Counteracting corruption

Formal solutions associated with counteracting corruption are implemented at the level of the internal control system and the level of organizational culture rooted in ethical values applicable to all employees.

Corruption and gift policy

Corruption and gift policy – “We do not tolerate corruption. We do not provide forbidden gifts or benefits to our counterparties, their employees, representatives or other third parties. We also do not promise, expect or accept such gifts or benefits. In particular, this applies to situations where the type or value of such gifts or benefits affects any decisions or actions of the recipient. It is also forbidden to take advantage of third parties to bypass this rule.

We do not accept gifts or benefits from our clients, counterparties or collaborators if such gifts or benefits could:

• result in the emergence of an informal obligation toward a client, a counterparty or a person collaborating with the company,
• cause a conflict of interest,
• otherwise adversely affect the employee’s performance of his/her professional duties.”

PZU’s Best Practices constitute the PZU Group’s internal code of ethics applicable to all its member companies (except for banks). This code defines the principles of ethical conduct within the organization, pointing out unambiguously to zero tolerance for any form of corruption. According to the adopted principles, it is not permitted to give prohibited gifts or benefits to our business partners, their employees or representatives or other third parties. It is also forbidden to promise, expect and accept any such gifts or benefits. In particular, this applies to situations where the type and extent of a gift may affect the actions or decisions of the recipient. It is also unacceptable to make use of third parties to circumvent this rule.

In 2015, the management boards of PZU and PZU Życie adopted, by way of resolutions, the Anti-Corruption Program governing the rules applicable to corruption risk management in these companies and forming the basis for establishing and supporting effective solutions aimed at preventing corruption in all areas of their business. The Anti-Corruption Program is among the elements implementing “we play fair” as one of PZU’s strategic values. It serves the purpose of ensuring transparency of PZU and PZU Życie’s activities and operates as a system minimizing corruption risk.

The purpose of the Anti-Corruption Program is to define the standards of conduct in such a manner that they reduce the companies’ corruption risk and eliminate corruption phenomena that may occur in their day-to-day operations. The scope of the Program covers general corruption risk management policies in these companies, used as the foundation for developing more detailed regulations in specific areas of business. Each organizational unit is responsible for ensuring full transparency of conducted activities and the application of appropriate anti-corruption control procedures commensurate with the scale of its operations.

All employees are prohibited from proposing, promising, giving or demanding any material or personal benefits in order to manipulate any pending decision. This pertains both to all forms of facilitation payments and, for instance, to the use of favoritism in the recruitment or promotion process. The Program defines the methods of managing corruption risk, including its identification, reduction and monitoring, for example by indicates symptoms of employee behavior or conduct that may suggest a possible corruption concern.

[GRI 205-1] The program also points to the business areas which are potentially most exposed to corruption risk. It provides criteria for the evaluation of business partners and supports the identification of warning signals. A score is calculated for potential suppliers who are considered as new business partners for PZU or PZU Życie. Notably, the companies take steps to ensure that, as a matter of standard, agreements with their business partners contain appropriate anti-corruption clauses. The Program applies to such areas as: HR policy, social assistance area, prevention and sponsorship activities and bookkeeping. It also defines general rules applicable to dealing with gifts and conflicts of interest as well as rules for reporting employee suspicions concerning cases of corruption and their subsequent examination. Periodic corruption risk assessments and training in this area are the responsibility of the Compliance Department. [GRI 205-2]

Transparent rules of cooperation - “We treat our counterparties honestly. We are bound by strictly defined rules and policies related to gifts.

We will not initiate business contacts or enter into agreements in the name of or on behalf of PZU if our family members are a party to them. If cooperation is to be established with entities to which our relatives have any ties, we will request to be withdrawn from making decisions in such matters.

Our employees cannot have, without PZU knowing about it, any financial interests, as defined by the company, in the enterprises of PZU’s suppliers or clients or in competitive businesses.

We care for good relations with intermediaries. We do not, without a valid reason, apply different terms and conditions of cooperation with them due to the nature, form or size of the intermediary’s enterprise.”

Building on the general rules laid down in the Anti-Corruption Program, PZU and PZU Życie have adopted their rules of conduct for handling gifts. These rules define in transparent and very detailed terms the categories and types of gifts, the procedure for accepting or offering gifts and the rules for registering gifts. They apply to the acceptance and giving of gifts by employees in connection with their work for the company, regardless of their position or function. The employee may accept or offer a gift solely for the purpose of building business relations or to show appreciation in relations with a client or business partner, and provided that, due to the value or nature of the gift, the acceptance or offering of the gift does not create any form of mutual obligation on the part of the other party. It is also worthwhile to mention an additional document, namely the “Rules for acceptance and giving of gifts for management board members of PZU Group companies”, forming an attachment to the “Code of ethics for management board members of PZU Group companies”.

The fundamental rules for counteracting corruption at Bank Pekao are laid down in the anti-corruption policy which defines general objectives and powers in the field of corruption risk management and introduces the Anti-Corruption Program. The policy applies to all subsidiaries of the Pekao Group to the extent it is permitted by the applicable laws, regulations and freedom of operation and to the extent reasonable in the specific business context. Within the framework of the Anti-Corruption Program, various elements have been distinguished, including: reporting, training and control activities.

All members of the Alior Bank Group engaged in operational activities are required to observe the rules established by the Code of Ethics. The Code defines the principles of ethical conduct and unambiguously emphasizes zero tolerance for corruption. Moreover, the companies concerned are engaged in a number of activities and initiatives focused on improving employees’ awareness and attitudes in the areas of compliance and ethics.

PZU Zdrowie’s managerial approach and policies in the anti-corruption area chiefly consist of the established and implemented ethical standards. The applied solutions are based on those adopted by the PZU Group, in consideration of the specific nature of the medical sector.

TFI PZU and PTE PZU have solutions in place that are based on their counterparts adopted by the PZU Group or whose implementation resulted from the applicable periodic reporting laws.

Conflict of interest

Every day we are striving to build good relations with our clients and we are continually working toward a positive image of our company - “Any conflict of interest or even a possibility of a conflict of interest may damage our company’s reputation. A conflict of interest may occur in various forms. It usually involves a situation entailing or likely to entail a conflict between:

• an interest of the company or a person associated with the company and a client’s interest
• interests of two or more of the company’s clients
• an interest of a person associated with the company and the company itself.

A conflict of interest may emerge when an employee:

• uses his/her contacts or professional position to obtain personal benefits at the expense of the company’s interests,
• is involved in a business outside of PZU’s structures which interferes with the efficient performance of his/her duties toward the company,
• makes investments on his/her own based on any information he/she has obtained in the company.

A conflict of interest also arises when a relative or a family member obtains undue benefits as a result of any one of us being employed by PZU.”

PZU and PZU Życie have adopted the Rules for managing conflicts of interest at PZU and PZU Życie. This regulation aims to ensure professional, reliable and fair treatment of all clients and persons related to the company in conflict of interest situations. The adopted approach, one that requires analysis of any identified cases of a conflict of interest, is yet another example of practical thinking in terms of corporate values (“we play fair”). This is because the management boards of PZU companies are aware that in their financial operations there may and do occur various forms of potential conflicts of interest. These are usually the situations where there is or there might occur a discrepancy between:

• the interests of PZU or its affiliates and the interests of a client;
• the interests of two or more PZU clients;
• the interests of a PZU affiliate and PZU.

A person associated with PZU companies (an employee or an insurance agent) who has determined that a conflict of interest has occurred or may occur as a result of the performance of his/her duties is required, on the one hand, to take steps aimed at eliminating the conflict of interest and, on the other hand, to notify the conflict of interest in accordance with the applicable Rules. Such a notification is delivered to the person’s superiors but is also forwarded the Compliance Department for examination.

Within the Pekao Group, all companies engaged in operational activities have in place policies, regulations or instructions for employees on how to manage conflict of interest situations.

In particular, these internal regulations define the rules for managing conflicts of interest and describe the circumstances that cause or may cause such conflicts. Detailed provisions of the regulations in each company reflect the type of business and services provided by the entity in question.

The Alior Bank Group has adopted the Instructions for managing conflicts of interest. The Instructions define in specific terms the notion of a conflict of interest and assist employees in understanding how they should act to avoid conflicts of interest. The document governs such elements as: serving one’s relatives, accepting gifts or invitations and running a for-profit business by employees outside the Alior Bank Group. Furthermore, the Instructions contain a Gift Policy defining the rules for offering and accepting gifts in interactions with clients and business partners.

Whistleblowing system

[GRI 102-17] The PZU Group has implemented a Whistleblowing System. The System enables employees and entities cooperating with PZU to report issues of material importance for the company’s legal and financial interest as well as irregularities of an ethical nature. It supports the application in PZU of the standards laid down in PZU’s Best Practices. Every notification is examined observing the confidentiality of the whistleblower and the information so obtained. Employees may report any concerns of an ethical nature or violations of the provisions of law or internal regulations:

Reports by named individuals or anonymous are reviewed by a dedicated team in the Compliance Department. Identical solutions have been implemented in other PZU Group entities.

In Bank Pekao, the whistleblowing system is defined by the Whistleblowing Policy. This policy provides for the possibility of making anonymous (or non-anonymous) notifications of practices inconsistent with the applicable laws or internal regulations. All notifications are examined and processed properly.

Other Pekao Group companies also have in place their own mechanisms for anonymous notification of irregularities.

In 2017, Alior Bank defined the process of notifying breaches and established guarantees for whistleblowers. Employees may report a breach orally, in writing, by e-mail to dedicated addresses or directly to Members of the Management Board or the Supervisory Board. Whatever the selected form of notification, the whistleblower may choose to remain anonymous.

All member companies of the Alior Bank Group have a whistleblowing system in place.

Internal control

Compliance with laws and regulations - “PZU makes every effort to ensure that applicable laws and standards are complied with in all areas of its business.

In its dealings with the regulatory authority, the Polish Ombudsman for the Insured and other external institutions, PZU respects and recognizes all statutorily defined duties of such entities. PZU also provides them with assistance in the pursuit of their main task, i.e. protection of the insureds’ interests.

The basic rights and duties of every employee should be precisely defined. However, should doubts emerge as to whether a decision is reasonable or when a situation seems questionable or there is a suspicion that the law or any of the adopted principles or standards may have been breached, the company’s relevant units must be informed about it.”

In 2017, the Management Boards of PZU and PZU Życie adopted the amended Rules and Regulations of the Internal Control System. The Internal Control System comprises overall internal regulations, in particular administrative regulations, accounting regulations, regulations on capital adequacy, information issues, organizational structures, solutions implemented in IT systems, reporting systems, the compliance function, supervision and other control mechanisms contributing to the attainment of the companies’ objectives and security and stability of their operations. This is intended to ensure:

• efficiency and effectiveness of operating activity,
• credibility of information communicated inside and outside and assurance of availability and reliability of such information,
• adequacy and effectiveness of risk controls,
• responsible and transparent management,
• compliance of the companies’ activities with the laws, KNF recommendations, internal regulations and the standards of conduct adopted by the companies,
• efficient acquisition and transfer of any data and information that may be important to supplementary supervision.

The Internal Control System is based on a model of three independent and complementary levels, i.e. three lines of defense, where:

• the first line of defense is comprised of the activities of business processes owners, encompassing the operational management of risk associated with the companies’ business and processes carried out as part of that business,
• the second line of defense is provided by activities of the Compliance Department,
• the third line of defense is provided by activities of the Internal Audit Department.

The document defines the objectives, organization and rules of application of the Internal Control System at PZU and PZU Życie, including the control function, the control mechanisms, the rules for monitoring such mechanisms and reporting monitoring outcomes.

Internal auditors also examine any activities related directly to the social or environmental impact, albeit, due to their nature, they are not carried out annually.