Counteracting corruption and bribery

The ORLEN Group strives to eliminate factors that may facilitate corruption by obliging itself and its business partners to comply with the laws and market standards intended to prevent corruption and misconduct in all markets where the ORLEN Group companies, their subsidiaries and representative offices operate.

Overview

Prevention of corruption and bribery at ORLEN and coordination of such activities across the ORLEN Group are the responsibilities of the Control and Security Office, acting in cooperation with the Financial Control, Risk Management and Compliance Office and with the Audit Office.

The responsibilities of the Control and Security Office include:

• Economic, physical, and technical security.
• Developing solutions and standards to improve performance of the internal control system.
• Implementation and coordination of measures defined in the ‘ORLEN Group Anti-Corruption and Misconduct Prevention Policy’, ‘ORLEN Group Conflict of Interest Management Policy’, ‘ORLEN Group Policy for Accepting and Offering Gifts’, ‘Rules for Anonymous Reporting of Misconduct and Irregularities at ORLEN’ and ‘Rules for Organising the Counterparty Screening Process at ORLEN.
• Monitoring business processes, analysing information, and reporting irregularities and instances of misconduct.
• Coordinating criminal proceedings conducted by law enforcement authorities and the judiciary in which ORLEN is involved in any capacity.
• Executing advanced security analyses and control processes.
• Cooperation with whistleblowers.
• Consultations regarding registration of gifts.
• Reviewing the security of cooperation with trade partners in business processes.
• Conducting internal control activities.

Audit Office

By carrying out audit tasks at ORLEN and the ORLEN Group companies, the Audit Office contributes to their value growth as it:

• Identifies and assesses significant risks, threats and inefficiencies in the operation of the existing organisational system and business processes.
• Identifies and evaluates the existing controls and promotes their continuous improvement.
• Provides recommendations of solutions and standards to be implemented to enhance the probability of achieving goals by, among other things, reducing the risks, implementing new or strengthening the existing controls, improving effectiveness of the internal control system assessment, and enhancing the efficiency of business processes.
• Monitors the implementation of post-audit recommendations.

The Audit Office works with the Head of the Control and Security Office on measures to be taken by the company with respect to proceedings conducted by law enforcement authorities or competent external institutions, in order to safeguard the company’s interests in such proceedings.

As part of corruption prevention efforts, regular training is offered and campaigns promoting appropriate behaviour are carried out on the internet and intranet (International Anti-Corruption Day). An Anti-Corruption Guide for employees and trade partners of ORLEN Group companies is also available. An annual anticorruption report covering the entire ORLEN Group is also prepared, with a summary of anti-corruption measures taken by individual companies.

In 2022, financial control activities were performed on the basis of annual plans approved by the President of the ORLEN Management Board and requests submitted to the Head of the Financial Control, Risk Management and Compliance Office by Members of the ORLEN Management Board and by individual business areas. Based on findings presented in the financial inspection reports, follow-up instructions were issued which specified and prioritised measures to be taken to eliminate irregularities or improve the performance of the inspected area.

The Financial Control Department continuously monitors the implementation of follow-up instructions, i.e. until it is satisfied that the corrective measures have been put in place. The rules and procedures for monitoring post-inspection instructions are set forth in the Rules for financial control procedures carried out by the Financial Control, Risk Management and Compliance Office. Twice a year, the Head of the Financial Control, Risk Management and Compliance Office presents to the ORLEN Management Board and the Audit Committee of the ORLEN Supervisory Board a report on the financial inspections performed and a report on the implementation status of the post-inspection instructions.

Following all the financial inspections carried out by the Financial Control Department of the Financial Control, Risk Management and Compliance Office, in 2022 a total of 177 instructions were addressed to the inspected areas, 45 of which concerned organisational units of ORLEN and 132 – the ORLEN Group companies.

In the course of each audit, the Audit Office reviews and assesses the risk of potential fraud and misconduct in the organisational processes under review, as well as the existence and effectiveness of safeguards against such risks. These activities cover sales, procurement, logistics and other processes in the audited business areas of ORLEN and the ORLEN Group. The Audit Office produces recommendations for solutions and standards that can be implemented to reduce such risks by introducing new or strengthening existing controls.

If any irregularities are identified, including information justifying suspicion of an offence, the Audit Office is required to report that to the ORLEN Control and Security Office.

Percentage and total number of operations assessed for risks related to corruption. Identifed risks.

At ORLEN and the ORLEN Group companies covered by the Enterprise Risk Management (ERM) System, the following anti-corruption and anti-bribery risks have been identified and assessed, depending on each company’s specific characteristics:

• Fraud and other misconduct – the risk of employees acting unethically and committing fraud or other misconduct. The risk of fraud and other misconduct was identified in 37 processes in the areas of retail, wholesale, procurement, safety, finance, human resources, oil trading, marketing, and legal.
• Employees’ conduct resulting in violation of law – risk that any activities taken by employees or subcontractors on behalf of the Company or its subsidiary may lead to a violation of national or international law. The risk was identified in 24 processes in the areas of procurement, retail, safety, finance, oil trading, marketing and legal.
• Misconduct by customers, employees or agents involved in the sales process – the risk of an inappropriate sales process or system or inappropriate sales system safeguards enabling customers or employees to commit financial fraud. The risk of misconduct by customers, employees or agents in the sales process was identified in 3 processes in the areas of retail and wholesale.

The risks related to anti-corruption and anti-bribery were assessed in a controls effectiveness review conducted by the relevant business areas in respect of 64 processes and in an independent review performed by the Internal Control Department based on the irregularities identified during inspections.

In 2022, the ERM System covered: ORLEN, ANWIL, ORLEN Lietuva Group, ORLEN Unipetrol Group, ORLEN Deutschland GmbH, ORLEN Paliwa and ORLEN Centrum Usług Korporacyjnych, which represent close to 10% of all the ORLEN Group companies.

Communication and training about anticorruption policies and procedures²

• Total number and percentage of board members to whom the organisation’s anti-corruption policies and procedures have been communicated – 100%.
• Total number and percentage of employees to whom the organisation’s anti-corruption policies and procedures have been communicated – 100%.
• Total number and percentage of business partners to whom the organisation’s anti-corruption policies and procedures have been communicated – 100% Information about the anti-corruption standards in force at the ORLEN Group is provided to all trading partners at the time of contract conclusion and by posting the most important information on www.orlen.pl or websites of the ORLEN Group companies.
• Total number and percentage of board members who have received anti-corruption training – 100%. Anti-corruption training is provided to each newly appointed board member.
• Total number and percentage of employees who have received anti-corruption training – 100% (basic training in the form of e-learning). The ORLEN Group’s anti-corruption training consists of two stages. Stage one is basic training, which all employees are required to take once every two years. Stage two is additional improvement training, addressed to people working in business areas with the highest risk of corruption.

² Former LOTOS Group and PGNiG Group not included.

Confirmed incidents of corruption and actions taken

• Total number and nature of confirmed incidents of corruption – not found.
• Total number of confirmed incidents in which employees were dismissed or disciplined for corruption – not found.
• Total number of confirmed cases of termination or non-renewal of contracts with business partners due to corruption-related violations – not found.
• Public corruption cases brought to court against the organisation or its employees during the reporting period and the outcome of such cases – not found.

Transparency of contracts and licences

Transparency of contracts is ensured by their digitisation, whereby any changes made to them can be traced during inspection and audit activities. Trade contracts constitute business secrets and as such are not disclosed to the public. Contracts and licences are not expected to be disclosed to the public for reasons of security of business operations of the ORLEN Group companies and their trade partners.

ORLEN has policies and regulations in place to ensure transparency of its contracts and agreements. These include: Instruction on drafting, registering, reviewing, approving, signing and archiving contracts concluded by ORLEN, and the Procurement Instruction, which lay down the rules for preparing and concluding contracts. The organisation has developed various types of clauses (e.g. non-disclosure, rights to inventions, sanctions, anti-corruption and other clauses), which ORLEN employees are required to use when preparing draft contracts. Before a contract or agreement is concluded, its draft is consulted with other organisational units of ORLEN, including Legal, Finance, Tax, and Controlling.

In the course of its audits, the Audit Office reviews the transparency of contractual provisions relating to the business processes under review and seeks to identify any risks involved.

In accordance with the Code of Best Practice for WSE Listed Companies, ORLEN has in place effective functional control, risk management and compliance supervision systems, as well as an internal audit and control function. The simultaneous operation of all those systems and functions allows the Group to exercise ongoing and effective anti-corruption supervision.

ORLEN has implemented a structured management control system, comprising a set of comprehensive procedures. The procedures are managed through a dedicated IT system which ensures their consistency through multifaceted agreements as well as approvals at each level in the organisation.

Key roles in the Enterprise Risk Management System

In order to minimise the risk of misconduct and corruption, ORLEN has adopted the popular Three Lines of Defence Model. The first line of defence involves risk management by employees and business units, and controls related to the operational processes. The second line is compliance functions, and the third – internal audit and control, supporting the correct functioning of the specified prevention measures.

First line of defence/prevention – Integrated Enterprise Risk Management System.
Risk management is a continuous process, however it is revised in response to the ever-changing economic environment. As part of enterprise risk management, risk self-assessment processes and controls tests are carried out at ORLEN and other ORLEN Group companies on a regular basis.

The ORLEN Group’s operations in Poland are compliant with the provisions of Polish law that apply to the required level of competence of all qualified security personnel, i.e.:

1. The Act on Security of People and Property dated August 22nd 1997, which states in Art. 50 that: “Security operatives who, in carrying out their tasks, abuse their authority or fail to perform their duties in a way that violates any individual’s personal rights shall be liable to a penalty of imprisonment for up to five years”, and therefore the Group has provided for sanctions in case of such situations.
2. The Regulation of the Minister of Internal Affairs dated December 18th 2013 on requirements related to training and courses confirming theoretical and practical knowledge of gun shooting, self-defence and intervention techniques and knowledge of legislation governing the protection of people and property where one of the training modules addresses the catalogue of human rights and freedoms and respect for human dignity in the context of security personnel’s powers.

All members of our qualified security staff have received the relevant training and possess knowledge of the standards of ethics and professionalism relative to human rights and are aware of the consequences of any violations of those standards.

The PGNiG Group, which joined the ORLEN Group at the end of 2022, has branches in Pakistan and Ras Al Khaimah (UAE) and the following companies: PGNiG Upstream North Africa, PGNiG Upstream Norway and LLC Karpatgazvydobuvannya. These entities are engaged in projects outside of Poland, and their security function, if any, is implemented in accordance with local laws.

In the context of human rights protection, ORLEN Ochrona security staff have been 100% acquainted with the provisions of the two ordinances listed below (items 1 and 2), while point 3 refers to the training programme for qualified physical security staff – i.e. 82.67% of all security staff (data from ORLEN Ochrona) are trained in policies and procedures relating to various aspects of human rights related to their business.

1. Ordinance No. 22/2021 of 15.07.2021 on the introduction of the Capital Group's Code of Ethics to be applied at ORLEN Ochrona Sp. z o.o.
2. Ordinance No. 10/2020 of 23.04.2020 on the introduction of the Rules on counteracting mobbing, discrimination and all forms of harassment at ORLEN Ochrona Sp. z o.o.
3. Qualified security personnel shall account for 82,67 % of all security personnel (employees and contractors).

To sum up, when it comes to the Code of Ethics and counteracting mobbing, discrimination and all forms of harassment, 100% of employees have been familiarized with these issues (trained), while in terms of qualifications of security personnel the percentage of training and familiarization with the protection of human rights among security staff is 82.67.

List of beneficial owners

ORLEN has implemented a procedure defining the process for screening its trade partners. Internal Order on: Rules for Organising the Trade Partner Screening Process at ORLEN, which in 2022 replaced the procedure set out in Internal Order on: Rules for Integrated Verification of Security and Credibility of ORLEN S.A.'s Trade Partners.

The trade partner screening procedure combined with documents governing procurement and sales set out the obligation for respective business areas to obtain from potential trade partners of a ‘Beneficial Ownership Statement’ or information on their organisational structure, ownership or control (excerpts from beneficial ownership registers of EU countries, annual group reports, stock exchange information, trade partners’ own declarations, etc.).

Initial verification of the beneficial ownership information obtained from a trade partner is performed by the respective business area.

Subsequently, the accuracy of such information is verified or the beneficial owner is established (in the absence of any information from the trade partner or in the event of any doubts about the veracity of such information) in the course of security clearance, the purpose of which is to determine, among other things, whether the specific beneficial owner(s), if a transaction is concluded or a decision to continue the business relationship is made, could cause specific risks to ORLEN Group companies, including risks to their operations, assets or reputation.

The beneficial owners of trade partners are also screened for the existence of any sanction risks associated with the imposition by individual countries or supranational organisations of sanctions on individuals of key importance to countries targeted by those sanctions.

The ORLEN Group companies are in the process of updating their trade partner screening process. The Groups which merged with ORLEN in 2022 (LOTOS and PGNiG) had their own procedures in place to verify and identify trading partners. Currently, those processes are being adapted to conform to the standards applied by ORLEN.