in a country other than the parties’ countries, or other than the country where the services have to be performed 44

Flow Chart Joint Venture Agreement 1-A 1-B 2 45

Flow Chart Intermediary Agreement 46

New project: Follow up Due Diligence 47

Partner Approved more than a year ago:1) Renewal Due diligence Questionnaire

Partner Approved more than a year ago:2) Further Board of Directors Approval The Anti-Corruption Legal Support Unit Reviews the results of the Renewal Due Diligence Questionnaire; Suggests any appropriate further actions. The Board of Directors Approves the Partner/Intermediary and the joint venture structure. 49

Saipem Anti-Corruption Compliance Guideline and relevant procedures