Ethics and counteracting corruption

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Table of contents

Values and Code of Ethics
Countering corruption, fraud and conflicts of interest
Employee trainings

Values and Code of Ethics

The LOTOS Group conducts business ethically by complying with standards in all areas of its activity. The company has adopted a value system based on respect for the needs of the society and the environment.

Ethics Programme

Effective and ethical management of the organisational culture in the LOTOS Group is possible thanks to the Ethics Programme. It is the foundation of the group’s activities that builds value for our employees and external stakeholders.

The Ethics Programme consists of:

The Code of Ethics
The Ethics Ombudsman
reporting channels for code violations
education of employees
easy communication

The Code of Ethics sets out the principles and describes the group’s ethical value system that employees should follow in their work and relations with key stakeholder groups. Violations of the Code of Ethics are reported and investigated by the Ethics Ombudsman. They guard the compliance with the Code in the LOTOS Group.

The Ethics Ombudsman is at the disposal of each employee and counterparty of the LOTOS Group.

Available forms of contact with the Ombudsman:

a face-to-face meeting at a time convenient for the employee, arranged in advance by phone,
a phone call or message recording for the Ombudsman
(phone No: +48 58 308 80 70),
sending an e-mail to the following address: liniaetyki@grupalotos.pl,
filling out the report form at: www.lotos.pl,
sending a notification by post.

The Grupa LOTOS operates in accordance with the principles of Best Practice of GPW Listed Companies. Consistency with these principles helps to build the company’s ethical culture, which translates into shaping our relations with the market environment and is an important element in building our market position.

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Countering corruption, fraud and conflicts of interest

Effective management of the risk of potential fraud minimises the potential for fraud to occur. Additionally, in the event of a possible materialisation of this risk, immediate action is ensured to promptly clarify the situation, limit the harmful effects of its occurrence, return the organisation to the desired status and eliminate the recurrence of similar events in the future.

In 2020, there was a change of responsibility in the area of fraud prevention — the Internal Audit Team and the Risk Management Team at the Internal Audit Office of the Grupa LOTOS were liquidated, their tasks were entrusted to the Internal Control Office in the department of the Director for Security and Internal Control. To this end, a new role was created — that of the Fraud Prevention Coordinator.

The duties of the Coordinator include, among others:

coordination of activities related to the monitoring of enterprise risk associated with instances of material fraud (including corruption);
preparation of didactic materials and conducting fraud prevention trainings in the LOTOS Group;
operation of information channels created for whistleblowers reporting fraud;
protection of whistleblowers reporting fraud in good faith.

As a result of expanded fraud prevention responsibility, the Internal Control Office launched actions to assess the procedures currently in place and redefined the DN1 Risk Sheet. Measurable indicators were also determined for assessing the level of risk of material fraud and assessing the effectiveness of actions, as well as conducting a detailed analysis of fraud prevention risks.

As a result of the works carried out in September 2020, the updated Policy of the LOTOS Group on fraud prevention came into force, which redefined the concept of fraud, emphasising, inter alia, particular importance of corruption fraud and specified the responsibility for developing an environment free from any displays of fraud.

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In 2020, no cases of corruption were identified in the LOTOS Group

Contact for fraud-related issues

Stakeholders may report any suspicions of irregularities and/or fraud using defined and available communication channels. In 2020, the notification channels were updated in the event of justified suspicions of fraud by the management, employees of the LOTOS Group and suppliers, contractors or other entities with business relationships with the LOTOS Group. Notifications may be submitted via several channels:

a phone call or message recording (phone No +48 504 181 048);
by sending an email to: zawiadomienia@grupalotos.pl;
by filling out the report form available HERE;
by sending a letter to the following address: Head of the Internal Control Office, Grupa LOTOS S.A., ul. Elbląska 135, 80-718 Gdańsk, Poland.

Information received via the above channels is forwarded directly to the Head of the Internal Control Office and clarified in the course of an investigation or control procedure. It is now also possible to send notifications of suspected fraud to employees of the LOTOS Group via the intranet platform www.lotostrada.pl in the Fraud prevention in the LOTOS Group sub-service.

No type of fraud is allowed in the LOTOS Group. The Grupa LOTOS belongs, among others, to the United Nations Global Compact Call to Action on Anti-Corruption initiative, which unites businesses in the fight against all forms of corruption. The Fraud Prevention Policy and other anti-corruption internal regulations are known to all employees of companies from the LOTOS Group. Every newly hired employee, as part of training, receives, among others, information on these regulations and the liability resulting from non-compliance therewith. In addition, this information is often refreshed throughout the employment relationship.

Employee trainings

In connection with the COVID-19 pandemic, the Internal Control Office, in recognition of barriers and limitations in the field of on-site training in the field of fraud, took the initiative involving preparation of a training for employees of the LOTOS Group on the e-learning platform (the e-learning training course is being prepared and will be implemented in 2021). All employees of the LOTOS Group were supposed to familiarise themselves with the mandatory training and to pass the test of knowledge in the field of fraud prevention (including corruption). Other companies from the LOTOS Group received a recommendation to apply in the same obligation of becoming familiar with the training to their employees.

Adaptation trainings also changed their formula in 2020. There was one on-site training, organised by the Internal Audit Office (a total of 31 people were trained from: the LOTOS Group, LOTOS Paliwa and LOTOS Lab) and no further meetings were planned due to the restrictions associated with the COVID-19 pandemic. Instead of traditional trainings, an online adaptation training was prepared. New hires became familiar with the training path on the e-learning platform. In the LOTOS Group, the adaptation path in the online version last year was completed by 75 employees (126 people in total). All employees of the LOTOS Group and subsidiaries were also obliged to familiarise themselves with the new Policy of the LOTOS Group on fraud prevention.

At the same time, all business partners of the group were informed about the policy and anti-corruption procedures in 2020.

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Percentage of employees trained on the Grupa LOTOS anti-corruption policies and procedures

	Number of members of governing bodies who:
	were informed about anti-corruption policy and procedures	underwent anti-corruption trainings
Number of members of governing bodies	11	n.d.a
Number of new members of governing bodies	2	n.d.a
Number of new employees	106	n.d.a

Despite limited possibilities to raise awareness in the area of preventing corrupt behaviour, classified as particularly harmful types of fraud, no cases of dismissal of an employee of the LOTOS Group due to corruption were recorded in 2020.

The organisation’s efforts to prevent and detect fraud are seen as effective. This is due, inter alia, to the following activities:

implementation of the Policy of the LOTOS Group on fraud prevention, execution of investigations (in the case of reported suspected fraud) and implementation of fraud risk mitigation mechanisms;
defining the Fraud Risk Management Sheet, managing and monitoring this risk, as well as a plan for its mitigation and handling in the event of materialisation;
use of CSR clauses (including anti-corruption clause) in requests for proposals and agreements;

creation of a new position — Fraud Prevention Coordinator;
the existence of Counterparty Verification Department and the Internal Control Office within the structures of the LOTOS Group;
conducting fraud prevention trainings in the group.

The fight against fraud also includes imposing the obligation to verify counterparties in accordance with the procedure and to comply with internal policies on all companies in the Group. The structure of the Department of the Head of Security and Internal Control includes the Counterparty Verification Office, which verifies counterparties in order to present recommendations on entering into or continuing the agreement, basing its decisions, among others, on the provisions of the Policy of the LOTOS Group on fraud prevention.

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In 2020, all companies of the LOTOS Group were assessed in terms of the risk of occurrence of corruption events.

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We act ethically and in accordance with the highest standards, also in areas such as marketing communication, advertising, sales or market presence. Thanks to this approach, no legal actions were initiated against the LOTOS Group in 2020 due to violation of free competition rules and antitrust practices.

Due diligence procedures

The LOTOS Group (depending on the scope of the company’s operations and its needs) applies due diligence procedures in accordance with standards, as part of the implemented management systems:

PN-EN ISO 9001:2015 — Quality management systems
PN-EN ISO 14001:2015 — Environmental management systems
PN-ISO 45001:2018 — Occupational health and safety management systems
PN-EN ISO 27001:2017 — Information security management systems
PN-EN ISO 22301:2014 — Business continuity management systems

PN-EN ISO 50001:2018 — Energy management systems
PN-ISO 31000:2018 — Risk management
Internal Control System
AQAP 2110 — NATO Quality Assurance Requirements for Design, Development and Production.

Governance structure

Ethical supply chain