Foreign Corrupt Practices Act

June 2004

To: All Baker Hughes Employees, Agents, Consultants, Representatives and Joint Venture Partners

For more than two decades, the U.S. Foreign Corrupt Practices Act ("FCPA" or the "Act") has applied to Baker Hughes Incorporated (“the Company” or “Baker Hughes”) business operations globally. All employees, agents, consultants, representatives and joint venture partners acting on behalf of Baker Hughes must fully comply with the provisions of the Act. Violations are not tolerated. The FCPA is a U.S. law and compliance is a condition of employment or association with our Company.

In general terms, the FCPA makes it a crime to pay or offer to pay anything of value, directly or indirectly, to any non-U.S. official, including employees of state-owned oil companies, non-U.S. political candidates or anyone acting on behalf of a public international organization. The Act also requires that all publicly-traded companies, which includes Baker Hughes, maintain a system of internal controls and books and records that accurately reflect every transaction.

Interpreting the FCPA is not a simple task. There are times when situations fall into the "gray areas" of the Act. As a result, Baker Hughes provides this Guide to ensure that all employees and third party representatives of the Company understand the general requirements of the FCPA.

As you are aware, the Company is under a Cease and Desist Order imposed by the Securities and Exchange Commission on September 12, 2001. This was the result of the investigation of the Company's operations in Indonesia from 1999-2001. Although the Order was issued several years ago, it remains valid today and will continue to remain in full force and effect. Therefore, any failure to comply with the FCPA creates exposure for the Company under the FCPA and, separately, under the Order.

In addition to this Guide, which represents a part of our compliance program, all employees with internet access are required to take and pass the FCPA course offered through the Legal Resources University. This course is administered by our Legal Department Compliance Group and is designedto be repeated every two years.

If, after becoming familiar with this Guide, employees or third party representatives have any questions or concerns regarding the FCPA, contact a Baker Hughes lawyer, the Vice President – Chief Compliance Officer & Deputy General Counsel (by phone: 713-439-8439 or email CCO@bakerhughes.com), or the General Counsel's Office (outside the U.S.: 713-439-8676 or toll free within the U.S.: 866-303-8676). For those who wish to remain anonymous, Baker Hughes offers the Business Help Line, which accepts calls 24 hours a day, 7 days a week (outside the U.S. collect calls are accepted: 713-626-0521 or toll free within the U.S.: 800-288-8475). If you prefer, you may make an online report through Business Ethics Help Line Online. This website is available in 14 languages and is accessible 7 days a week, 24 hours a day.

Integrity, our first core value, provides the foundation for our Company policies, procedures and guidelines. As such, Baker Hughes expects and demands compliance with our Business Code of Conduct and the law. Our ethics and reputation must not be compromised.

Your continued commitment to our high ethical standards is expected and appreciated.

Related Information

Baker Hughes Foreign Corrupt Practices Act "FCPA" (555 KB PDF)