The Company strives to deal with contractors who conduct their business in open and fair manner.

Based on the analysis of the global best practices the Company management decided to move the anticorruption priority to the next level in 2012. Therefore the Company started to implement a compliance system, meaning the organizational principles of financial and economic activities that prevent groundless damage and the loss of goodwill occurring due to corruption, the violation of the norms of the Russian laws, or the internal corporate regulations. A Corporate and Anticorruption Procedures Department established within the Executive Body of the Company is responsible for the formation and implementation of the compliance system. In accordance with the international standards, the Department reports directly to the Chairman of the Company’s Management Board.

Apart from the changes in the organizational structure, there also took place a number of changes in the Company’s legal framework in 2012. The first thing to note is the approval by the Board of Directors of the Company’s Anticorruption Policy, which is a fundamental document regulating anticorruption initiatives and defining key tasks, principles and priorities of anticorruption activities.

A precondition required to achieve the goals stated in the Anticorruption Policy consists in the development of a set of the Policy implementation initiatives, meaning a Program to prevent corruption and to regulate the conflict of interests within the Company in 2012-2014. The Program was approved by the Company’s Management Board.

To perform according to the instructions of the President Putin V.V., and the decisions of the Presidential Commission on the Development Strategy of Fuel and Energy Complex and Environmental Issues, to provide for the transparent financial and economic activities and to prevent the conflict of interests, the Company launched an automated process of acquisition and analysis of data on the owners (including end beneficiaries) obtained from the contractors. The Company introduced annual declarations stating data on property, income and property liabilities of the Company top managers.

One more activity pertaining to the exclusion of contractual relationships with unfair contractors consists in the inclusion into the contracts of an anticorruption stipulation, which allows the establishment of business relationships only with partners supporting the Company’s Anticorruption Policy and conducting their business in open and fair manner.

Apart from the priorities of the Anticorruption Policy listed above, in 2012 the Company exercised anticorruption control over the purchasing activities, including the control over the execution of legal documents pertaining to the land used for the UNEG facilities construction. The Company also conducted anticorruption assessment of the industry guideline documents and their drafts, controlled the Company’s participation in charity initiatives and the interaction with government officials. The Company’s subsidiary and dependent companies implemented their own anticorruption policies. The Company checked the applications submitted by the Company employees, contractors and other physical persons and legal entities, informing the Company about instances of corruption. Other initiatives included managing the conflicts of interests, and anticorruption monitoring, etc. In 2012 the Company was focused on corruption prevention, legal education and the formation of loyal behavior of its employees. The initiatives included different topical training sessions, and seminars for the Company employees. The Company employees and those of its branches and dependent companies participated in an anonymous survey intended to identify the personnel’s understanding and attitude to the Company’s Anticorruption Policy.

The Company’s continuous efforts have their results, with 4 546 contractors checked in 2012 (twice as many, compared to 2011). The number of industry guideline documents checked for corruption potential grew twice, with the number of documents checked during anticorruption monitoring of purchasing activities growing thrice (compared to 2011), while the economic effect amounted to RUR 116 million.

Throughout the formation period of the Company’s Anticorruption Policy we had to deal with a number of difficult tasks and despite the success of the Company’s actions, we are going to proceed with improvement and development of our anticorruption priority, conducting anticorruption initiatives on a systematic basis. We plan to actively revise the Company’s internal legal framework pertaining to the implementation of corporate and anticorruption compliance procedures, and to implement new preventive measures within the existing business processes.