Cummins Inc
Corporate Offices Building
Box 3005, 500 Jackson St. Columbus, IN 47201
For Reference Only. Not Valid if Printed.
Policies and Procedures
Title:
Conflicts of Interest in Business Relationships Policy
Formerly Meals Gifts and Discounts Policy
Department:
Corporate
Approved & Released
Policies and Procedures
Doc Number CORP-00-11-04-00
Revision: 1
Implementation Date:
04/06/2011
Area:
World Wide
Type of Document:
Policy
Review Period - 728 Days
Table of Contents
1.0 Purpose
2.0 Scope
3.0 Related Policies
4.0 Definitions
5.0 Policy
5.1 Never Acceptable Business Courtesies
5.2 Generally Acceptable Business Courtesies with No Approval
5.3 Business Courtesies that Require Approval
Receiving Business Courtesies
Giving Business Courtesies
5.4 Other Conflicts of Interests
Government or State Owned Enterprise Delegations
Financial Interests
Family Members and Friends
Outside Employment
Discounts
Charitable Contributions
6.0 Recordkeeping and Auditing
7.0 Penalties
8.0 Where to go for Assistance
9.0 Company Ethics Help Line
10.0 Company Resources
11.0 Annual Ethics Certification
1.0 Purpose
To set forth the policy and guidelines under which Cummins Inc. personnel shall
avoid conflicts of interest in business relationships. A conflict of interest could
include the inappropriate giving or receiving of gifts, meals, entertainment, discounts,
financial interests, or any other interaction that creates or appears to create an
inappropriate working relationship outside of business norms.
2.0 Scope
This policy applies to Cummins Inc. organizations world-wide in which Cummins
Inc. has a controlling interest or management responsibility. This includes
subsidiaries, joint ventures, affiliated companies, and distributors. If Cummins Inc.
does not have a controlling ownership interest or management responsibility in the
subsidiary, joint venture, affiliated company, or distributor, Cummins will take
reasonable steps to ensure the entity has a written policy addressing the issues in this
policy.
3.0 Related Policies and Regulations
Cummins Code of Business Conduct
Prohibited Payments to Government Officials Policy, CORP-00-04-01-00
Employee Participation in Political Campaigns Policy, CORP-00-06-01-00
Honest Leadership and Open Government Act of 2007 (HLOGA)
Cummins Supplier Code of Conduct, CORP-00-02-02-04
Purchasing Policy, CORP-00-02-00-00
Corporate Indirect Purchasing Financial Policy, CORP-00-02-02-03
Outside Employment of Full-Time Members of Cummins Exempt Workforce Policy,
CORP-00-05-02-00
Global Travel and Entertainment Policy, CORP-05-11-00-00
4.0 Definitions
Business Courtesy – Any item, hospitality, or favor given or received with a specific
business purpose for which the recipient does not pay the fair market value of the
item. A business courtesy may be a tangible item such as a gift, present, ticket, gift
certificate, etc. Or it could be an intangible or consumable benefit such as meals,
drinks, entertainment, prizes, discounts, transportation, promotional items, home
improvements, or use of a donor’s time, materials, facilities, equipment, vehicles,
vacation facilities, etc.
Business Purpose – Any purpose that is principally designed to further a company’s
or an individual’s business interests.
Cultural Gift – A gift traditionally presented in a culture as a gesture of goodwill or
in celebration of a holiday or life event. These gifts are typically modest, appropriate
to local customs, and do not influence business decisions.
Employee – Includes the Cummins employee and immediate members of their family
(parents, spouse, children, or other dependents).
Group Event – A reasonably large event lasting more than one day with a defined
business purpose and involving one or more customers, suppliers, or other nonCummins organizations. Typically a portion of the event’s agenda is dedicated to
recreational or social activities and may include transportation, meals and overnight
accommodations.
Promotional Gift – A gift bearing a company logo directly associated with that
company’s products. This could include product models, souvenirs, clothing with a
company logo, and other promotional items. This does not include personal or unique
items with a company logo attached in an effort to make them promotional. The item
should be part of the company’s widely available promotional gifts.
Spouse – A husband, wife, or domestic partner.
USD – All monetary guidelines in this policy are in U.S. Dollars. Entities using other
currencies may convert the guidelines to their local currency for adherence to this
policy.
5.0 Policy
Cummins Inc. competes on a straight commercial basis, and sells products and
services solely on the strength of quality, reliability, suitability, and price. Our
purchase of supplies and services is conducted according to the same criteria.
The casual exchange of business courtesies (e.g., meals, entertainment, and nominal
gifts) is a widespread commercial custom. The integrity of the Company requires that
such exchanges remain casual and token. In both giving and receiving business
courtesies, Cummins employees should avoid any action which might distort, or
might appear to distort, the strictly commercial nature of any business dealings and
should never ask for a business courtesy. All business courtesies involving Cummins
employees belong to Cummins and should be treated as such. It is ultimately the
employee's responsibility to exercise moderation and judgment in these matters.
Exceptions to this policy may be authorized by the responsible Cummins Vice
President when in his or her judgment considerations of courtesy require such an
exception, and where there is no danger of thereby distorting commercial judgment.
Such exceptions should be specific, not general, and should be granted only after
consultation with the Office of the General Counsel. Where the proposed recipient is a
government official or employee, you must contact the Cummins Law Department to
prevent possible violation of the law or the Prohibited Payments to Government
Officials policy. A record of the business courtesy and exception should be kept
according to section “6.0 Recordkeeping and Auditing” of this policy.
The exchange of business courtesies fall into three categories: (1) never acceptable;
(2) generally acceptable and requires no approval; and (3) may be acceptable but
requires approval.
A local entity, business unit, or department may set stricter guidelines
than outlined in this policy if they are properly communicated to
employees through a subordinate policy to this one. There also may be
stricter guidelines due to financial policies and/or other restrictions that
are not relevant to conflicts of interest. Employees should follow the
guidelines in this policy and the stricter guidelines when applicable.
5.1 Never Acceptable Business Courtesies
The following business courtesies are never acceptable to give or receive and are
outside of the ethical standards in the Code of Business Conduct. If offered to you, it
is best to not accept these business courtesies. For gifts in this category that cannot be
rejected at the time of offer, it is best to return the gift as soon as possible with an
explanation that it is outside Cummins policy to accept. If it cannot be returned, it
should be reported to the employee’s manager, relevant VP, and/or law department
and disposed of properly (for disposal options see the “Receiving Business
Courtesies” section below).
Unacceptable Business Courtesies:
Any business courtesy that is illegal under local or international laws.
Anything offered to a government official in violation of the Prohibited
Payments to Government Officials or any applicable laws.
o Consult the Prohibited Payments to Government Officials
Policy and Employee Participation in Political Campaigns Policy
for more information and/or contact the law department for local
regulations (e.g., Honest Government and Open Leadership Act).
Any gift of cash or cash equivalent (e.g., gift certificate, loan, stock, stock
options, etc.).
Any item that is “quid pro quo” (offered with an expectation of something in
return).
Any business courtesy that involves parties currently in a competitive bidding
process.
Any entertainment or other business courtesy that is indecent, sexually
oriented, outside of the Treatment of Each Other Policy, or may adversely
affect the company’s reputation.
Any business courtesy paid for personally by an employee or individual to
avoid reporting or seeking approval for giving a business courtesy.
5.2 Generally Acceptable Business Courtesies with No Approval
Some business courtesies are sufficiently modest that they do not require prior
approval. Though these business courtesies may not require approval, they still belong
to Cummins, as they are given or received on behalf of Cummins, and should be
treated as such.
The following are monetary limits for the business courtesies that do not require
approval (local and/or financial guidelines may be stricter). In addition to being under
these monetary limits, the business courtesy must also be within the guidelines of
Intent, Frequency, Normality, Transparency, Total Compliance, Legality, and
Government Official Involvement,which are explained further below. If a business
courtesy is above these monetary limits and/or outside the other guidelines in this
section, obtain prior approval for the business courtesy in accordance with this policy.
Meals – The buying or receiving of meals for business purposes costing less
than $100 USD per person would not require approval under this policy. The
giver and receiver must attend the business meal or entertainment. If only the
receiver attends, it is a gift and follows the $50 USD gift guideline.
Entertainment – The buying or receiving of occasional entertainment with a
defined business purpose costing less than $100 USD per person would not
require approval under this policy.
Gifts – The modest and occasional giving or receiving of the below types of
business related gifts would not require approval under this policy.
o Giving a promotional or cultural gift less than $100 USD
o All other gifts less than $50 USD
Total gifts received should be less than $200 USD from one organization or
individual over a 12 month period. If greater than $200 over a 12 month period
then it must be reported.
Prior to determining that a business courtesy meets this category of not requiring
approval, an employee must consider whether it meets all of the following guidelines:
Intent – The business courtesy must have a specific legitimate business
purpose or build a business relationship. The intent cannot be to influence the
recipient’s objectivity in making a business decision and/or be overtly personal.
Frequency –The business courtesy cannot be too frequent as to create an
obligation for the recipient. Small business courtesies cannot be given
frequently in an attempt to avoid approvals or other restrictions on large
business courtesies.
Normality – The business courtesy must be sufficiently modest and within the
cultural norms of the giver and receiver.
Transparency – If the details of the business courtesy were to become public,
it should not reflect badly on any of the involved parties or Cummins. The CEO
would be comfortable accepting it on live television.
Total Compliance – The business courtesy must be in compliance with the
other party’s policies. Each party should understand the other’s relevant
policies.
Legality – The business courtesy must be legal in the country of the giver and
receiver and comply with all applicable international regulations.
Government Official Involvement – The business courtesy cannot involve a
government official. If it does, even a modest business courtesy may have
severe restrictions. Consult the Prohibited Payments to Government Officials
Policy and/or contact the Law Department for any local restrictions.
5.3 Business Courtesies that Require Approval
Some business courtesies require approval to ensure that they are not or do not appear
to be a conflict of interest. This approval will also provide a record of the business
courtesy, which can be audited as necessary to ensure compliance.
Receiving Business Courtesies
When employees are offered or accept a business courtesy it is always on the behalf
of Cummins. When possible an employee should seek approval prior to accepting a
business courtesy according to the guidelines in the chart below. When an employee
cannot obtain prior approval, they should use their best judgment and the guidelines in
this policy. The business courtesy should always be recorded and reported according
to the following chart (local and/or financial guidelines may be stricter):
Receiving Business Courtesies
All Gifts
Meals / Entertainment
(per person)
Approval by
Manager
> $50 USD
> $100 USD
Approval by
VP
> $200 USD
> $200 USD
If someone from the paying organization does not attend the business meal or
entertainment, it is a gift and follows those guidelines. Total gifts received >$200
USD from one organization or individual over a 12 month period must be reported
Recording, reporting, and approvals should be maintained in accordance with section
“6.0 Recordkeeping and Auditing” of this policy.
Disposal and Use of Gifts
Employees should not assume that they may keep a business gift for personal use. The
gift was received on behalf of Cummins and belongs to Cummins. It is the
responsibility of the employee’s manager or VP (depending on the value) to decide
what should be done with the gift. Below are recommendations for appropriate
disposal or use of gifts (not all inclusive):
Display the gift in the office
As appropriate, reuse the gift for giving business courtesies
Give the gift to charity (according to corporate social responsibility
guidelines)
Auction the gift at a company event
As appropriate make the gift available for the entire office to use or consume
Giving Business Courtesies
When employees give a business courtesy to a non-Cummins person it is always on
behalf of Cummins. Employees should obtain prior approval for giving a business
courtesy according to the following guidelines (local and/or financial guidelines may
be stricter):
Giving Business Courtesies
Non-promotional Gifts
Promotional or Cultural Gifts
Approval by
Manager
> $50 USD
> $100 USD
Approval by
VP
> $200 USD
> $250 USD
Meals / Entertainment (per person)
> $100 USD
> $250 USD
If a Cummins employee does not attend the business meal or entertainment, it is a
non-promotional gift and follows those guidelines.
Many times the total value of the meal or entertainment may not be known until
afterwards. If the per person value is expected to require manager or VP approval then
obtain prior approval. If the per person value unexpectedly goes above a value
requiring approval then notify the manager or VP and record the business courtesy
when reasonably possible afterwards.
Recording, reporting, and approvals should be maintained in accordance with section
“6.0 Recordkeeping and Auditing” of this policy.
Group Events
Group events lasting more than one day with a defined business purpose and
involving one or more customers, suppliers, or other non-Cummins organizations
should meet the general guidelines set in this policy. However, due to their nature
these events have separate monetary guidelines. For these events if the per person per
day cost is greater than $500 USD (local and/or financial guidelines may be stricter)
than the relevant VP should grant prior approval using the recordkeeping guidelines in
the policy. Business units may set their own internal policies for group events to
manage approvals and record keeping for conflicts of interest. Examples of events that
would require further approval due to a potential conflict of interest:
The per person per day cost exceeds $500 USD;
Government officials are involved;
The event is held close to a purchasing decision and individuals with decision
making authority over the purchasing decision are invited; or
The event violates any guidelines under the “Never Acceptable Business
Courtesies” section of this policy
A record of group events should be kept according to the individual business unit or
local entity’s guidelines. When necessary, that record should be available for audit
under the guidelines of this policy.
Spouses and Children
It is generally not appropriate to provide meals, entertainment, or other business
courtesies to spouses or children of customers, suppliers, or other non-Cummins
employees. If the business purpose of a business courtesy necessitates involving a
family member of a customer, supplier, or other non-Cummins person, the Cummins
employee must report, record, and obtain approvals for both the other party and their
family member to include the business purpose.
Tax Implications of Giving Gifts
When Cummins employees purchase gifts for company business there are tax
implications depending on the employee's location. For example, U.S. employees
should charge the value of gifts to any person not employed by Cummins exceeding
$25 USD during a calendar year to Account No. X602. Consult Corporate Tax
Administration or your Cummins local Tax Administration personnel for the dollar
limits and account number in order to provide proper tax treatment for giving gifts or
for related questions.
5.4 Other Conflicts of Interests
Meals, gifts, and entertainment are the typical business courtesies and covered
extensively in this policy. Other tangible and intangible business courtesies should
also be considered for potential conflicts of interest.
Government or State Owned Enterprise Delegations
Cummins often does business with or receives visits from government delegations,
state owned enterprises, or other similar quasi government organizations. Business
courtesies involving these organizations must follow the Prohibited Payments to
Government Officials Policy and local regulations, such as the U.S. Honest
Government and Open Leadership Act. It is unacceptable to pay for the travel,
accommodations, or daily expenses of these delegations without prior approval from
the Law Department.
Financial Interests
An employee’s financial interest in an organization which competes with or does
business with Cummins could create a conflict of interest. These could include the
ownership of stock, stock options or other financial interests or participation in a stock
offering. Employees should seek law department guidance and approval to resolve
any potential conflicts of interest if the employee has a financial interest of 5% or
more of the stock, assets, or interests of the organization in question.
Family Members and Friends
It is generally not appropriate for immediate family members of employees to give or
receive meals, entertainment, or other business courtesies involving customers,
suppliers, or other companies engaged in business with Cummins. Any business
courtesies given or received by the immediate family member of an employee are the
same as if given or received by the employee. The employee must report, record, and
obtain approvals the same as if they were giving or receiving the business courtesy.
If an employee’s family member or close friend works for an entity that Cummins
does business with and that relationship may improperly influence business decisions,
then there also may be a conflict of interest. These types of conflicts of interest could
include directing business to a family member’s or friend’s company, or other
business dealings that appear to give preferential treatment due to an employee’s
personal relationship at the other company. Also, if an immediate family member has
financial interests as outlined in the Financial Interests section above, there may be a
conflict of interest. This includes an immediate family member’s or friend’s company
(where that person is an officer or owner of the company) having financial interests as
outlined in the Financial Interests section above. It is best for employees to take
reasonable means to reduce any potential conflicts of interest or the appearance of a
conflict of interest and ensure business decisions are not influenced by the above
circumstances. If there is a potential conflict of interest due to a family member or
close friend, employees must contact their manager and/or the law department for
further guidance.
If an employee’s family member works for a supplier to Cummins, the employee may
not be involved in the supplier selection process, supplier management, or other
similar conflicts of interest related to the supplier.
Outside Employment
Any employment in addition to that employee’s roles at Cummins could create a
conflict of interest, especially if the employee’s role at Cummins is related to the
outside employment. The Outside Employment of Full-Time Members of Cummins
Exempt Workforce policy (CORP-00-05-02-00) should be followed for any outside
employment. If that employment creates or appears to create a conflict of interest, the
manager should be notified and the law department should be consulted.
Discounts
Business-related discounts on personal goods are inherently compromising. They
invite an affirmative decision on the part of the recipient that he or she desires the
discounted product. They can represent a substantial economical benefit. Cummins
employees should not accept discounts on personal goods which are offered as a
consequence of actual or potential business dealings with Cummins unless such goods
are part of an overall program arranged by the company for all employees.
Charitable Contributions
Charitable contributions are generally outside the scope of this policy except when
there is a potential conflict of interest or they violate any guidelines in the “Never
Acceptable Business Courtesies” section of this policy. Business courtesies should not
be reclassified as charitable contributions in attempt to avoid required approvals or
notifications. If there is a potential conflict of interest in a charitable contribution,
such as a donation to an organization that is a customer or supplier of Cummins or a
government official, the relevant manager and VP should consult the Vice President –
Corporate Responsibility and the law department.
6.0 Recordkeeping and Auditing
It is the responsibility of the employee who gives or receives the business courtesy to
obtain any necessary prior approvals and maintain a proper record of the transaction.
The approvals, notifications, and records outlined in this policy should be maintained
and easily accessible for audit purposes, such as for an ethics investigation or
otherwise requested by internal audit or the law department. Business units or local
entities may use their own record keeping systems that meet or exceed the guidelines
in this policy.
Each required record of a business courtesy at minimum must include: type of
business courtesy, date of business courtesy, description of the business courtesy,
parties involved, business purpose, value of the business courtesy, any required
approvals, how a received gift was disposed, and other relevant information.
7.0 Penalties
Violations of this policy or related policies and laws can cause substantial harm to our
business reputation and our ability to conduct normal business operations. Violations
related to anti-corruption laws carry serious penalties for the Company and individual
including large fines and/or prison terms. Any individual who violates our policy or
related laws will be subject to serious disciplinary action up to and including
termination.
8.0 Where to go for Assistance
All employees are required to comply with the provisions of this policy and all related
policies. If you have questions or become aware of any action that you believe is not
consistent with this policy, the applicable law, or the Company’s Code of Business
Conduct, you are required to seek assistance. You can seek assistance by contacting:
Human Resources
The Cummins Law Department;
Your supervisor or manager; or
Your business leader
How to contact the Law Department: If you are outside of North America, please
contact the Central Area (U.K.) Law Department at 44-1784-231505 and/or your
regional Cummins lawyer. A list of contact information for current lawyers in each
region can be found on the Legal Services intranet page on MyCummins
(mycummins.cummins.com).
If you are in North America, please contact the Law Department at 317-610-2461 or if
you do not know who to contact in the Law Department, simply send a Lotus Note
email to “Law Department” and you will be contacted by the appropriate person.
9.0 Company Ethics Help Line
If for any reason you are not comfortable taking your concerns to any of the above
departments or individuals, you may report your concerns to the Company’s Ethics
Help Line number or the website by typing “ethics.cummins.com” in your internet
browser. The phone number of the Ethics Help Line in your country may be found on
the Cummins intranet or ethics.cummins.com. Or you may call the United States
number at 1-800-671-9600.
10.0 Company Resources
Conflict of interest situations can be detailed and unique. Cummins has additional
training on conflicts of interest and related policies and laws. If you believe you or
others need additional training or information, please contact the Cummins Law
Department to arrange. The Company will provide you with the information that you
need.
11.0 Annual Ethics Certification
All Cummins Inc. employees who must complete the Annual Ethics Certification
must certify their compliance with this policy.
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Executive Directo
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Ignacio Garcia/Int
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Rebecca D Speak
Marya M Rose/Co
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Marya M Rose/Co Marya M Rose/Co Vice President - G
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Jill E Cook/Auto/C
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Jill E Cook/Auto/C
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