BUSINESS AND GOVERNMENT: How they relate

1. BUSINESS AND GOVERNMENT: How they relate Veit V. Dengler General Manager, Central and Eastern Europe Dell Consumer

2. Our agenda • Introduction: Who’s talking? • Business – government framework • Promote • Regulate • Control • Case study: Dell and U.S. Government

3. Introduction: VEIT DENGLER • Education: • Vienna School of Business (1993) • MPA, Harvard (1996) • Experience: • Journalist (TIME Magazine, 1986-1990) • Marketing (Procter & Gamble, 1993-1994) • Consulting (McKinsey, 1997-2003) • Marketing (T-Mobile International, 2003-2005) • Sales, General Management (Dell, 2005-present) • Personal: • Married, 3 children • Leisure: family, politics & history

4. The pyramid of interactionGOVERNMENT VS. BUSINESS

5. Promotion of us business interests within and abroad

6. U.S. Commercial Service:“Global business partner” Mission: To promote the export of goods & services from the United States, particularly by small- and medium-sized businesses To represent U.S. business interests internationally To help U.S. businesses find qualified international partners The U.S. Commercial Service is part of the U.S. Department of Commerce, an agency of the United States government.

7. Trade specialists in over 100 U.S. cities and 83 countries worldwide... USDC Network & What it does of businesses Services: • Locate international buyers, distributors & agents • Provide expert help at every stage of the export process • Help you to enter new markets faster and more profitably

8. Regulation: guard the rules of the game

9. Basic regulation framework: protect the competition • Trust-busters in US • US Department of Justice • Federal Trade Commision • State Attorneys General • Major tasks: • Prevent unfair, uncompetitive business practices • Enforcing general consumer protection laws • Some spectacular cases: • Breaking up AT&T Monopoly (1970s) • Attacking Microsoft monopoly in web browser market • Ruling on all major M&A activities (HP/Compaq, TimeWarner/AOL, Exxon/Mobil but also any foreign M&A which impact US)

10. Control: keep all honest

11. Control: law and enforcer The Foreign Corrupt Practices Act (FCPA): US law designed to prevent bribery and corruption of non-US government officials. All US companies must comply with the FCPA in all their global operations. Sarbanes-Oxley Act:Legislation setting new, more comprehensive standards for management and boards of publicly traded companies and public accounting firms. The SEC (US Securities and Exchange Commission) an independent agency of the US government which holds responsibility for enforcing the federal securities laws and regulating the securities industry, the nation's stock and options exchanges, and other electronic securities markets.

12. Export controls • Embargoed Countries – N Korea, Cuba, Iran, Syria, Sudan • No US company is permitted to export to the above countries; special focus on high technology • Possible sanctions: loss of export authorisation, and personal monetary and criminal liability • Group D1 countries: Former Soviet Union, Albania, Burma, Cambodia, China (People's Republic of), Iraq, Laos, Libya, Macau, Mongolia, Vietnam • Exporting to those countries and/or hiring their nationals by a US business underlies export limitations

13. All this is nice…but what happens when crisis hits?

14. Bail out: us government majority stakeholder of us corporations Total commited government funds (loans, capital and guarantees) exceed US$ 12 trillion (this is more than current US public debt) Most experts agree that doing nothing would cause immeasurable damage on US and global economies.

15. Case study: how all this impacts a specific company

16. Export regulations: only do business with the good guys • Every Dell employee must take a training and pass a test on “export compliance”. Their training record is saved and employee is then automatically asked to retrain themselves every year. • Employee awareness of US export regulations is subject to regular audit. This concerns ALL employees, irrespective of their job assignment (sales/non sales, front/back office etc.)

17. Ethics compliance: do business the right way • Very strict rules regarding accepting or donating gifts to customers, partners, vendors, government officials etc. apply to every Dell employee. • Breach of those rules may result disciplinary action, termination of employment and/or in criminal prosecution of the trespassing individual. • To Dell, violating the FCPA may result in monetary fines, loss of business but worst of all long term damage in reputation and goodwill.

18. Financial statement integrity: sec on stage • Dell launched independent audit involving 375 professionals, reviewed 5 mil. Documents, conducted 200 interviews, checked thousands of journal entries • Findings: discovered accounting issues relating mainly to adjustments of various reserve/accrual accounts • Impact: • revenues and earnings statements restated for 3 fiscal years; restatement volume: $ 50-150 MM (vs stated earnings of US$ 12 BN) • Major overhaul of internal structures and policies to prevent repetition

19. summary • Relationship between US Government and business is three pronged • Promoting • Regulating • Controlling • US laws, rules and regulations apply to all subsidiaries of US companies irrespective of where in the world they do business or of what nationality/citizenship are their employees engaging in relationships which are subject to those rules • High standards of integrity and ethics are expected and enforced

20. THANK YOU FOR YOUR ATTENTION

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