Companies that want to do business with or provide goods or services to Saudi Aramco, SADARA, SATORP, SABIC, and other Saudi companies will have to agree to a Supplier Code of Conduct (SCOC) that establishes the policies, principles, and expectations of suppliers.[i]  The SCOC policies, principles, and expectations apply to vendors, manufacturers, contractors, sub-contractors,[ii] and other third parties[iii] as well as their employees, agents, subsidiaries, and affiliates.[iv] By agreeing to the SCOC, suppliers legally commit themselves to comply with applicable laws and regulations, conflicts of interest, ethical trade practices, monitoring and training, and reporting and cooperation.[v]  This article talks about the compliance obligations and risks to suppliers who do not comply with the SCOC.

Compliance with laws and regulations

As noted in How business partner expectations can drive compliance in the Middle East and The opportunity value of compliance, multinational companies frequently use the SCOC to demonstrate supply chain compliance with internationally enforced laws and regulations that prohibit bribery and corruption, regulate the export of controlled items and dealings with sanctioned parties, and the processing of personal data.  Especially companies that operate in industries subject to greater regulatory scrutiny, as explained in Identifying relevant compliance laws and obligations.  The SCOC requires suppliers to comply with all applicable laws and regulations or risk termination of the supplier relationship.[vi]

In addition to complying with applicable laws generally, most SCOCs expressly prohibit bribery and corruption[vii] that is subject to local prosecution by the Saudi Oversight and Anti-Corruption Authority (Nazaha) and international prosecution under the Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act.  Many SCOCs also restrict the giving of gifts, meals, and entertainment to items of “nominal value and . . . in line with customary business practices.”[viii]  Some even restrict giving “business gifts of any value” to their employees.[ix]  In addition to prohibiting bribery and corruption, some SCOCs require suppliers to follow export control and sanction laws that might apply to certain goods, services and technology, business dealings with certain countries, entities and individuals, travel to certain countries, and the exchange of information.[x]  They can even require suppliers to process personal data in accordance with prevailing data privacy laws such as Saudi Arabia’s Personal Data Protection Law.[xi]

Suppliers who have adopted and implemented effective policies, procedures, and training have the tools and records necessary to comply with applicable laws and regulations.  For example, policies that explain the requirements of anti-bribery and corruption, data privacy, export controls, and sanctions laws to employees, officers, and directors.  The tools also include procedures and training that teach employees how to comply with the laws and records that substantiate compliance with the terms and conditions of the SCOC.

Ethical practices

     In addition to laws and regulations, the SCOC requires suppliers to avoid unethical practices such as engaging in conflicts of interest and unfair trade practices.  Conflicts of Interest involve any interaction with a company employee that might conflict with the company's best interest—usually prohibiting suppliers from using current or former employees to disclose confidential, proprietary, or other redistricted information.[xii]  Conflicts of Interest also prohibit suppliers from hiring, employing, or otherwise engaging former employees for up to two (2) years after their employment relationship is terminated.[xiii]  Some SCOCs even require suppliers to disclose the hiring of former employees or risk “appropriate action against current or former employees and Suppliers who violate these restrictions.”[xiv]  Finally, the SCOC regularly prohibits engaging in “collusive bidding, price discrimination, anti-competitive, anti-trust, or other unfair trade practices.”[xv]  Compliance programs that include policies, procedures, and training can also explain Conflicts of Interest and fair trade practices and how to act ethically.

Monitoring and Training

     Suppliers are held responsible for their compliance with the “standards and requirements of the SCOC”[xvi] and the “conduct and actions of their employees.”[xvii]   The SCOC requires suppliers to monitor compliance with and train their employees on its requirements to ensure compliance.  Monitoring can include the right to audit compliance,[xviii] commitments to self-monitor and audit,[xix] the implementation of effective policies, procedures, and training to promote, monitor, and validate compliance with the SCOC,[xx] and maintaining appropriate records to substantiate compliance with the terms and conditions of the SCOC.[xxi] In addition to communicating the standards and requirements of the SCOC to employees and representatives,[xxii] training can include participation in all training necessary and sufficient to ensure compliance with the SCOC.[xxiii]  The quality of a supplier’s monitoring and training program is also a factor in determining access to future business opportunities.[xxiv]

Reporting and Cooperation

In addition to complying with the conduct and actions required by the SCOC, Suppliers, their employees, and representatives must report actual and potential violations of the SCOC, the law, and unethical conduct[xxv] and, in some cases, plans to correct and remediate the violation.[xxvi]  Suppliers, their employees, and representatives may also be required to cooperate with investigations into the violation.[xxvii]

As noted at the beginning of this article, Saudi companies will suspend or terminate the business relationship with suppliers that do not comply with the law and ethical practices, report violations, or cooperate with investigations required by the SCOC.[xxviii]  Even where no violation exists, having an effective compliance program will improve a supplier’s chances for future business opportunities and satisfy the records requirements contained in the SCOC.  For help evaluating or developing your compliance programs contactus@emme-advisory.com. 


[i] Saudi Aramco SCOC – This Supplier Code of Conduct establishes a Policy for all current and potential Saudi Aramco Suppliers; SADARA SCOC – This Supplier Code of Conduct set forth the principles that Sadara Chemical Company . . . expects of all individuals and organizations who supply goods or services to SADARA; SATORP SCOC – This Supplier Code establishes a policy for all current and potential SATORP suppliers; and SABIC SCOC – SABIC requires our Suppliers to share [the] commitment to abide by the principles contained in our Supplier Code of Conduct.

[ii] Saudi Aramco SCOC – Saudi Aramco Suppliers include vendors, manufacturers, contractors, and sub-contractors.

[iii] SABIC SCOC – For our purposes, ‘Supplier’ means the legal entity specified in the SABIC purchase contract/purchase order as the supplying party, including but not limited to, manufacturers, tollers, logistic providers, waste handlers, consulting firms, independent contracts, and staffing agencies.

[iv] SABIC SCOC – Our Supplier Code of Conduct applies to Suppliers and their employees, agents, subsidiaries, affiliates, and subcontractors.

[v] see STC SCOC; Saudi Aramco SCOC; SADARA SCOC; SATORP SCOC; and SABIC SCOC.

[vi] Saudi Aramco SCOC – Saudi Aramco reserves the right (in addition to all other legal and contractual rights) to disqualify any potential Supplier or to terminate any relationship with a current Supplier which Saudi Aramco has found to be in violation of this Supplier Code of Conduct and SADARA SCOC – Violations of relevant laws, regulations or applicable codes may result in the dissolution of all business relationships between Sadara and the non-compliant Supplier.

[vii] Saudi Aramco SCOC; SADARA SCOC; SATORP SCOC; and SABIC SCOC.

[viii] Saudi Aramco SCOC and SADARA SCOC.

[ix] SABIC SCOC.

[x] SADARA SCOC and SABIC SCOC.

[xi] SABIC SCOC.

[xii] Saudi Aramco SCOC; SADARA SCOC; and SATORP SCOC.

[xiii] Saudi Aramco SCOC; SADARA SCOC

[xiv] Saudi Aramco SCOC.

[xv] Saudi Aramco SCOC; SADARA SCOC; SATORP SCOC; and SABIC SCOC.

[xvi] Saudi Aramco SCOC – Suppliers shall be responsible for complying with the standards and requirements of this Supplier Code of Conduct; SADARA SCOC – Suppliers shall be responsible for complying with the standards and requirements of this Supplier Code; and SATORP SCOC – Suppliers shall be responsible for complying with the standards and requirements of this Supplier Code of Conduct.

[xvii] Saudi Aramco SCOC – Suppliers will be held responsible for the conduct and actions of their employees; SADARA SCOC – Ultimately, Suppliers will be held responsible for the conduct and actions of their employees; and SATORP SCOC – Suppliers will be held responsible for the conduct and actions of their employees; and SABIC SCOC – You are responsible for the conduct and actions of your employees.

[xviii] SABIC SCOC and STC SCOC.

[xix] SATORP SCOC.

[xx] SADARA SCOC and SATORP SCOC.

[xxi] Saudi Aramco SCOC and SADARA SCOC

[xxii] Saudi Aramco SCOC – Suppliers are responsible for ensuring that the standards and requirements of this Code are communicated and understood by their personnel working on or in support of Saudi Aramco projects, jobs, contracts, agreements, and orders; SADARA SCOC – [Suppliers are responsible] . . . for ensuring that the standards and requirements are communicated and understood by their Employees & Representative working on or in support of Sadara projects, jobs, contracts, agreements and orders; SATORP SCOC – Suppliers are responsible for ensuring that the standards and requirements of this Supplier Code of Conduct are communicated and understood by their Employees & Representatives working on or in support of SATORP projects, jobs, contracts, agreements, and orders; and SABIC SCOC – Please communicate the requirements of this Supplier Code of Conduct to your personnel working on SABIC matters, including your agents and subcontractors.

[xxiii] SADARA SCOC – Suppliers also undertake that their designated Employees & Representatives who have work-connection with SADARA will participate in all necessary training . . . to ensure compliance with the Supplier’s commitments hereunder and SABIC SCOC – You should provide sufficient training and supervision to ensure that the workers assigned to perform work for SABIC and its affiliates observe the principles contained in this Supplier Code of Conduct.

[xxiv] Saudi Aramco - A Supplier performance assessment will be used as a factor in the selection of bidders, the administration of contracts and procurements, or to possibly restrict Supplier access to future business opportunities; SADARA SCOC – A Supplier performance assessment will be used by SADARA as a factor in the selection of bidders, the administration of contracts and procurements, or to possibly restrict Supplier access to future SADARA business opportunities; SABIC SCOC – Supplier performance and compliance with the Supplier Code of Conduct are used in the selection of Suppliers and to invite bidders for new SABIC opportunities; and STC SCOC – stc’s evaluation of supplier’s adherence to this Code is an important factor in stc’s overall performance assessment of the supplier . . . that will [be] consider . . . in selecting future bidders, administering contracts, and deciding whether to disqualify or restrict the supplier from future business opportunities;

[xxv] Saudi Aramco SCOC – Suppliers are to promptly notify . . . when they become aware of any actual, or potential violation of this Code of Conduct and to communicate plans to correct and remedy such violation; SADARA SCOS – Suppliers who believe that . . . anyone . . . has engaged in illegal or otherwise unethical conduct . . . should report the matter; SATORP SCOC – Suppliers and their Employees & Representatives are to promptly notify SATORP when they become aware of any actual, or potential violation of this Supplier Code and to communicate plans to correct and remedy such violation; SABIC SCOC – You are responsible for raising integrity concerns about potential or actual violations of our Supplier Code of Conduct or applicable laws; STC SCOC – Suppliers shall promptly report . . . any suspected or actual violation of this Code.

[xxvi] Saudi Aramco SCOC – Suppliers are to promptly notify . . . when they become aware of any actual, or potential violation of this Code of Conduct and to communicate plans to correct and remedy such violation; SADARA SCOS – Suppliers who believe that . . . anyone . . . has engaged in illegal or otherwise unethical conduct . . . should report the matter; SATORP SCOC – Suppliers and their Employees & Representatives are to promptly notify SATORP when they become aware of any actual, or potential violation of this Supplier Code and to communicate plans to correct and remedy such violation; SABIC SCOC – You are responsible for raising integrity concerns about potential or actual violations of our Supplier Code of Conduct or applicable laws; STC SCOC – Suppliers shall promptly report . . . any suspected or actual violation of this Code.

[xxvii] Saudi Aramco SCOC – Suppliers are to communicate plans to correct and remedy such violation; SATORP SCOC – Suppliers . . . are to communicate plans to correct and remedy such violation; SABIC SCOC – If you find areas of non-compliance, . . . notify SABIC . . . any plans to remedy it.

[xxviii] Saudi Aramco SCOC and SADARA SCOC.