Anti-corruption efforts

Anti-corruption regulations

RusHydro Group’s anti-corruption framework is aligned with the relevant laws of the Russian Federation.

RusHydro and its affiliates use a system of corporate policies and standards to regulate anti-corruption measures and define the main objectives, goals and focus areas of activities aimed at preventing and combating corruption. These documents include:

  • Code of Corporate Ethics;
  • Anti-Corruption Policy;
  • Regulations on the Prevention and Management of Conflicts of Interest;
  • Regulations on the Procedure to Report Presents Received by RusHydro’s Employees;
  • Regulations on the Committees for Compliance with the Corporate Ethics Standards and Management of Conflicts of Interest;
  • Rules of RusHydro’s Line of Trust Operation.
Anti-corruption activities structure 103–2

Code of Corporate Ethics

The Code of Corporate Ethics of PJSC RusHydro (the "Code") is approved by the Company's Board of DirectorsMinutes No. 235 of April 8, 2016 as amended (Minutes No. 281 of December 27, 2018)..

The Code of Corporate Ethics sets out key standards, principles of professional ethics and ethics rules to be observed by the Company, including its employees and governing bodies:

  • compliance with the Constitution of the Russian Federation, federal constitutional laws and federal laws, other regulations of the Russian Federation and internal regulations of the Company;
  • showing good faith, impartiality and professionalism in discharging duties and responsibilities for the benefit of the Company, its employees and shareholders;
  • observing the standards of labor and professional ethics and rules of business conduct in communicating with colleagues, counterparties and other stakeholders;
  • remaining impartial and independent in relations with counterparties, political parties, non-government associations and other stakeholders and refraining from actions, situations or conduct with respect to the latter influenced by personal, property/financial or other interests which make it impossible to discharge professional duties in good faith and can damage employees' or the Company's reputation.

The following requirements also apply to the governing bodies:

  • showing an example of professionalism and impeccable reputation to subordinates in the Company and promoting a healthy moral and psychological environment at work;
  • taking all necessary measures to prevent and settle any conflicts of interest;
  • taking all necessary measures to prevent unlawful actions by subordinates which may be intended to harm the Company’s interests;
  • not coercing the Company employees to participate in the activities of political parties and private associations;
  • showing a personal example of integrity, impartiality, and justness.

RusHydro Group takes the following steps to implement the Code:

  • drafts uniform internal regulations specifying standards, requirements and limitations related to the implementation of the Code of Corporate Ethics. These are subject to approval at each Group company;
  • familiarizes all employees with the above standards, rules and requirements, and provides advice as to their observance;
  • sets up ethics committees at RusHydro and its affiliates, which help ensure compliance with corporate ethics rules by employees and managers, among other things, by reviewing identified breaches, issuing corrective recommendations and monitoring their implementation.

In their decisions, the governing bodies of PJSC RusHydro and its affiliates strictly abide by the principles and standards championed by the Code to promote the interests of the Company and avoid conflicts of interest.

With a view to preventing, among other things, a conflict of interest, the Audit Committee of RusHydro’s Board of Directors reviews, on a preliminary basis, the Company’s transactionsTransactions involving a conflict of interest are the Company’s transactions with persons affiliated with (related to) substantial shareholders of RusHydro (other than the Russian Federation) aimed at receiving unjustified profit (enrichment) at the Company’s expense. with persons affiliated with substantial shareholders of RusHydro (other than the Russian Federation) and makes sure that there is no conflict of interest involved.

Anti-corruption rating of the Russian business

The key anti-corruption milestone in 2020 was the Company's participation in the first anti-corruption rating of the Russian business launched by the Russian Union of Industrialists and Entrepreneurs in accordance with the National Anti-corruption Plan for 2018-2020.

The rating of 50 major Expert 400 companies relied on the independent assessment of compliance with ISO 37001:2016 Anti-Bribery Management Systems (Requirements with Guidance for Use) and the Anti-Corruption Charter of the Russian Business. 102–12

The Company received the top A1 ranking as the business with the strongest anti-corruption practices and a minimum corruption risk and related threat to investors, creditors, business partners and other stakeholdersSee on corporatewebsite..

Improvements to the anti-corruption framework in 2020

In 2020, the Company completed a project to automate the system for receiving, processing and handling reports sent through the Group’s Line of Trust. Following the launch, the system has been running as usual.

The Company updated its corporate distance learning course on the anti-corruption policy, which describes both the legal framework and the Company's key focus areas in combating corruption:

  • corruption: definition, types and responsibilities;
  • RusHydro's anti-corruption framework: regulatory framework, structure, principles, goals and objectives;
  • RusHydro's anti-corruption program and implementation tools;
  • conflicts of interest: definition and prevention;
  • RusHydro's Line of Trust: rules for report acceptance and processing;
  • Ethics Committee: structure, goals and objectives;
  • bans, limitations and regulatory requirements.

Comprehensive Program of Anti-Corruption Activities

In 2020, the Company rolled out a number of initiatives to combat and prevent corruption in accordance with the relevant comprehensive program.

Developing and updating the Company’s anti-corruption regulations

In 2020, the Company introduced the following changes:

  • amended the Regulations on the Procedure for Reporting and Verifying the Data on Income, Property and Property-related Liabilities at RusHydro GroupOrder No. 355 of May 13, 2020. by updating the model for the business process “Management of reporting and verifying the data on income, property and property-related liabilities”;
  • amended the Regulations on the Committees for Compliance with the Corporate Ethics Standards and Management of Conflicts of InterestOrder No. 580 of July 28, 2020. as regards the possibility for the ethics committees to use a digital signature and electronic documents due to the Group's transitioning to electronic signing;
  • amended the Regulations on the Complete Disclosure of the Ownership Chain Including Beneficiaries by the Group's CounterpartiesOrder No. 598 of August 3, 2020..

To harmonize anti-corruption framework approaches across RusHydro Group, the Company continued to oversee the adoption of internal anti-corruption regulations (by-laws) by its affiliates in line with the Company's regulations.

As at January 31, 2021, out of 60 affiliatesSome affiliates did not adopt internal regulations (by-laws) similar to the Company’s due to organizational specifics (small headcount, planned reorganization, etc.) or changes (newly incorporated affiliate, reorganization, etc.). The affiliates that did not adopt the internal anti-corruption regulations (by-laws) as at the reporting date are guided by relevant regulations approved by their controlling companies of RusHydro Group.:

  • Anti-Corruption Policy is adopted by 56 affiliates (93%);
  • Regulations on the Committees for Compliance with the Corporate Ethics Standards and Management of Conflicts of Interest, as well as Ethics Committees’ composition are approved at 51 subsidiaries (85%);
  • Regulations on the Procedure for Reporting and Verifying the Data on Income, Property and Property-related Liabilities are adopted at 50 affiliates (83%);
  • Regulations on the Procedure for Reporting Presents Received by Employees is put into effect at 48 subsidiaries (80%).

Providing for transparency and availability of information

To ensure the transparency and integrity of its operations, the Company provides maximum disclosure on its anti-corruption activities.

The following information is published on RusHydro’s website and intranet portal and updated on a timely basis:

  • internal regulations on combating corruption and preventing wrongdoings and conflicts of interest;
  • action plans and reports on the implementation of the Comprehensive Program of Anti-Corruption Activities;
  • information, effective laws and regulations, and guidance on combating corruption.

In 2020, we published around 30 articles and press-releases on improvements of the current systems for preventing and combating corruption, internal controls and audit, corporate governance, and procurement transparency.

To keep the employees fully informed on our anti-corruption efforts and relevant legal requirements, the Our Company section of the Company's intranet portal now features the updated Anti-corruption Efforts subsection.

The subsection offers data on effective internal regulations on preventing and combating corruption, underlying laws, regulations and methodologies, and links to the Group's Line of Trust and key relevant forms.

In keeping with the business transparency principle, RusHydro Group communicates its anti-corruption standards to its counterparties and business partners. In the course of procurement and contracting, the Company adds anti-corruption clauses to draft contracts with information about its Anti-Corruption Policy and Line of Trust (a communication channel for reporting actual or potential violations) 102–17. In 2020, RusHydro Group communicated its anti-corruption principles to 18,021 business partners, including suppliers and contractors, banks, financial and credit institutions, and insurance companies.

Cooperation with state regulatory bodies and law enforcement authorities

RusHydro works in close cooperation with the law enforcement authorities and supervisory bodies and provides assistance to them in case of audit and inspections, requests of information on the Company’s anti-corruption compliance (including with respect to storage and transfer to the authorities of the information and documents in case of investigations of corruption cases and inspections seeking to check how the Company prevents and combats corruption, etc.).

In 2020, the areas of the Company’s cooperation with government authorities (the Ministry of Energy of Russia, the Government of the Russian Federation, etc.) to prevent and combat corruption included:

  • disclosure of information upon an authorized request;
  • reporting on the Company’s anti-corruption practices as part of the National Anti-corruption Plan for 2018-2020;
  • formulating and submitting proposals to be included in the draft National Anti-corruption Plan for 2021-2023.

Providing for investigations into any reports of wrongdoings

The Line of Trust is the Company's permanent confidential communication channel established so that all of RusHydro Group’s employees, counterparties and third parties (including anonymous) could report issues in an effort to combat fraud and corruption, embezzlement and unauthorized use of property and assets, conflicts of interest involving employees and counterparties of the Company, violations of the rules on the procurement of goods, works and services, as well as other violations of Russian laws and RusHydro Group’s internal regulations.

Line of Trust channels for submitting reports (available 24/7):

  • e-mail:ld@rushydro.ru;
  • online feedback form on the Company’s website and intranet portal;
  • hotline answerphone +7 495 785 0937;
  • Line of Trust boxes placed in the offices of RusHydro Group;
  • Russian Post service;
  • an in-person meeting with the Internal Control and Risk Management Director – Chief Auditor.

The Control and Risk Management Department is in charge of receiving, recording, reviewing and responding to reports.

The Line of Trust provides for impartial consideration of reported issues by officers not involved in the cases, meaning they remain unbiased and independent while checking the facts and drawing conclusions, which they do in full compliance with Russian laws and internal regulations of the Company/affiliates.

RusHydro does the following to promote the Line of Trust among its employees and counterparties:

  • regularly updates the information about the Line of Trust on its official website and intranet portal;
  • shows educating videos and places roll-ups in the halls of the Group companies’ offices;
  • includes the information about the Line of Trust in anti-corruption clauses added to contracts signed by the Company and its affiliates with counterparties.

The Company also publishes semi-annual reports on the Line of Trust performance on its website and provides a summary in the corporate newsletter.

Reports by topic

Information contained in 48 (21%) out of 228 reviewed reports was confirmed to be true and involve violations of rights and/or other wrongdoings. The Company took measures to eliminate all verified violations and impose sanctions on the wrongdoers (employees/managers), including:

  • disciplinary action (reprimand, censure) was taken against 13 employees (managers) of RusHydro Group who committed violations;
  • three reports resulted in eight employees and managers being stripped of their bonuses;
  • organizational measures, including:
    • preventive discussions on zero tolerance for violations;
    • necessary employee training on reported matters/issues;
    • payment adjustments;
    • additional accruals of wages;
    • interaction with whistle-blowers to settle claims and clarify the operation of relevant services (charging stations, energy bills, use of personal accounts, reporting of utility meter readings, etc.)
  • other measures aimed at eliminating identified gaps and violations.

No corruption cases were confirmed at RusHydro Group during the reporting period. 205–3

Wrongdoing prevention by the Company’s employees 205–2

RusHydro Group consistently informs its employees and business partners on anti-corruption practices.

All new employees of RusHydro are required to read the Code of Corporate Ethics, Anti-Corruption Policy and other internal anti-corruption regulations of the Company. The information on newly approved internal regulations is communicated to the Company’s employees via the corporate document management system. In 2020, 16,965 RusHydro Group employees were informed as part of the awareness program.

The Group regularly improves training programs dedicated to ethics compliance and preventing and combating corruption.

In 2020, we updated our distance learning course on the anti-corruption policy and conducted annual staff testing to check their knowledge of Russian anti-corruption laws and the Company’s local internal documents on combating corruption. The testing covered 346 Group employees (managers and specialists) exposed to corruption risks.

In 2020, as part of a yearly reporting procedure, RusHydro collected and analyzed income records of 342 employees (managers) of the Group that held positions exposed to corruption risks. RusHydro’s Central Ethics Committee met to review the results of the 2019 reporting campaign. In response to 47 cases where indications of conflicts of interest and/or other violations/gaps had been revealed, the Committee issued recommendations on their resolution and prevention.

In 2020, the Company checked and approved 100 candidates for the positions exposed to corruption risks.

As part of the approval procedure for draft contracts and addenda, 1,021 contractors were checked for conflicts of interest and had their business reputation and financial position assessed. As a result of the check, no conflicts of interest or signs thereof between the managers (founders) of the potential contractors and RusHydro’s employees were revealed.

Employee training in the existing anti-corruption policies,  % 205–2

Enhancing internal control system

To improve the internal control system and mitigate risks of corruption and fraud in the Company’s activities, RusHydro took a number of actions in the reporting period, including:

  • approving the Risk Management Regulations of RusHydro GroupRusHydro’s Order No. 251 of March 27, 2020.;
  • approving the Regulations for Interaction on the Internal Control and Risk Management System between RusHydro and its affiliatesRusHydro’s Order No. 464 of June 18, 2020.;
  • approving the Plan for Managing the Risks of RusHydro’s Business Processes for 2020RusHydro’s Order No. 64 of January 30, 2020, as amended by Order No. 544 of July 10, 2020.;
  • completing an e-learning course and using it to teach Company and affiliate employees engaged in risk management as part of the Basics of Risk Management and Internal Controls at RusHydro Group program’s business processes.

Anti-corruption program roadmap

In 2021, the Company will continue rolling out the Comprehensive Program of Anti-Corruption Activities.

In particular, RusHydro plans to focus on improving the existing automated systems for preventing and combating corruption and increasing the level of awareness and knowledge of anti-corruption practices of RusHydro Group employees.

Control over corruption risks and economic security

In its efforts to ensure economic security and control corruption risks, the Company emphasizes measures to promptly identify, neutralize and prevent risks and threats to RusHydro Group’s interests posed by unreliable contractors, minimizing potential repercussions of illegal actions, compensation for damages, internal inspections, and investigations on actual or potential infringement on the Company’s interests.

In 2020, to provide for better economic security, as well as to mitigate corruption risks and safeguard RusHydro Group’s economic interests, the work on an Automated System for Contractor Checks and Monitoring was initiated, currently in its design and development stages. The commissioning of the system is planned for 2021.

Control over major transactions and interested-party transactions

RusHydro has a transaction control system in place to ensure that every draft contract is checked for meeting the criteria of major, interested-party and other transactions that require the Board of Directors’ approval (Regulations on Contracts and Agreements).

Depending on transaction value, the review is done by legal departments of the Company’s branches or at the Company’s Headquarters.

In 2020, RusHydro concluded several interested-party transactions and no transactions that would be deemed major under Russian laws.

Preventing the use of insider information

RusHydro has put in place Regulations on Insider Information to secure compliance with laws and regulations of the Russian Federation in terms of prevention of unauthorized use of insider information and market manipulation. The Regulations account for international corporate governance practices, including Regulation (EU) No. 596/2014 of the European Parliament and of the Council on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC, as well as Disclosure and Transparency Rules of the Financial Conduct Authority.

The Regulations specify:

  • persons included in the Company’s list of insiders;
  • rules of access to the insider information and its confidentiality protection;
  • restrictions on the use of insider information in transactions with the Company’s financial instruments and disclosure thereof to third parties;
  • procedure and deadlines for the disclosure of the Company’s insider information, and the rules for transactions with the Company’s financial instruments.

The list of insider information is made in Russian and English and published on the Company’s website. In October 2019, the Company approved a new revised list of insider information.

In April 2020, the Company approved Methodology for Countering the Misuse of RusHydro’s Insider InformationOrder No. 310 of April 17, 2020..

RusHydro’s list of insiders is updated upon inclusion or exclusion of the Company’s insiders. As at December 31, 2020, the Company’s list of insiders included 19 legal entities and 112 individuals. In 2020, three legal entities and 25 individuals were added to the list, while five legal entities and 21 individuals were excluded. RusHydro sends proper inclusion/exclusion notifications to the insiders. In 2020, 54 notifications were sent.

In response to the requests of the security market operator (PJSC Moscow Exchange), RusHydro provided it with eight lists of insiders as at the respective dates of the requests.

In 2020, RusHydro did not send the insiders on its list requests for information on their transactions with the Company’s financial instruments, and received no notifications regarding the sale of its shares by any of its insiders.

In 2020, in order to account for changes in the relevant legislation and prevent conflicts of interest, matters of compliance with the laws on insider information were included in the remit of Yelena Shchyogoleva, Internal Control and Risk Management Director – Chief Auditor.

Based on a Bank of Russia ordinanceBank of Russia Ordinance No. 5222-U of August 1, 2019 “On Requirements for Internal Control Rules on Preventing, Detecting, and Stopping the Unlawful Use of Insider Information and/or Market Manipulation...”, in August 2020 the Company approved Internal Control Methodology for Identifying, Neutralizing and Preventing the Misuse of Insider Information and Market ManipulationOrder No. 647 of August 20, 2019..