XII. DEALINGS WITH PUBLIC OFFICIALS

The nature of the Company's business requires it to be in contact with public officials in the United States and foreign countries on a wide variety of matters. Such contacts take place against a background of laws, regulations and public officers' published codes of conduct. Moreover, there is a high level of public interest in dealings by business with public officials. Employees who regularly make these contacts have special responsibilities for upholding the Company's good name and relationships with public officials. All other employees should be aware that there are corporate policies and procedures that may require coordination with the Executive Vice President-External Relations and General Counsel of RAI, or their designees, prior to contacting public officials. All employees should be aware that various government entities have enacted formal, published codes of conduct and regulations which apply to elected and appointed government officials and their staffs, as well as to various other government employees (e.g., government investigators and those involved in negotiating and overseeing government contracts). Those who deal with members or employees of such entities should familiarize themselves with the relevant codes. The following standards govern all employee contacts with public officials:

1. All employees who contact public officials must be familiar with and obey the lobbying laws and public disclosure requirements.
   
   
2. Some types of contact with public officials (e.g., lobbying) require special recordkeeping and the filing of reports that may be made public by the government entities receiving them. All employees making contacts with public officials are responsible for keeping proper records, promptly filing with the relevant government entity any reports required of them and submitting copies of such reports, as filed, to the General Counsel of RAI or his designee.
   
   
3. No employee shall make any form of payment, direct or indirect, to any public official as inducement to having a law or regulation enacted, defeated or violated.
   
   
4. When not prohibited by law or public officials' codes of conduct, employees may make gifts to public officials within any legal or code guidelines, provided that the presentation and acceptance of such gifts is open and aboveboard, customary for the occasion and a normal business practice. Such gifts cannot be for the purpose of corruptly influencing the recipient. All such gifts shall be of nominal or reasonable value, and questions as to value should be referred to the General Counsel of RAI or his designee. If a proposed gift is of more than nominal value, the presentation must be approved in advance by the Chairman or President of RAI with the concurrence of the General Counsel and the Executive Vice President-External Relations of RAI, or their designees. Such gifts must be presented in a manner that clearly identifies the Company and the occasion that warrants the presentation.
   
   
5. On special ceremonial occasions, senior officers of the Company may publicly give gifts of more than nominal value to public institutions and public bodies. Such gifts can commemorate special events or milestones in the Company's history, such as the dedication of a new facility. These may be transmitted through public officials, but the gifts are given to the public institutions and public groups they represent, not the officials personally.
   
   
6. From time to time, employees may entertain public officials as allowed by applicable laws and regulations. Entertainment can be provided only under the following conditions:
   
   
   1. the entertainment is not for the purpose of corruptly influencing the official;
      
      
   2. the entertainment is not solicited by the public official;
      
      
   3. the entertainment arises in the ordinary course of business;
      
      
   4. the entertainment does not involve lavish expenditures or excessive frequency, considering the circumstances; and
      
      
   5. the settings and types of entertainment are reasonable, appropriate and fitting to our employees, their guests and the business at hand.
      

Some public officials with whom employees have dealings might be candidates for reelection. In these instances, the corporate standards applicable to the Company's relationship with political candidates must also be observed.