Conflict of Interest Management and Corruption Prevention

Managing conflicts of interest

The procedure for preventing, identifying and resolving conflicts of interest is formalised in the Company's internal documents (regulations):

The Regulations on the Board of Directors of JSC FPC regulate conflicts between the interests of the Company and the personal interests of a member of the Board of Directors or the sole executive body of the Company, which shall mean any direct or indirect personal interests or interests in favour of a third party, including due to their business, friendly, family and other relations and relationships, their holding of positions in another legal entity or the ownership of shares in another legal entity by them or related persons, conflicts between their duties to the Company and their duties to another person.
The Regulations on Preventing and Resolving Conflicts of Interest in JSC FPC regulate conflicts of interest that arise for employees in the performance of their employment duties.

The Board of Directors plays a key role in preventing, identifying and settling internal conflicts. The Regulations on the Board of Directors stipulate that members of the Board of Directors are obliged to report:

Facts that may cause or have already caused a conflict of interest, including information on organisations related and affiliated Board members, persons serving on the governing bodies of organisations, members of the executive body, other key management personnel and conflicts of interest that exist in connection therewith (including the existence of an interest in the conclusion of transactions)
Intention to enter into transactions involving shares in the Company or shares (interests) in legal entities controlled by the Company and immediately after entering into such transactions to report that such transactions are made
Existence of a conflict of interest and the reasons for it before the matter is discussed by the Board of Directors or its committee

The Regulations also stipulate that a member of the Board of Directors may not participate in decision‑making if there is a conflict of interest. He/she may be advised not to be present when such matter is discussed at the meeting. Independent directors who do not have a conflict of interest may present their standpoint (provide an assessment) in advance with respect to material corporate actions involving a possible conflict of interest.

The Company has a Conflict of Interest Committee chaired by the Deputy General Director for Security. The Corporate Security Centre is responsible for reviewing conflict of interest declarations.

In 2023, 86 conflict of interest declarations were reviewed for 55 situations showing signs of conflict of interest. In 29 cases, a conflict of interest was found, in 26 cases there was no conflict of interest. The incidents were related to the participation of the employee or related persons in the activities of commercial entities engaged with JSC FPC, as well as the subordination or controllability of relatives. There were 36 inspections of managers (65%), and 19 inspections of white‑collar and blue‑collar employees (35%).

Thirty‑seven conflicts of interest were resolved (29 established in 2023, 8 – in 2022). The following ways of resolving conflicts of interest were applied: employee's renunciation of personal interest (including dismissal), limitation of decision‑making and control functions, transfer to another position within the Company, non‑approval of a candidate for a position. Disciplinary sanctions (warning, reprimand) were applied to six employees (17%).

Anti‑Corruption

In accordance with FPC's Anti‑Corruption Policy, the Company conducts open and honest business and follows the best practices of corporate governance and strong business reputation. The Anti‑Corruption section is publicly available on FPC's official website.

The Deputy General Director in charge of the Security Block was appointed Commissioner for the Prevention of Corruption Offences. The unit responsible for the prevention of corruption offences is the Corporate Security Centre, a structural unit of JSC FPC, which has a Corporate Communications Control and Anti‑Corruption Division. In 2023, JSC FPC implemented measures to prevent and combat corruption in line with its Anti‑Corruption Plan for 2021–2024.

FPC's corruption risk management is an integral part of the Company's RM&ICS. It is based on the Methodological Recommendations for Managing Corruption Risks at JSC FPC. The Company periodically assesses corruption risks and implements multi‑stage internal control procedures. The findings of the corruption risk assessment were used to create a list of FPC's positions associated with corruption risks. The share of employees occupying positions with a high corruption risk is 0.1% of the actual Company's headcount. In 2023, JSC FPC and controlled companies were not held administratively liable for offences under Articles 19.28 and 19.28 of the Code of Administrative Offences of the Russian Federation.

To assess the effectiveness of the RM&ICS in preventing and combating corruption, an annual internal audit is conducted and the Audit and Risk Committee of the Board of Directors is informed on a quarterly basis of progress in preventing and combating corruption and other unfair practices, as well as of the work of FPC's Anti‑Corruption Hotline.

Sources of information on possible corruption:

Reports to FPC's anti‑corruption hotline and other communication channels
Notification of the employer of the instigation of an employee to commit corruption offences
Reports of employees on receiving a gift in connection with protocol events, business trips and other official events, participation in which is connected with their official position or performance of their official duties
Results of audits of financial and business operations carried out by control and supervisory divisions of JSC FPC, the parent company, and state authorities

In 2023, 26 reports were received about possible corrupt practices at JSC FPC. Following the review, four staff members were dismissed, two were reassigned, and six were subject to disciplinary action. Information on two cases was sent to law enforcement agencies.

Anti‑corruption work was monitored at 40 divisions of the Company, and measures to eliminate identified violations and shortcomings were developed and are being implemented.

The Company's personnel are familiarised annually with key internal anti‑corruption regulations. Anti‑corruption information boards were placed in all divisions of the Company.

In 2023, JSC FPC joined the Anti‑Corruption Charter of Russian Business and took part in the Anti‑Corruption Rating of Russian Business. The Company was assigned the AAA+ grade (an organisation with maximum level of anti‑corruption).