XVI. INTEGRITY OF RECORDS AND FINANCIAL REPORTS

The integrity of the Company's financial recordkeeping and reporting systems must be respected at all times. Employees and supervisors are forbidden to use, authorize or condone the use of "off-the-books" recordkeeping, secret accounts, unrecorded bank accounts, "slush" funds, falsified books or any other devices that could be utilized to distort records or reports of the Company's true operating results and financial conditions. No false or artificial entries shall be made in the records of the Company for any reason, and no payment on behalf of the Company shall be approved or made with the intention or understanding that any part of such payment is to be used for any purpose other than that described by the documents supporting the payment. Maintenance of falsified, inaccurate or incomplete records can subject the offending individual and Company to civil and criminal penalties.

It is legally required, as well as essential to the success of the business, that full, fair, accurate, timely and understandable disclosures be made in all financial statements, reports and documents submitted to the Securities and Exchange Commission, and in all other public communications made by the Company. All individuals who prepare, contribute to, assist in the preparation of or approve such reports and communications must strictly adhere to the following guidelines:

• All accounting records and reports produced from such records must be prepared and maintained in accordance with applicable laws, rules and regulations.
  
  
• All records and reports must fairly and accurately reflect the transactions or occurrences to which they relate.
  
  
• All records and reports must fairly and accurately reflect the Company's assets, liabilities, revenues and expenses.
  
  
• The Company's accounting records must not contain any false or intentionally misleading entries.
  
  
• No transactions shall be intentionally misclassified as to accounts, departments or accounting periods.
  
  
• All transactions must be supported by accurate documentation in reasonable detail and recorded in the proper account and in the proper accounting period.
  
  
• No false or misleading statement shall be made to, and no fact shall be concealed from, an internal or external auditor in connection with the audit, review or examination of Company financial statements or the preparation of any document or report filed with the Securities and Exchange Commission.
  
  
• No action shall be taken by any person to coerce, manipulate, mislead, or fraudulently influence an internal or external auditor engaged in the performance of an audit or review of the Company's financial statements.
  
  
• Compliance with the Company's system of internal accounting controls is required at all times.
  
  

Any individual who receives, uses or disburses corporate funds as a part of his or her job has a special obligation to follow established procedures to ensure proper use and recording of such funds. Such procedures are designed to protect the employee as well as corporate assets.

In accordance with the policy and procedures adopted by the Audit Committee of RAI's Board of Directors, any employee who is aware of suspected misconduct, illegal activities, fraud or abuse relating to the Company's accounting, internal accounting controls or auditing matters shall report such matters to his or her management or Human Resources representative, the Vice President and General Auditor of the Company or the General Counsel of the Company (or his or her designee). An individual also may report such information (anonymously, if desired) to EthicsLine by calling 1-800-500-0333 or directly to the Chair of the Audit Committee of RAI's Board of Directors by sending a detailed note, with any relevant documents, addressed to Chair of Audit Committee, P. O. Box 2990, Winston-Salem, North Carolina 27102. The Audit Committee complaint policy and procedures for accounting and audit matters can be found in the "Governance" section of the www.ReynoldsAmerican.com web site.

The Company will not discharge, demote, suspend, threaten, harass or in any manner discriminate against any employee in the terms and conditions of employment based upon any lawful actions of such employee with respect to good faith reporting of an accounting complaint or the provision of assistance in investigating or otherwise helping to resolve the accounting complaint. Retaliation against a complaining employee may result in disciplinary action by the Company and/or criminal liability. Any reported allegations of retaliation will be investigated promptly.