Anti-corruption efforts

Being included in the list of systemic company of strategic importance for the Russian economy, and realizing the high degree of responsibility to the state, society, regulators, and authorities, ROSSETI implements uniform requirements of international legal norms and Russian law in the field of prevention and combating corruption in companies of the electric grid complex.

The Anti-Corruption Policy of ROSSETI PJSC and subsidiaries and affiliates of ROSSETI PJSC reflects the commitment of Russia’s largest public infrastructure company to high ethical standards for conducting open and honest business, following the best practices of corporate culture, and the principle of zero tolerance towards bribery in a profit-making organization and bribery.

By creating an effective legal mechanism and improving the regulatory framework in the field of anti-corruption, ROSSETI strives to create an atmosphere of rejection of corruption in all forms and manifestations in the electric grid complex, an anti-corruption corporate consciousness, and minimizing the risk of involving electric grid companies in corrupt practices.

Federal Law of the Russian Federation No. 273-FZ of December 25, 2008 “On Combating Corruption” establishes the basic principles of anti-corruption, the legal and organizational foundations for preventing and combating corruption, minimizing and (or) eliminating the consequences of corruption offences.

This Memo has been developed in order to prevent employees of the ROSSETI Group from committing offences that contain signs of corruption in connection with their work.

Being included in the list of systemic company of strategic importance for the Russian economy, and realizing the high degree of responsibility to the state, society, regulators, and authorities, ROSSETI implements uniform requirements of international legal norms and Russian law in the field of prevention and combating corruption in companies of the electric grid complex.

The Anti-Corruption Policy of ROSSETI PJSC and subsidiaries and affiliates of ROSSETI PJSC reflects the commitment of Russia’s largest public infrastructure company to high ethical standards for conducting open and honest business, following the best practices of corporate culture, and the principle of zero tolerance towards bribery in a profit-making organization and bribery.

By creating an effective legal mechanism and improving the regulatory framework in the field of anti-corruption, ROSSETI strives to create an atmosphere of rejection of corruption in all forms and manifestations in the electric grid complex, an anti-corruption corporate consciousness, and minimizing the risk of involving electric grid companies in corrupt practices.

Federal Law of the Russian Federation No. 273-FZ dated December 25, 2008 “On Combating Corruption” establishes the basic principles of anti-corruption, the legal and organizational foundations for preventing and combating corruption, minimizing and (or) eliminating the consequences of corruption offences.

Anti-corruption means the activity of federal government bodies, state authorities of the subjects of the Russian Federation, local self-government bodies, civil society institutions, organizations and individuals within their powers: a) to prevent corruption, including the identification and subsequent elimination of the causes of corruption (prevention of corruption); b) to identify, prevent, suppress, disclose and investigate corruption offences (combating corruption); c) to minimize and (or) eliminate the consequences of corruption offences.

Compliance means ensuring that an organization’s activities comply with the requirements imposed on it by Russian and foreign law and other mandatory regulatory documents, as well as creating mechanisms for the organization to analyze, identify and assess the risks of corruption-related practices and ensure comprehensive protection of the organization.

The concept of “corruption”

Corruption means the abuse of official position, giving a bribe, receiving a bribe, abuse of authority, bribery in a profit-making organization or other illegal use by an individual of his/her official position contrary to the legitimate interests of society and the state in order to obtain benefits in the form of money, valuables, other property or services of a proprietary nature, other property rights for him/herself or for third parties, or illegal provision of such benefits to the specified person by other individuals, commission of such acts on behalf of or in the interests of a legal entity.

One of the types of corruption is bribe and bribery in a profit-making organization.

The concepts of “bribe” and “bribery in a profit-making oraganization”

Bribe means receipt by a functionary, a foreign functionary, or a functionary of a public international organization, personally or through an intermediary, of money, securities, or other property, or in the form of illegal provision of property-related services or other property rights for actions (inaction) in favor of the bribegiver or persons represented by him/her, if such actions (inaction) are part of the official powers of a functionary or if, by virtue of his/her official position, he/she may contribute to such actions (inaction), as well as for general patronage or connivance in the service.

Explicit bribe means a bribe, when handing the subject of which to a functionary, the bribegiver specifies those acts that he/she is required to perform immediately or in the future.

Veiled bribe means a situation in which both the bribegiver and the bribe taker disguise their joint criminal activities as legitimate acts of behavior. At the same time, direct demands (requests) by the bribegiver may not necessarily be made, for example, for general patronage at work.

Bribe for the future means a systematic receipt of a bribe by a functionary in the form of periodic deductions from the profit (income) of an entrepreneur (legal entity) who is a bribegiver, if the taker commits a new act in his favor each time or provides general patronage and connivance.

Bribery in a profit-making organization (Part 1 of Article 204 of the Criminal Code of the Russian Federation) means the illegal transfer of money, securities or any other assets to a person who discharges managerial functions in a profit-making or any other organization, and likewise unlawful rendering of property-related services, granting other property rights to him/her for commission of actions (inaction) in the interests of the giver, in connection with the official position held by this person. The illegal receipt of money, securities or any other assets by a person who discharges managerial functions in a profit-making or any other organization, and likewise the illegal use of property-related services or exercise of other property rights for commission of actions (inaction) in the interests of the giver, in connection with the official position held by this person.

Person discharging managerial functions in a profit-making or other organization, as well as in a non-profit organization that is not a government body, local government body, state or municipal institution, shall mean a person discharging the functions of a sole executive body, a collegial executive body, as well as a person permanently, temporarily or by special authority discharging organizational, administrative or economic functions in these organizations (Article 201 of the Criminal Code of the Russian Federation).

Subject of a bribe (Articles 290, 291, and 2911 of the Criminal Code of the Russian Federation) and bribery in a profit-making organization (Article 204 of the Criminal Code of the Russian Federation) shall mean, along with money, securities, and other property, property-related services and other property rights provided by a functionary in the interests of the bribegiver.

Illegal provision of property-related services should be understood as the provision of any property benefits to a functionary as a bribe, including the release of his/her property obligations (for example, provision of a loan with a low interest rate for the use thereof, free or at a reduced cost, provision of tourist vouchers, apartment repairs, construction of cottages, transfer of property, in particular vehicles, for its temporary use, debt forgiveness or fulfillment of obligations to other persons) – clause 9 of Resolution No. 24 of the Plenum of the Supreme Court of the Russian Federation dated July 09, 2013 “On Judicial Practice in Cases of Bribery and Other Corruption Crimes” (hereinafter referred to as Resolution No. 24 of the Plenum of the Supreme Court of the Russian Federation dated July 09, 2013).

Property rights – which refers to the rights of participants in civil law relations related to the exercise of their powers of ownership, use and disposal of property (goods, money, securities, etc.), as well as property claims that arise between participants in civil turnover regarding the determination of the fate of property and related rights (distribution of this property and exchange). Property rights include both the right to property, including the right to a creditor's claim, and other monetary rights, such as the exclusive right to the results of intellectual activity and equivalent means of individualization (Article 1225 of the Civil Code of the Russian Federation).

Taking a bribe in the form of illegally granting property rights to a functionary presupposes the emergence of a legally secured opportunity for a person to take possession or dispose of someone else's property as his/her own, to require the debtor to fulfill property obligations in his/her favor, etc. (clause 9 of Resolution No. 24 of the Plenum of the Supreme Court of the Russian Federation dated July 09, 2013).

Bribe taker means a functionary only.

Functionaries means persons who permanently, temporarily or by special authority discharge the functions of a government representative or discharge organizational and administrative, administrative and economic functions in state bodies, local governments, state and municipal institutions, state corporations, as well as in the Armed Forces of the Russian Federation, other troops and military formations of the Russian Federation (Note 1 to Article 285 of the Criminal Code of the Russian Federation).

Organizational and administrative functions should be understood as the powers of a functionary who is associated with the management of the labor collective of a state corporation (its structural subdivision) or individual employees subordinate to them, with the formation of personnel and determination of the labor functions of employees, application of incentive measures or awards, imposition of disciplinary penalties, etc. Organizational and administrative functions include the powers of persons to make decisions of legal significance and entailing certain legal consequences (clause 4 of the Resolution of the Plenum of the Supreme Court of the Russian Federation dated October 16, 2009 No. 19 “On Judicial Practice in Cases of Abuse of Office and Exceeding Official Powers”).

Administrative and economic functions means the powers of a functionary to manage and dispose of property and (or) funds held on the balance sheet and (or) bank accounts of organizations, institutions, military units and subunits, as well as to perform other actions (for example, to make decisions on payroll, bonuses, control over movement of material assets, determination of the procedure for their storage, accounting and control over expenditure thereof) (clause 5 of the Resolution of the Plenum of the Supreme Court of the Russian Federation dated October 16, 2009 No. 19 “On Judicial Practice in Cases of Abuse of Office and Exceeding Official Powers”).

Bribe taking means receipt by a functionary, a foreign functionary, or a functionary of a public international organization, personally or through an intermediary, of a bribe in the form of money, securities, or other property, or in the form of illegal provision of property-related services or other property rights for actions (inaction) in favor of the bribegiver or persons represented by him/her, if such actions (inaction) are part of the official powers of a functionary or if, by virtue of his/her official position, he/she may contribute to such actions (inaction), as well as for general patronage or connivance in the service (Article 290 of the Criminal Code of the Russian Federation).

General patronage in the service means a type of corrupt behavior that a bribegiver-subordinate seeks to obtain from a bribetaker-superior, consisting in biased benevolent, preferential treatment compared to other subordinates. Such patronage may include, in particular, undeserved bonuses or other incentives, extraordinary unjustified promotions, and the creation of exceptional working conditions.

Connivance in the service includes, for example, the consent of a functionary of the supervisory authority not to apply the penalties within his/her authority in case of detection of a violation committed by a bribegiver. Actions (inaction) related to general patronage or connivance in the service may be committed by a functionary in favor of both subordinates and other persons who are subject to his/her supervisory, control or other functions of a government representative, as well as his/her organizational and administrative functions (clause 5 of the Resolution of the Plenum No. 24 of the Supreme Court of the Russian Federation dated July 09, 2013).

Furtherance by a functionary by virtue of his/her official position to commit actions (inaction) in favor of the bribegiver or persons represented by him/her is expressed in the use by the bribetaker of the authority and other opportunities of the position to influence other functionaries in order for them to commit the specified actions (inaction) in the service. Such an influence consists in inducing another functionary to commit appropriate actions (inaction) through persuasion, promises, coercion, etc. (clause 4 of Resolution No. 24 of the Plenum of the Supreme Court of the Russian Federation dated July 9, 2013).

Extortion of a bribe (clause b of Part 5 of Article 290 of the Criminal Code of the Russian Federation) or a subject of bribery in a profit-making organization (clause b of Part 4 of Article 204 of the Criminal Code of the Russian Federation) should be understood not only as the demand of a functionary or a person discharging managerial functions in a profit-making or other organization to pay a bribe or transfer illegal remuneration in the case of bribery in a profit-making organization, which involves the threat of committing actions (inaction) that may harm the legitimate interests of a person, but also the deliberate creation of conditions, in which a person is forced to transfer the specified items in order to prevent harmful consequences for his/her law enforcement interests.

Taking valuables by a functionary or a person discharging managerial functions in a profit-making or other organization for actions (inaction) that fall within/her his authority or that he/she could have committed using his/her official position is regarded as taking a bribe or bribery in a profit-making organization, regardless of the intention to commit these actions (inaction).

In the event that the said person has received valuables for committing actions (inaction) that, in reality, he/she cannot carry out due to lack of official authority and inability to use his/her official position, such actions, if there is intent to acquire valuables, are qualified by the preliminary investigation and court authorities as fraud committed by a person using his/her official position.

Fraud is defined as the actions of a person who took valuables under the pretext of transferring them to a functionary or a person discharging managerial functions in a profit-making or other organization as a bribe or an object of bribery in a profit-making organization, but who deliberately did not intend to fulfill his/her promise and turned these valuables to his/her benefit. In these cases, the owner of the transferred valuables is responsible for attempted bribe or bribery in a profit-making organization (clause 24 of Resolution No. 24 of the Plenum of the Supreme Court of the Russian Federation dated July 09, 2013).

If property benefits in the form of money, other valuables, or the provision of material services are provided to the relatives and friends of a functionary with his/her consent, or if he/she has not objected thereto and used his/her official powers in favor of the bribegiver, the actions of the functionary shall be considered as receiving a bribe.

In accordance with Part 3 of Article 30 of the Criminal Code of the Russian Federation, intentional actions (inaction) of a person directly aimed at committing a crime, if the crime has not been completed due to circumstances beyond the control of this person, shall be recognized as an attempted crime.

Thus, intentional actions (inaction) of a person directly aimed at giving a bribe, if the transfer of the bribe has not taken place due to circumstances beyond the control of this person, shall be recognized as attempted bribegiving. Intentional actions (inaction) of a functionary directly aimed at receiving a bribe, if at the same time receiving a bribe has not taken place due to circumstances beyond the control of the functionary, shall be recognized as an attempted bribetaking.

Responsibility for bribetaking, bribegiving, and mediating bribery occurs regardless of the time when the functionary took the bribe – before or after he/she committed actions (inaction) in the service in favor of the bribegiver or persons represented by him/her, as well as regardless of whether these actions (inaction) were conditioned in advance by a bribe or an agreement with the functionary on transfer of bribes for their commission (clause 8 of Resolution No. 24 of the Plenum of the Supreme Court of the Russian Federation dated July 09, 2013).

A bribe or a bribe through an intermediary

As practice shows, a bribe is often transferred and accepted by an official through intermediaries, for example, through subordinates, employees of intermediary firms, transaction partners, or specially hired persons who are considered accomplices in a crime by the Criminal Code of the Russian Federation.

In accordance with Article 2911 of the Criminal Code of the Russian Federation, mediation in bribery means the direct transfer of a bribe on behalf of the bribegiver or the bribetaker, or other assistance to the bribegiver and/or the bribetaker in reaching or implementing an agreement between them on taking and giving a bribe.

Illegal remuneration on behalf of a legal entity is another manifestation of corruption.

Illegal remuneration on behalf of a legal entity is defined as an illegal transfer, offer, or promise on behalf of or in the interests of a legal entity to a functionary discharging managerial functions in a profit-making or other organization, to a foreign functionary, or to a functionary of a public international organization – of money, securities, other property, provision of property-related services, granting of property rights for the commission in the interests of this legal entity by a functionary, a person discharging managerial functions in a profit-making or other organization, a foreign functionary or a functionary of a public international organization of an action (inaction) related to their official position (Article 19.28 of the Code of Administrative Offences of the Russian Federation).

Identification and resolution of conflicts of interest

Identifying conflicts of interest in the activities of an organization and its employees is one of the important ways to prevent corruption. A significant part of corruption offences are preceded by a situation of delicate balance, when an employee of an organization already sees an opportunity to extract personal benefits from the improper performance of his/her duties, but for one reason or another has not yet performed the necessary actions for this. If you fix this moment in a timely manner and in one way or another persuade the employee to behave properly, you can prevent an offence and avoid causing harm.

Conflict of interest means a situation in which the personal interest (direct or indirect) of an employee and/or supervisor affects or may affect the proper performance of his/her official duties and in which there is or may be a conflict between the personal interest of the employee and/or the head of the Company and the rights and legitimate interests of the Company, which can lead to harm to the interests of Company.

Personal interest, which affects or may affect the proper performance of his/her work duties, means the possibility of a supervisor/employee receiving income in cash or in kind, personal benefits directly for the employee or supervisor, his/her family members, or close relatives of the employee or supervisor, as well as for people or organizations with which an employee or supervisor is bound by financial or other property obligations.

In this case, parents, spouses, children, grandfathers, grandmothers, grandchildren, full- and half-siblings are considered close relatives of the supervisor/ employee in accordance with clause 4 of Article 5 of the Criminal Procedure Code of the Russian Federation.

The existence of a conflict of interest (or apparent existence of such a conflict) poses a threat to the Company’s reputation in the eyes of the Company’s employees and other persons (including shareholders, counterparties, the state and government agencies, professional associations, securities market players). Employees of the Company should avoid situations in which they have a conflict of interest.

In this regard, clause 3.3.4 of the Anti-Corruption Policy of ROSSETI PJSC and subsidiaries and affiliates of ROSSETI PJSC establishes an obligation for employees of the ROSSETI Group:

- when making decisions on business matters and performing their work duties, they should be guided by the interests of ROSSETI PJSC and subsidiaries and affiliates of ROSSETI PJSC;

- avoid situations and circumstances that may lead to a conflict of interest;

- disclose any (real) or potential conflict of interest, including reporting on the occurrence of a conflict of interest and filling out declarations of conflict of interest;

- facilitate the settlement of the conflict of interests that has arisen.

Ban on taking gifts in connection with the performance of official duties

As a rule, at the subconscious level, a bribe is associated with banknotes, but a gift to an official on whom managerial decision-making directly depends can also be considered a bribe if its value exceeds the amount of money stipulated by law.

Thus, as one of anti-corruption measures, the legislator has established a ban on taking any remuneration. Methodological guidelines on the development and adoption by organizations of measures to prevent and combat corruption, developed by the Ministry of Labor and Social Protection of the Russian Federation (approved on 08.11.2013) refer to Article 575 of the Civil Code of the Russian Federation, which establishes a direct ban on giving gifts to civil servants in connection with their official position or in connection with the performance of their official duties, with the exception of those, the cost of which does not exceed three thousand rubles.

However, even accepting a gift that does not exceed the specified value, one should not only be guided by moral and ethical beliefs and principles of reasonableness, but also not forget about the criminal liability established both when taking and when giving a bribe.

It should be remembered that, regardless of the amount of remuneration received by a functionary, it will be considered a bribe if there was extortion of remuneration, as well as if the remuneration (or agreement thereon) was of the nature of bribery, or was transferred to a functionary for illegal actions (inaction). At the same time, the lowest limit of a bribe may be less than three thousand rubles, established by Article 575 of the Civil Code of the Russian Federation, if this amount was intended for the commission of an action (inaction) by a functionary.

Decree of the Government of the Russian Federation dated 09.01.2014 No. 10 “On the procedure for Notifying Certain Categories of Persons about Receiving a Gift in Connection with their Official Position or the Performance of their Service (Official) Duties, Handing Over and Evaluating the Gift, Selling (Buying Back) and Crediting the Proceeds from its Sale” recommends the organizations, established to fulfill the tasks assigned to them by federal government agencies, to develop and approve the procedure for notification of receipt of a gift in connection with hospitality events, official business trips and other official events, participation in which is related to the performance of service (official) duties, its handing over, evaluation and sale (purchase) on the basis of the Model Regulation approved by the above-mentioned resolution.

In this regard, clause 3.4.4 of the Anti-Corruption Policy of ROSSETI PJSC and subsidiaries and affiliates of ROSSETI PJSC establishes that the Company and its subsidiaries and affiliates recognize the exchange of gifts with business partners as an integral part of business ethics if these actions are open and comply with the applicable law of the Russian Federation and local regulations of ROSSETI PJSC and subsidiaries and affiliates of ROSSETI PJSC. In addition, the Company’s Order No. 1032 dated 19.08.2015 approved the Regulation on informing employees of MOESK PJSC about receiving a gift in connection with their official position or performance of their official duties, handing over and evaluating the gift, selling (buying back) and crediting the proceeds from its sale (hereinafter referred to as the Regulation).

The following types of gifts should be distinguished:

1. “A gift received in connection with hospitality events, business trips and other official events” – a gift received by an employee of the Company from individuals (legal entities) who make a donation based on the official position of the recipient or the performance of his/her official duties, with the exception of stationery, which are provided to each participant of these events in the framework of hospitality events, business trips and other official events for the purpose of fulfilling official duties, as well as flowers and valuable gifts that are given as an incentive (reward).
2. “A gift received in connection with an official position or in connection with the performance of official duties” – receipt by an employee of the Company personally or through an intermediary from individuals (legal entities) of a gift in the framework of carrying out activities provided for in the job description, as well as in connection with the performance of official duties in cases established by federal laws and other regulatory acts defining the specifics of the legal status and the specifics of the professional work of these persons.

Employees of the Company are not entitled to take gifts not provided for by the law of the Russian Federation from individuals (legal entities) in connection with their official position or the performance of their labor (official) duties.

The Company’s local regulatory act (clause 3.4.5 of the Anti-Corruption Policy of ROSSETI PJSC and subsidiaries and affiliates of ROSSETI PJSC) establishes the obligation of employees of ROSSETI PJSC and its subsidiaries and affiliates to report all cases of taking a gift in connection with their official position or performance of their labor (official) duties. Cases of violations by the Company’s employees of the Regulation that led to a pre-conflict situation or conflict of interests, in accordance with clause 3.2 of the Regulation (Company Order No. 1032 dated 19.08.2015), shall be considered by the MOESK PJSC Commission on Compliance with Corporate Ethics Standards and Conflict of Interest Resolution. Disciplinary measures may be applied to an employee who violates the requirements of anti-corruption law, up to and including dismissal due to loss of trust.