4.5. Business ethics and anti-corruption
4.5.1. Control over Major and Interested Party Transactions
RusHydro has an efficient system of internal control over transactions in place. The policy adopted by the Company regulates a unified procedure for reconciliation, conclusion and execution of contracts concluded on behalf of RusHydro. The contract drafts are subjected to the corporate expert assessment in order to comply with the laws and to reduce the risk of challenging the contracts by the agents and shareholders of RusHydro.
In 2015 PJSC RusHydro concluded interested party transactions listed in the Supplement to the Annual Report, together with information on the related subjects, interested parties and approvals. All transactions have been approved by the Board of Directors or the General Meeting of Shareholders in accordance with the requirement of the law, therefore the transactions concluded contain no conflict of interests.
4.5.2. Preventing the use of Insider Information
A new version of the Insider Information Policy was approved in September 2014. The Policy regulates the Company practices of observing the Russian law pertaining to the prevention of illegal use of insider information and market manipulation. The Policy has been developed taking into account the international practices of corporate governance, including the requirements of the Disclosure and Transparency Rules of the UK Financial Conduct Authority. The Policy sets the categories of persons included by RusHydro in the list of insiders. The Policy also regulates the access to the confidential insider information and the rules of its protection, as well as the limitations imposed on the use of such information by insiders for the purposes of operations with the Company’s financial tools and the transfer of data on insider information to third parties. The list includes the employees of RusHydro having access to the data and documents containing insider information due to the performance of their duties as employees of the Company.
In 2015 the Company:
- Revised procedure for inclusion of the Company’s employees in the list of insider information. According to the new order in insider information list can be involved first deputy and deputy Director General of the Company;
- A new version of the insider information list was approved;
- Issued 30 notices on the inclusion and exclusion of persons in/from the list.
The insider information list is drawn in Russian and in English languages to be published at the Company’s website at www.rushydro.ru and http://www.eng.rushydro.ru/. The insider information is published by the Company in Russian language in the newsfeed of Interfax, the authorized information agency. The English language version of the information is published in RNS newsfeed.
The observance of the requirements pertaining to insider information is controlled by the Company’s Auditor, who submits the resulting reports to the Audit Committee on a quarterly basis. The Audit Committee includes information on the observance of the abovementioned requirements in the corresponding report to be approved by the Board of Directors.
4.5.3. Anti-corruption efforts
The Company carries out regular work on prevention and detection of the corruption offence, elimination (minimisation) of the reasons and conditions generating corruption in PJSC RusHydro.
The work is based on the Anti-corruption Policy, Code of conduct, Conflict of interests Management Policy, Integrated Programme of Anti-corruption efforts and a number of other local normative documents forming the elements of corporate culture, rules and procedures to ensure prevention of corruption in the PJSC RusHydro.
Internal regulation guiding anti-corruption efforts forms basis of the anti-corruption system of PJSC RusHydro
As per the provisions of the Anti-corruption Policy all the Company employees and members of the Board of Directors must observe the norms of the Russian legislation and international law in the field of anti-corruption efforts. The obligations are assigned to the employees and members of the Board of Directors by the Code of Conduct to act in the interests of the Company and to avoid the conflict of interests. The members of the Board of Directors must notify the Company about occurrence or the risk of occurrence of the conflict of interests (as well as of its affiliation).
In addition the Company employees filling the positions exposed to corruption risks1, shall:
- abstain from actions leading or potentially leading to a conflict between the employee’s interests and the Company interests;
- notify about known cases of corruption offence and illegal actions, the receipt of gifts and etc., and disclose information on any commercial activities not related to the Company interests;
- submit the information in writing about the absence of conflicts of interest on a quarterly basis;
- submit the details of income, property and liability in relation to himself/herself, members of his/her family and nearest relatives on a quarterly basis.
PJSC RusHydro is a participant of the Anti-corruption Charter of the Russian business accepted by business community in 2012 for implementation of the National Anti-Corruption Plan. The Charter was initiated by the Russian Chamber of Commerce and Industry, the Russian Union of Industrialists and Entrepreneurs (RSPP), All-Russian Public Organisation Business Russia and all-Russian Small and Medium Business NGO OPORA ROSSII. In 2014 RSPP monitoring of execution of the Anti-corruption charter of the Russian business analysed the data on the implementation of anti-corruption initiatives in over 50 companies included in the Consolidated Charter members’ Register. In the opinion of the experts the PJSC RusHydro anti- corruption practices were recognized among the best.
Anti-corruption efforts in the Company (in accordance with the Integrated Programme of anti-corruption efforts) are carried out according to four directions:
- improvement of the local normative documents (acts) basis;
- corruption prevention and control;
- check of the messages of possible facts of corruption (illegal actions, conflicts of interest and etc.);
- internal control system improvement.
The Joint-Stock Company declares prohibition of the corrupt practices in its activities, in this regard the main direction of anti-corruption effort is aimed at prevention and precaution of the corruption facts, such as detection and prevention of the conflicts of interest, assessment of possible corruption risks, typical for the Company activities.
Evaluation of the corruption risks is carried out in order to identify certain business processes associated with higher probability corruption offence by employees. Within the internal control procedures the examinations of the key business processes are carried out in terms of sufficiency and effectiveness of control procedures available for them in order to minimize the risks of illegal actions.
“Helpline” functions on a permanent basis in the Company – communication channel for applications of the PJSC RusHydro employees and third persons (including the anonymous ones) related to the issues of fraud and corruption management, suppression of illegal actions and conflicts of interests, the Company activities improvement.
In 2015 the Company Helpline received 522 calls, of which 111 calls were submitted for review due to the selection results in accordance with the criteria established by the Rules of the Helpline functioning – 111 calls, 411 calls were rejected, as they were not related to the issues of corruption management and suppression of illegal actions.
In 7 cases out of 111 considered on the basis of helpline calls data, facts of illegal actions and breaches of the applicants’ rights were confirmed, as well as within the frame of the conducted internal investigation (Two internal investigations have been initiated as per the Helpline calls during the reporting period).
Measures of organizational influence:
- explanatory work of personnel;
- personnel testing in order to check knowledge;
- introduction of alterations into the applicable LNA and standards of the JSC;
- forwarding to the Internal Audit Service of the proposals on o conduct of audit of financial and operational activities.
220.127.116.11. Adherence to the Code of Conduct
The PJSC RusHydro Code of Corporate Ethics is applicable in the Company (the Code first version was approved by the minutes of the meeting of the Board of Directors of the PJSC RusHydro as of 21.05.2012 No. 152), the new version of the Code of Corporate Ethics was approved by the minutes of the meeting of the Board of Directors of the PJSC RusHydro as of 08.04.2016 No. 235. It takes into account the actual recommendations of the Code of Corporate Ethics, approved by the Bank of Russia and other requirements and recommendations issued by regulating authorities by now.
In accordance with the Code of Corporate Ethics the Company employees must:
- not give preference to any Joint-Stock Company counterparties, organisation, be independent from their influence;
- exclude the actions connected with influence of any personal, material /financial and other interests, preventing from faithful execution of its employment duties;
- observe impersonality excluding the possible influence of decisions of the political parties and public associations on its labour activity;
- not use official position for exercising influence on activity of the public authorities, self-governing authorities, organisations, officials, state (municipal) officials and citizens while solving the personal issues;
- not undertake illegal actions;
- in terms of prevention of the conflict of interests:
- take measures to avoid occurrence of the conflict of interests and regulate of the occurred cases of conflict of interests;
- refrain from combined job at the plants /in the organisations not included in the RusHydro Group, except for teaching, creative and scientific activities, if it does not lead to the conflict of interests;
- not recourse directly or indirectly to any personal loan or service from any individual or legal entity, having business relations with the Company or seeking such relations. It does not cover the organisations which offer such loans or services during its normal course of business.
- declare of existence or potential occurrence of personal interest, which influences or may influence the proper execution of official duties.
- The Code of Corporate Ethics also defines that the employees are prohibited:
- to give presents in relation to execution of the official (job) duties to the state and municipal employees;
- to accept remuneration (loans, money or other reward, services, payments for entertainment, holiday, transportation expenses) and gifts from individuals and legal entities38.
18.104.22.168. PREVENTING THE CONFLICT OF INTERESTS
To identify and prevent the conflict of interests of corporate employees, the Company established requirements for senior managers of the RusHydro Group to present annual declarations on income, property and material obligations in relation to themselves and their nearest relatives. The Company has a procedure for the disclosure of the chain of beneficiaries by agents and a HR Commission is in place.
The Company established an automated process for checking declarations. The automation is implemented in the form of Affiliated Persons’ Customer software1. To develop the software module intended to identify and control affiliated persons, in 2014, the Company established an automated process for collecting information and identifying conflicts of interest.
Starting from 2014, all declarations of Company employees and their relatives are submitted, processed and analysed using the software in question. The implementation of this software resulted in a considerable decrease in labour costs related to the checks of submitted data, thus allowing for the minimisation of risks associated with the human factor.
In 2015, as part of the declaration campaign (information check about income for 2014) has been analize more than 3 thousand declarations for participation in the activities of commercial organisations and a existing of conflict of interest. After audit the disciplinary measures was applied to RusHydro Group employee.
The conflict of interests check conducted in 2015 showed that there appeared a tendency for a decrease in the number of the conflict of interest violations by the employees, which is proof of the positive results of the Company’s activities.
To provide for additional transparency, the Company made its requirements for the contractors more stringent – in particular, when concluding contracts, each contractor shall provide information and confirming documents relative to the entire chain of owners of the contractor, including the ultimate final beneficiaries. The Company contractors shall also sign a guarantee letter on non-involvement of fly-by-night companies in the performance of the contractors’ contractual obligations.
As part of the procurement procedures and the procedures for the conclusion of contracts audited chain of 669 contractors beneficiaries.