Table of Contents
1. Prohibited Conducts 3
1.1. Kickbacks, Briberies and Remunerations 3
1.2. Frauds, Collusion and Coercive Practices 5
1.3. Payments Involving Government Officials 5
2. Due Diligence of Business Partners 7
2.1. Application 7
2.2. Due Diligence 8
2.2.1. General Procedures 8
2.2.2. Additional Procedures 9
2.3. Waiver of Due Diligence 11
2.3.1. Waiver for Small Amount Contracts 11
2.3.2. Waiver on Case-by-case Basis 12
3. Anti-bribery and Anti-fraud in Business Activities 12
3.1. Conflict of Interests 12
3.2. Signing Contracts 12
3.3. Contracts Must Contain Anti-bribery and Anti-fraud Clauses 13
3.4. Contract Review 13
3.5. Tendering and Bidding 15
3.6. Provision of Materials and Information 15
3.7. Retention of External Legal Counsels 15
3.8. Contract Management 16
4. Post Contract Execution Supervision 16
4.1. Timely Notice 16
4.2. Business Partner Re-authentication 16
4.3. Payment Review 16
4.4. Results of Disposal 17
4.5. Filing 17
5. Special Expenditures 17
5.1. Gifts, Entertainment and Travel Expenses 17
5.2. Donation and Sponsorship 19
5.2.1. Political Donation 19
5.2.2. Charity Donation 19
5.2.3. Sponsorship 19
5.2.4. Examination and Approval; Monitoring 20
5.3. Facilitation Fee 20
6. Human Resources 20
6.1. Promotions 20
6.2. Relationship with Former Government Officials 20
6.3. Appraisal 20
7. Accurate Records 21
7.1. Books and Records 21
7.2. Compliance Files 21
8. Compliance Committee and Chief Compliance Officer 21
8.1. Establishment and Constitution of Compliance Committee 21
8.2. Duties of the Compliance Committee 21
8.3. Duties of the Chief Compliance Officer 22
8.4. Joint Meeting on Compliance 23
8.5. Persons in Charge of Compliance in Subsidiaries 23
8.6. Review of the Compliance System 23
9. Evaluation and Audit 23
9.1. Risk Evaluation 23
9.2. Audit 24
9.3. Amendment to Policies 24
9.4. Annual Report 24
10. Training 25
11. Compliance Certificate 25
12. Communications and Reporting 25
12.1. Open Communications Encouraged 25
12.2. Doubts and Consulting 25
12.3. Reporting and Reporting Hotlines 26
12.4. Handling of Reporting 26
12.5. Protection of Informant 27
13. Rewards and Punishments 27
Hunan Construction Engineering Group Corporation, its subsidiaries and affiliates (collectively the “Group”) shall abide by the laws of China as well as the laws and regulations of other countries and regions that have jurisdiction over the Group in the areas where they conduct businesses, including laws prohibiting making payments or accepting things of value for the purpose of gaining commercial interests or personal interests (“Anti-bribery Laws”). The policies of the Group are not only observing discipline and abiding laws, but also making operation with integrity, abiding by Anti-bribery Laws and adhering to high-standard commercial ethical codes as important parts of the corporate cultures and business operations of the Group. Therefore, the Group shall abide by this Policies and Procedures on Integrity and Compliance (the “Policies”). The Policies reflect the laws of China and international standards (including the Summary of World Bank Group Integrity Compliance Guidelines and various other requirements on integrity and compliance announced by it thereafter).
The directors, managers and employees of the Group place great importance on and undertake to abide by the aforesaid laws, regulations and the Compliance Policies and Procedures, which is of great importance to the management of the Group. All employees of the Group have the obligation to learn and abide by the Anti-bribery Laws and the Policies when performing their duties. The Policies apply to the directors, managers and employees of the Group, subsidiaries as well as entities “controlled” by the Group. (The term “control” shall be construed in a broad sense, including any powers of the Group in guiding, managing, supervising and/or restricting the relationship or affairs between it and third parties pursuant to the Agreement.) When dealing with government agencies and other entities, the Policies shall be abide by. The Policies are supplementary to the Employee Manual of the Group and relevant regulations on discipline.
1. Prohibited Conducts
Any organizations or employees of the Group are prohibited from promising, offering, soliciting or accepting kickbacks, briberies, remunerations or benefits in any form (either in cash or other forms) or authorizing any such conducts (“Bribery Conducts”) for the purpose of influencing decisions in relation to the businesses of the Group or gaining personal interests.
No organizations or employees of the Group shall undertake any prohibited Bribery Conducts directly or indirectly, such as authorizing or permitting third parties to undertake prohibited Bribery Conducts on behalf of the Group. An employ is deemed to have violated these Policies so long as he or she is aware of such conducts but fails to report to relevant departments in accordance with the following procedures even though he or she has not participated in such prohibited conducts or he or she intentionally avoids the information which shall be known and reported.
Fair competition is one of the core values of the Group. Any organizations or employees of the Group are prohibited from misleading or attempting to mislead third parties intentionally or without considering the results for the purpose of gaining economic benefits, other benefits or avoiding certain obligations, including distorting facts, intentionally hiding facts, providing false materials or information, or not taking initiative to clarify the false information known to be false. Any organizations or employees of the Group are prohibited from intentionally conspiring or colluding with third parties, or intentionally designing certain arrangements for the purpose of unduly influencing the decisions of certain persons, such as collusion with the tenderer in bidding, false bidding for helping others to win the bid or collusion with other bidders to increase the price, etc. Any organizations or employees of the Group are prohibited from improperly affecting the conducts of the counterparty through coercive practices on one party, i.e., through harming or damaging or threatening to harm or damage the bodies or properties of the other party directly or indirectly so as to force the counterparty to take the actions which it would have not taken, including using forces, political powers or other threatening methods.
When government officials are involved, the conducts prohibited in 1.1 and 1.2 (the “Prohibited Conducts”) in relation to kickbacks, briberies, remunerations and benefits of the Group shall be strictly abided by. Any organizations and employees of the Group are strictly prohibited from offering briberies or making any commitments to offer briberies or payments to any government officials directly or indirectly for the purpose of obtaining or maintain businesses.
No organizations or employees of the Group may violate any Anti-bribery Laws and regulations of the jurisdictions (including all overseas areas) where the Group conducts businesses. No organizations or employees of the Group may, through the Group or any of the Group’s business partners, provide, pay, present or promise to pay any things of value to any government officials directly or indirectly or authorize such actions (unless permitted under Exhibit H hereto General Standards in Relation to Gifts, Entertainment and Travel Expenses and Proper and Improper Behaviors, or approved in writing in advance through the procedures under Schedule A of Exhibit H).
Government Officials include: (1) persons who take positions in central or local legislative, administrative or judicial systems through campaign or appointment; (2) persons who perform public functions for government agencies or private enterprises (such as officials of state-owned airlines or other companies); officials, employees or other persons who perform governmental functions for government agencies, including those who work for a government though not employed by the government, such as private architects, engineers or consultants engaged to provide assistance in specific projects or contracts; (3) officials or agents of public international organizations (such as the World Bank Group and the International Monetary Fund); (4) officials or agents of political parties; or (5) candidates for political positions. The definition, per se, does not include the relatives of governmental officials or former officials, however, if the intentions or purposes in relation to payments to such persons are to influence current officials or government agencies for improper benefits, they will also be deemed as violations of Anti-bribery Laws. The Government Agencies mentioned above mean the governments, governmental departments, agencies or enforcement departments of China or foreign countries (central or local), including any entities or enterprises owned or controlled by the government, parties in power or public international organizations, such as the World Bank Group or the United Nations.
When encountering Suspicious Cases, the employees of the Group shall immediately report to the Chief Compliance Officer and seek his guidance and help. Such Suspicious Cases include:
(1) A Government Official demands or asks for briberies.
(2) A Government Official demands or suggests the Group to make donations to a designated charity.
(3) A government official demands employment opportunities for himself or for others.
(4) A Government Official demands the Group to sponsor a meeting or a tour of inspection.
(5) In dealing with the relationship with various departments owned or controlled by governments of various levels, the officers of these organizations shall be regarded as Government Officials for the purpose of complying with Anti-bribery Laws and the Policies.
The Anti-bribery Laws do not only apply to direct contacts with government officials, but also apply to the behaviors of business partners, for such business partners may give or pay things of value to government officials for the direct or indirect benefits of the Group. Business Partners under these Policies shall include:
(1) Contractors, sub-contractors, suppliers and project owners of the Group.
(2) Sales, marketing, taxation, environmental or other agents of the Group.
(3) Consultants, representatives, distributors or joint venture partners of the Group.
(4) Any other companies or individuals who provide cargos or services to or establish similar relationship with the Group or affiliated companied controlled by it (collectively “Business Partners” and individually “Business Partner”).
The term “Business Partners” has broad meanings. It refers not only to the institutions which sign contracts with the Group, but also refers to those other individuals who work for or with such institutions and those who provide services to the Group or are responsible for managing affairs of the Group. Therefore, Business Partners shall strictly abide by the provisions of Anti-bribery Laws and these Policies. Should you have doubts about whether a certain partner falls within the category of Business Partners, please consult with the Chief Compliance Officer.
the Group may not only be directly responsible for the behaviors of its employees, but may also be held liable for constituting acquiescence of briberies in the following circumstance: in case the Group is aware that its Business Partners will, or the circumstances then indicate that its Business Partners are very likely to, pay or accept briberies or kickbacks, engages in any fraud, collusion or coercion practices, but it does not take proper measures to try to stop such briberies or practices.
Prior to discussing business cooperation with a Business Partner, the relevant employees or the relevant department of the Group who is responsible for the engagement of the Business Partner (the “Responsible Employee”) shall notify and explain to such Business Partner (and its person in charge) that the Group has implemented the Policies and disclose its expectation that such partner is able to fully comply with the Policies and the Anti-bribery Laws. The Responsible Employee shall provide such business partner with a written copy of the Policies (or a copy excerpts containing relevant information) and will be notified that it must comply with the Policies when acting on behalf of the Group. Such partner must also be expressly notified that its full compliance with the Anti-bribery Laws is of essence to the Group and the Group may take proper actions including terminating contracts if it discovers that such partner has committed any suspicious acts of violating the Policies and the Anti-bribery Laws. The Group encourages such partner to consult with the Chief Compliance Officer of the Group on issues in relation to the Policies and the Anti-bribery Laws.
Unless a Business Partner is granted a waiver in accordance with the provision on waiver under Article 2.3, the Responsible Employee shall conduct an compliance due diligence of such partner, in addition to whatsoever business, financial, or legal due diligence procedure required by other departments, before any cooperation. The provisions on conducting such due diligence of a Business Partner with which a contract is intended to be entered into are as follows.
A compliance due diligence shall be conducted of a Business Partner in accordance with the general procedures before any cooperation relationship is established with such Business Partner by the Group.
(1) Before establishing any cooperative relationship with a certain Business Partner, the Responsible Employees shall complete Exhibit F Application Form by Recommenders on Proposed Business Partners and Schedule A to Exhibit F Information Table on Proposed Business Partners, collect and compile relevant evidential materials listed in the Exhibit F, make a complete due diligence archive, and submit the aforesaid to the Chief Compliance Officer for examination and approval. The Responsible Employees shall not have relationship of economic or other interests with the Business Partners selected by them. If an employee finds negative information in relation to such Business Partner but decides to submit the application nonetheless, the employee shall explain the reasons in the application documents on due diligence.
(2) Before the contracts with existing Business Partners are updated or renewed, the Responsible Employees shall collect and compile the aforesaid information and submit to the Chief Compliance Officer the updated Information Table on Proposed Business Partners.
(3) It is especially important to determine whether a Business Partner is owned or controlled by the central government or a local government of China (in which case such Business Partner itself is a Government Agency), or is directly or indirectly related to any government (including employees of a company owned wholly or partly by a government or a ruling political party) or any public international organization (such as the World Bank Group). In order to fully verify whether a Business Partner has any aforesaid relationship, the Chief Compliance Officer shall use its best effort to the reasonable extent identify the identities of the ultimate beneficial owner of such Business Partner and all individuals who are going to provide substantial services to the Group or all individuals who are in charge of monitoring, managing or guiding the aforesaid services.
(4) All documents and information collected in the due diligence before the execution of a contract shall be put into the due diligence files on the Business Partner and submitted to the Chief Compliance Officer, a copy of which shall be placed in the office of the employee (and its successor) who is charge of contacting such Business Partner. The due diligence files shall be complete and capable of proving that the Group has conducted full due diligence of such Business Partner, including any information reflecting the negative behaviors and reputations of the Business Partner.
With respect to any Business Partner which may become or be regarded by others as an agent, representative or cooperation partner of the Group, the additional due diligence procedures described in Exhibit G hereto shall be gone through wholly or partly under the monitoring of the Chief Compliance Officer. In addition, in case a “Dangerous Signal” is identified in the due diligence following the aforesaid general procedures, i.e., there are or there may be problems with the business operations or reputations of such Business Partner (“Suspicious Representative”), the employees who conduct the due diligence must notify the Chief Compliance Officer immediately. With respect to a Suspicious Representative, further due diligence must be conducted in accordance with the additional procedures provided for under Exhibit G hereto, the Additional Due Diligence Procedures on Retaining Special Representatives.
“Dangerous Signals” include:
(1) The reputation of a Business Partner is doubtful.
(2) A Business Partner does not have “actual existing offices and employees” or the relevant qualifications or experiences required for the performance of a contract.
(3) A Business Partner cannot or has not provided a reputable business and compliance reference.
(4) A Business Partner holds a position in a government (of any level) or has family, business or other close relationships with a Government Official, including holding a position in an enterprise owned by a government (of any level).
(5) The representations or behaviors of a Business Partner are untrue or are not fully disclosed.
(6) The employees who are related to the selection of a Business Partner or have direct business relations with a Business Partner have economic or other relations of interests with such Business Partner.
(7) The leaders or managers of the Group Headquarter or relevant subsidiaries have economic or other relations of interests with such Business Partner.
(8) The Chief Compliance Officer identifies any other Dangerous Signal in reviewing the Application Form by Recommenders on Proposed Business Partners.
In special circumstances, certain specific Dangerous Signals or numbers of Dangerous Signal may cause the Group not to sign contracts with Suspicious Representatives. For instance, if the services provided by a Suspicious Representative do not comply with local laws, the Suspicious Representative cannot provide authenticators, the Suspicious Representative requests not to disclose its identity or there are certain types of fake documents, the Group shall not sign contracts with such Suspicious Representative.
Generally, if no sufficient information on a Suspicious Representatives can be obtained, or there is information indicating that a Suspicious Representative has or may have misconduct, such Suspicious Representative shall not be retained, unless the Compliance Committee has reached the conclusion that a Business Partner has not and is less likely to participate in misconduct after an in-depth investigation and make a complete written document or it has obtained the written authorization from the Chief Compliance Officer. Before completing the investigation, review and approval of the due diligence by following these procedures and signing a contract with a Suspicious Representative, such Suspicious Representative shall not conduct any business on behalf of the Group. If you are certain that a third party has or is suspected of having any misconduct, you shall report immediately to the Chief Compliance Officer of the Group.
In certain circumstances, the aforesaid issues still cannot be solved even after the additional investigation of such Suspicious Representative. If the Chief Compliance Officer does not approve the engagement of such Suspicious Representatives, the Chief Compliance Officer shall submit his suggestions and all supporting documents to the Compliance Committee for the decision.
If the Group intends to establish commercial relationship with a Business Partner, the Responsible Employees must conduct sufficient due diligence of such Business Partner unless such due diligence of such Business Partner is waived in accordance with the procedures stipulated in this section, so as to ensure that the cooperation with such Business Partner comply with the Policies.
The Business Partners which meet the various standards set forth in Exhibit D hereto may apply for a waiver of the due diligence procedures on Business Partners.
The Compliance Committee of the Group shall decide the threshold of the amount for the purpose of applying the waiver for small amount contracts, which will be set forth in an application form for waiver for small amount contracts based on Exhibit D hereto, to be published by the Headquarter of the Group through notices and on its intranet. The Compliance Committee of the Group may adjust such threshold in accordance with actual economic and market situations.
The business departments and persons in charge of finance or the general managers and persons in charge of finance of relevant subsidiaries are responsible for determining proper application of waivers for small amount contracts, completing the table in Exhibit D hereto, and properly keeping all supporting documents in relation to such application for waiver. Though the aforesaid waivers do not need prior approvals by the Chief Compliance Officer, the Chief Compliance Officer has the power to conduct internal audit on such waiver practices so as to evaluate whether such waiver practices comply with the established correct procedures or not, or whether they can bring obvious risks in relation to the Anti-bribery Laws to the Group. In case the Chief Compliance Officer has reasons to believe that such waiver practices do not comply with the procedures hereunder or may bring obvious compliance risks to the Group, he or she has the power to cancel such applications for waiver upon discussions with the Compliance Committee.
As to those Business Partners who meet the various conditions set forth in Exhibit E hereto, the head of the department who is responsible for the engagement of the Business Partner of the Group may apply for the procedures for waiver of due diligence on the case-by-case basis on behalf of selected Business Partners. For this purpose, such recommending department shall fill in the application form stipulated in Exhibit E hereto and submit it to the Chief Compliance Officer of the Group and provide sufficient materials or explanations for such applications. Such waiver on the case-by-case basis can only be applied in advance and be approved by the Chief Compliance Officer of the Group.
3. Anti-bribery and Anti-fraud in Business Activities
All commercial decisions must put the interests of the Group on their priority list. All employees are prohibited from seeking personal interests in the business activities of the Group. When the personal interests of an employee may affect the objective and reasonable judgment as well as his fiduciary duties to the Group, there may be a conflict of interest. For instance, when a certain business involves the interests of an employee, his/her relatives or friends, or a certain manager, his/her relatives or friends own shares of, take positions of or have other economic interests in a cooperating Business Partner. Under these situations, the relevant employee and those employees who have knowledge of the existence of a conflict of interests must report the possible conflict of interests to his superior or the Chief Compliance Officer to decide whether they need to excuse themselves.
The Group must sign written contracts with all Business Partners. Before the Group agrees to sign or extend a contract with a Business Partners, the Responsible Employees of the Group must follow the procedures to ensure that such Business Partner will comply with the Anti-bribery Laws and the Policies. For the avoidance of doubt, the following procedures are supplementary to the existing requirements applied in the contract management regulations of the Group.
With respect to relevant requirements on anti-bribery and anti-fraud, the Group can only sign a contract with a Business Partner after the Chief Compliance Officer has reviewed the terms of such contract. However, with respect to a Business Partner which is granted a waiver of due diligence for the reason that the contract amount is lower than the aforesaid threshold of waiver for small amount contracts (limited to this reason only), the general manager of the relevant affiliated company may approve the signing of contract with such Business Partner without the prior approval by the Chief Compliance Officer, provided that all requirements and conditions in relation to the retaining of or contracting with such Business Partner under the Policies have been complied with.
In accordance with the Policies, only after a Business Partner has signed the compliance certificate in the form of Exhibit C-3 hereto provided by the Group, can the Group sign a contract with such Business Partner which may become or be regarded by others as an agent, representative or cooperation partner of the Group.
Any contract entered into with a Business Partner shall include the following:
(1) With respect to any Business Partner, unless specifically waived or exempted by the Chief Compliance Office in accordance with this Policy, an agreement entered into with the Group shall include the anti-bribery representations, warranties and undertakings in the form set forth in Exhibit A-1 hereto (subject to revisions and updates by the Group from time to time), or, in case the contracting parties are obliged to use a fixed form contract and cannot insert the aforesaid anti-bribery representations, warranties and undertakings, such Business Partner must submit a letter on the anti-bribery representations, warranties and undertakings (based on the form set forth in Exhibit A-2 hereto. Before retaining such Business Partner or preparing to sign a contract with Business Partner, any substantial amendments simplifying the restrictive languages must be approved by the Chief Compliance Officer before the simplified language can be included in the contract with such Business Partner.
(2) The Group is entitled to terminate the contract based on the reason that the Business Partner has violated the Anti-bribery Laws or the Policies.
(3) The Business Partner agrees that the payment by the Group under the contract is conditioned on its providing detailed invoices or bills (in which the detailed services provided by it under the contract shall be accurately described).
(4) The Business Partner agrees to receive payment after it has issued necessary invoices and documents with respect to the services actually provided by it in accordance with the terms of the contract. The payment clause shall be explicit and clear.
(5) The contract cannot be transferred without consent of the Group.
When the business staff and the Chief Compliance Officer of the Group review a contract, they shall pay special attention to the suspicious fraud or corruption of the Group’s business staff or the Business Partner. In most cases, a Business Partner’s request for relatively high fees or commissions cannot be a decisive base for proof of its intention of corruption, but if the fees are much higher than the amount that should be received by the Business Partner for the services provided by it, part of that amount paid presumptively has been or may be paid to a Government Official by such Business Partner as bribery. Therefore, the Group’s employees must be alert to requests for extremely high fees or commissions and where possible, try actively to make reasonable fee arrangements. For instance, in case that a certain contract contains any of the following terms or requests, it shall be regarded that there is a risk of fraud or corruption (“Suspicious Behaviors”):
“Suspicious Behaviors” include:
(1) Under a contract, the amount (or other economic benefits) paid to the Business Partner is disproportionate to the services provided by it or is much higher than the market price.
(2) There is an uncommon bonus, additional payment or abnormal or large advance payment, or abnormal large amount of credit granted to a new customer in a contract.
(3) A Business Partner requests the Group to pay a certain amount of money to “gain a commercial opportunity,” “make necessary arrangements” or “lock up a deal.”
(4) The amount under a contract is paid through indirect ways or informal ways or paid using money not reflected in financial books, or there are uncommon or suspicious payment terms in the contract.
(5) A Business Partner or the Group’s business staff requests that the amount of payment, details of bank account or the payee not be disclosed fully in the contract.
(6) The payment is made in cash or unnamed securities of value.
(7) A payment is made to a third party which does not participate directly in a contract.
(8) The payment is made in other countries or regions other than the country where a Business Partner conducts its main business or provides its services.
(9) A Business Partner refuses to provide the statement contained in Exhibit A-1 or Exhibit A-2.
(10) A Business Partner or a business staff of the Group requests not to disclose their identities.
(11) A Business Partner or a business staff of the Group request not to properly record the payments under a contract or not to report to the government.
(12) A Business Partner or a business staff of the Group requests to backdate or revise a certain invoice.
(13) A Business Partner or a business staff of the Group requests to tamper with a document or fake the document in other ways.
(14) A Business Partner refuses to incorporate the general compliance with the applicable law clause in the written contract signed with the Group.
(15) Any other “Suspicious Behaviors” identified by the Chief Compliance Officer in reviewing contracts.
When any departments, branches, subsidiaries of or entities controlled by the Group participate in bidding, signing and performing relevant contracts, they shall abide by the laws and regulations of China and relevant countries in relation to open tendering and bidding as well as the Bidding Management Measures of the Headquarter of Hunan Construction Engineering Group Corporation in addition to the Policies. In the course of bidding, any organizations or employees of the Group are forbidden from: (1) misleading or attempting to mislead third parties, including by ways of distorting facts, concealing facts intentionally, providing fabricated materials or information, not clarifying information known by them to be false, etc.; (2) colluding or conspiring with third parties intentionally in order to win the bids, such as collusion with the tenderer in the bidding, false bidding for helping others to win the bid or collusion with other bidders to increase bidding price, etc.; and (3) taking any other actions in violation of laws on tendering and bidding of China and the jurisdictions where the bidding or tender is subject to.
The representations and statements provided by the Group to any third parties which may affect the business decisions or actions of such third parties must be real, accurate and complete. The Chief Compliance Officer is responsible for managing the information and materials in relation to various factual matters such as the qualifications, projects participated in, corporate information and staff composition of the Group.
Although in most cases the Chief Compliance Officer would have sufficient experience and knowledge with respect to compliance for reviewing the draft contracts between the Group and its Business Partners, in certain circumstances (especially those involving contracts related to overseas projects and not governed by laws of China) the Chief Compliance Officer may retain external legal counsels to review the contracts so as to ensure that all clauses of the contracts comply with the Policies and applicable laws.
The Group may obtain opinions from its external legal counsels, or in certain circumstances, request its Business Partners to seek opinions from their external legal counsels, however, as a condition for entering into a contract with a Business Partner, the Group shall reserve the right to approve the external legal counsels designated by the Business Partner in advance. If the opinions are sought by Business Partners from their external legal counsels, the Responsible Employees have the responsibility to cooperate with the Chief Compliance Officer to ensure that the external legal counsels designated by the Business Partners are reputable and do not have any conflict of interests.
All contracts documents including contracts reviewed and approved, comments made in reviews, information provided to third parties in contract signing, tendering and bidding and opinions of external legal counsels, etc. must be filed and managed with relevant office of the Group and shall be provided a copy to the Chief Compliance Offer.
4. Post Contract Execution Supervision
The Group must guarantee to regularly supervise and re-authenticate all contracts signed between it and its Business Partners, whether signed before or after the adoption of the Policies. Such regular supervision by the Chief Compliance Officer shall include updating the information saved in the due diligence files, reviewing the compliance in the performance of contracts and reviewing all payments made to the Business Partners. The Chief Compliance Officer will be responsible for ensuring that the renewed compliance authentication on all Business Partners and supervision procedures shall be timely implemented, which specifically include the following:
As to any “Dangerous Signal”, “Suspicious Behaviors” or other behaviors which do not comply with the Policies identified in the course of commercial transactions with Business Partners or in the performance of contracts, all employees of the Group have the obligation to report the same immediately to the Chief Compliance Officer, stop such behaviors and conduct investigations immediately and properly handle the same.
Unless a waiver has been granted in accordance with the small amount contract waiver procedures, the Group shall authenticate its Business Partners regularly by updating the compliance certificate. The detailed procedures are as follows: the Group must authenticate again any Business Partner which acts as an agent, representative or cooperation partner of the Group each year, and request the same to sign again a compliance certificate in the form of Exhibit C-3 hereto; and the Group must authenticate again other types of Business Partner every two years and request the same to sign again a compliance certificate in the form of Exhibit C-2 hereto.
The financial persons of the Group shall review relevant invoices provided by the Group or Business Partners to confirm their completeness and accuracy, being recorded accurately in the financial books of the Group and their consistency with the amounts and payment modes agreed upon in the contracts. The business persons corresponding to the contracts shall ensure that all payments comply with the agreements under the contracts. If they find “Suspicious Behaviors” in connection with payment modes or methods or accounting treatment to any payment, they shall stop such payment immediately, make investigations and solve it properly.
Any non-compliance identified in contract performance review or renewed compliance authentication and the investigation results and opinions on disposal with respect to such incompliance shall be reported to the Chief Compliance Officer. The Chief Compliance Officer shall decide whether to participate in investigations based on the gravity of the events, provided that the approvals by the Chief Compliance Officer must be obtained with respect to opinions of disposal on all issues. If there is a need to terminate a contract or the cooperation with a Business Partner, the Chief Compliance Officer shall participate in the termination process so as to ensure compliance with proper procedures and laws and to reduce the claims caused by improper terminations against the Group.
The relevant documents in relation to the due diligence after the execution of a contract shall be placed in the due diligence files on the Business Partner and the relevant documents in relation to the supervision of the performance of a contract shall be put into corresponding contract files.
All expenditures set forth in this clause constitute high-risk special expenditures in terms of anti-fraud and anti-bribery, and their spending shall comply with the provisions and approval procedures under this clause.
Providing gifts, entertainment and travel expenses to Government Officials or making payment for the aforesaid expenses may violate the Anti-bribery Laws and the Policies. In general, it is prohibited from providing gifts, entertainments and travel expenses to Government Officials not covered under the list in Exhibit H hereto General Rules on Gifts, Entertainment, Travel Expenses and Proper and Improper Behaviors (“Rules on Gifts, Entertainment and Travel Expenses”). Common exchange of gifts only as a token of friendship or simple etiquette does not constitute a violation of the Anti-bribery Laws or the Policies. The test is whether the things of value intended to be provided to a Government Official is intended to or may be construed to be used to affect the behaviors of such Government Official so as to bring benefits to the Group or its representatives.
In any case, the employees of the Group may provide any things of value to a Government Official only after they have filled and submitted an application form in the form of Schedule A to Exhibit H to the Chief Compliance Officer of the Group and have obtained its written approval (excluding such gifts or entertainment for which prior written application and approval is waived under the Rules on Gifts, Entertainment and Travel Expenses). Among other factors, the Chief Compliance Officer shall consider the following factors: (1) whether the laws of local country allow the provision of such things of value; (2) in such circumstance, whether it is proper to provide such things of value; and (3) whether this is a direct commercial purpose for providing such things of value.
The following travel expenses may be proper: reasonable and actual travel expenses paid for a Government Official directly related to marketing, exhibiting or explaining the facilities or services of the Group, or travel expenses paid directly for signing or performing a contract with Government Agencies. In fact, for the purpose of marketing, exhibiting or explaining our facilities or services, we invite Government Official to our construction sites, offices and exhibition halls for site visit or commercial meetings at our cost from time to time. We may reimburse those reasonable and real expenses directly related to any of the aforesaid purposes for Government Officials, such as travel or lodging expenses. Travel expenses reimbursed may include reasonable expenses in relation to communications, meals, lodging and entertaining of such Government Officials. All travel and entertainment expenses incurred for any Government Official must be approved in advance by the Chief Compliance Officer (by filling and submitting Schedule A to Exhibit H Application Form for Gift, Entertainment and Travel Expenses of Hunan Construction Engineering Group Corporation) and the Chief Financial Officer may not approve the payment without the approval from Chief Compliance Officer.
The aforesaid prior approval policy does not exclude expenses in relation to unexpected or un-prescheduled meetings with Government Officials to discuss the Group’s businesses, in which case prior approval is not a condition to the reimbursement of expenses. However, the expenses shall be reasonable, real and in compliance with the Policies. When you entertain Government Officials, we expect that you could make reasonable judgments. When you foresee that an interim meeting with Government Officials may entail a series of meetings or continuous business relationship, you must disclose such relationship, the nature of the meeting with the Government Officials and the commercial purposes of the aforesaid meeting to the Chief Compliance Officer before you continue to meet such Government Officials.
For more detailed guidance in relation to gifts, entertainment and travel expenses of the Group, please refer to Exhibit H hereto General Rules on Gifts, Entertainment, Travel Expenses and Proper and Improper Behaviors, which has been incorporated into the Employee Manual of the Group.
In China, political donations of all natures and forms are prohibited. In areas other than China, donations may only be made to political parties, party officials and candidates pursuant to applicable laws and all political donations shall be disclosed publicly (unless for the need of lawful confidentiality). Meantime, the information about the individuals or organizations who will receive the donation or sponsorship shall be disclosed publicly as well.
Charity donation refers to giving money or others voluntarily to others without hoping to get rewarded. Donations or membership fees paid to industrial associations are generally for commercial purposes and therefore do not belong to charity donations.
Any charity donation made on behalf of the Group or its affiliates must meet the following conditions:
(1) it complies with relevant laws;
(2) it is not for the purpose of gaining any commercial interests or advantages;
(3) it is made only to lawfully registered and reputable charities;
(4) its purpose is of a charity nature;
(5) its amount and usages must be open and transparent, the donation shall be made public, and the information about the individuals or organizations who will receive the donation or sponsorship shall be disclosed publicly;
(6) it will not implicate any violation of the Anti-bribery Laws.
Sponsorship means cooperation for mutual benefits with third parties in the form of money, products, services, etc.
Any sponsorship made on behalf of the Group or its affiliates must meet the following conditions:
(1) it complies with relevant laws;
(2) it is not for the purpose of gaining unfair or illegal commercial interests or advantages;
(3) it is made only through cooperation with reputable third parties;
(4) its amount and usages must be reasonable, open and transparent, the sponsorship shall be made public, and the information about the individuals or organizations who will receive the donation or sponsorship shall be disclosed publicly;
(5) it will not implicate any violations of the Anti-bribery Laws;
(6) a written agreement with regard to it must be signed.
All donations, sponsorships and relevant agreements require the approval by the Chief Compliance Officer. The employees of the applying department shall fill and submit the application form set forth in Exhibit I.
Those departments which make donations or sponsorships shall ensure the process and results of the donations or sponsorships meet the requirements of the Policies and keep all relevant receipts and documents for future verification.
the Group prohibits facilitation fees of all natures and forms. Facilitation fee refers to fees or gifts given directly or indirectly to Government Officials so as to make them provide certain facilitation or expedite certain matters. Regardless of whether the facilitation fees are common practice in local places, they are expressly prohibited by the Policies.
Before retaining or promoting the employees who have decision-making powers or who are involved in “high-risk” assignments of the Group or its subsidiaries, the Group shall do a background check of the relevant persons in accordance with the Party and Political Leaders Promotion and Appointment Rules so as to ensure that they do not have any misconduct under the Policies.
Unless approved by the Compliance Committee, the Group shall not hire resigned or retired former Government Officials as employees or consultants of the Group or establish other economic relationships with such persons. The definition of “resigned or retired former Government Officials” includes their relatives and the entities controlled or managed by them.
Each year the Group shall conduct performance appraisal on the work of each employee. The compliance with the Policies should be a key content of such appraisal. The employees will be rewarded or punished based on such appraisal.
All managers and each person who is requested to participate in the training each year in accordance with Article 10 of the Polices of the Group and its subsidiaries shall sign a compliance certificate in the form of Exhibit C-1 hereto (subject to revisions and updates by the Group).
7. Accurate Records
Our financial books and records must accurately reflect each transaction and must comply with the Financial Management System of the Group and the applicable internal audit management policies, as well as the applicable law (collectively “Financial Monitoring Policies”). No false or misleading records are allowed to be included in our financial books and records. All contracts and other documents must accurately describe relevant deals. Unless there are sufficient supporting documents, no payment contracts are allowed to be approved (including small amount payments for which contracts are waived), and any part of or all amount paid shall not be used for any purposes other than those described by the documents supporting such payment. As a supplement to the Financial Monitoring Policies, we have adopted the financial book management and accounting monitoring policies as part of the Policies, which are attached as Exhibit B hereto. It is your personal obligation to knowing well the provisions of the Policies and the Financial Monitoring Policies and to complying with their respective requirements.
Unless otherwise provided for by the Policies, all files such as applications, documents, records, meeting minutes and investigations in relation to the implementation of the Policies shall be properly maintained by the Chief Compliance Officer.
The Group will establish an integrity compliance committee (“the Compliance Committee”) as the deliberative body of the Policies. The members of the Compliance Committee shall be nominated by the General Manager of the Group and shall be appointed by the Board of Directors. The Compliance Committee shall consists of five (5) members from the following members, the General Manager or the Secretary of the Disciplinary Committee( act as the Director of the Compliance Committee), the senior executives, Directors from related departments and specialists at or above the Vice General Manager level(act as the members). The General Counsel of the Group acts as the Chief Compliance Officer. The establishment, members and changes of the Compliance Committee shall be adopted by the Board of Directors of the Group through written resolutions.
8.2. Duties of the Compliance Committee
The Compliance Committee is a deliberative body of the Policies, which is liable to the Board of Directors of the Group only. The duties and responsibilities of the Compliance Committee include:
(1) To discuss and decide the matters submitted by the Chief Compliance Officer;
(2) To reconsider the application for review of the decisions made by the Chief Compliance Officer;
(3) To monitor the implementation of the Policies and to conduct an overall review on the Policies regularly (at least once every two years), taking into consideration of any lesson learned from any actual incidents so as to evaluate whether they are sufficient to protect the Group and its employees against the risks of violating relevant anti-bribery and anti-fraud laws, and to daft amendments to the Policies where necessary;
(4) To share all information and materials with the state-owned assets supervision and administration commission of higher level and relevant internal audit officers, and to cooperate with the superior entities on the investigation and audit with respect to compliance issues;
(5) To hear and approve the report on the investigation into the information on possible violation of the Policies or accusations, and monitor such investigation;
(6) To report violations of the Policies to the Board of Directors of the Group and propose measures it intends to take; and
(7) Other duties stipulated by the Policies.
The Compliance Committee decides on matters by simple majority votes.
The Board of Directors shall appoint the Chief Compliance Officer, who is responsible for detailed implementation of the Policies. The Chief Compliance Office may not concurrently be a member of the Compliance Committee. The Chief Compliance Officer may set up a compliance department based on the needs of work and lead the compliance department to perform the powers and duties ascribed by the Policies.
The duties and responsibilities of the Chief Compliance Officer with respect to the management of the Group’s compliance and maintaining the Group’s compliance cultures include:
(1) To educate and train the employees of the Group regularly to ensure that they know well and understand the Policies; to evaluate regularly the effectiveness of the aforesaid training programs; and to improve the contents of the training when it’s necessary to strengthen the trainings on specific types of employees;
(2) To answer the questions on the Policies raised by the Group’s employees;
(3) To conduct the approvals of due diligence, contract review, retaining third parties and fee payments in accordance with the Policies;
(4) To review the implementation of the Policies by the Group;
(5) To investigate into behaviors in violation of the Policies; and
(6) Other duties stipulated by the Policies.
The Chief Compliance Officer may submit those matters that he or she believes require discussions by the Compliance Committee to the Compliance Committee for discussions and decisions. In case an applying department has objections to a decision by the Chief Compliance Officer, it may submit an application to the Compliance Committee for review. In case such applying department objects to the decision by the Compliance Committee, it may discuss with the general manager, who will submit the matters to the Board of Directors of the Group for discussion and ruling. The decision of the Board of Directors is final.
A smooth communication mechanism shall be established between the Chief Compliance Officer and the Disciplinary Committee of the Group. The Group should arrange a budget on the special expenses to be used for compliance, disciplinary inspection and anti-bribery. The Compliance Committee and the Disciplinary Committee of the Group shall hold joint meetings regularly on compliance to exchange matters in relation to compliance and disciplinary inspection for the current period, to notify recent news on the Anti-bribery Laws, regulations and rules, and to exchange information on compliance matters.
The Chief Compliance Officer may appoint a full-time or part-time person in charge of compliance in each subsidiary of the Group based on the actual situations, so as to ensure the understanding and implementation of the Policies by such subsidiary. The persons in charge of compliance of the subsidiaries are part of the compliance department under the leadership of the Chief Compliance Officer and report to the Chief Compliance Officer. The powers and duties of the persons in charge of compliance of the subsidiaries are to be determined by the Chief Compliance Officer.
8.6. Review of the Compliance System
The Chief Compliance Officer will lead a biennial review on the implementation of the Compliace Policy of the Group. The Chief Compliance Officer will also supervise and review the decisions and approvals made by the persons in charge of compliance of the subsidiaries.
The Compliance Committee shall regularly (at least once every two years) evaluate the compliance risks of the Group and categorize each department, branch and subsidiary of the Group into one of the “high risk,” “medium risk” and “low risk” levels. When evaluating the compliance risks, the Compliance Committee shall consider the scale, business areas, business locations and other special factors as well as the implementation of the Policies of the Headquarter, each subsidiary or branch and each department. The risk evaluation on overseas subsidiaries and overseas projects shall also take into consideration the local laws, political environment and extent of corruption and refer to the corruption indexes of various countries published by Transparency International.
The audit department of the Group and its superior department may conduct an audit on the compliance of the anti-bribery and anti-fraud laws and the Policies (“Compliance Audit”) jointly with the Chief Compliance Officer each year, so as to evaluate whether we need to amend our compliance policies and procedures and to consider issues in relation to anti-fraud and anti-briberies during our business operations. In the following circumstances, the audit department of the Group and the Chief Compliance Officer shall conduct a Compliance Audit (either an audit on specific matters or as part of a regular audit):
(1) As to the subsidiaries and departments confirmed to be of high risk, the Compliance Audit shall be done once a year;
(2) As to those departments, branches or subsidiaries which are found to have violated the Policies, an audit shall be conducted on such department, branches or subsidiaries within one year thereafter;
(3) An audit shall be conducted on the targets recommended by the Chief Compliance Officer or the Compliance Committee.
The Compliance Committee shall evaluate the applicability, sufficiency and effectiveness of the Policies in preventing, identifying, investigating and dealing with various improper behaviors based on results of risk evaluation and the Compliance Audit. Meanwhile, it shall also consider relevant laws in the area of compliance and actual changes, as well as the evolution of international and industrial standards. In case it identifies any defaults in the Policies, it shall take reasonable measures to prevent recurrence of such defaults, including making necessary amendments to the Policies.
The Chief Compliance Officer shall draft an annual report every year on the compliance of the Group and submit the same to the Compliance Committee for discussion and review. The Compliance Committee shall report to the Board of Directors on the implementation of the Policies, materials problems identified and the necessities for amendment each year.
The Chief Compliance Officer shall ensure that all employees are aware of the existence of the Policies and the ways of obtaining a copy of it, and shall publish and update an electronic copy of the Policies on the website of the Group.
All managers, members of the Board of Directors and the Board of Supervisors of the Group (including its subsidiaries) and all employees of the financial department and the marketing department of the Group (including its subsidiaries) must participate in the annual training arranged by the Chief Compliance Officer which aims to enable the aforesaid persons to know the Policies.
The Chief Compliance Officer shall arrange additional special training on the employees who may be considered by the Chief Compliance Officer as at high compliance risk positions.
All newly recruited employees shall receive training on the Policies arranged by the Chief Compliance Officer within 6 months from the date of on-board.
All other employees shall know well the contents of the Policies and receive the training that the Chief Compliance Officer believes necessary.
It is required that: (i) anyone who is requested to participate in the trainings each year under Article 10 sign a Compliance Certificate (as amended and updated by the Group from time to time) in the form of Exhibit C-1 hereto; (ii) a Business Partner which cooperates for the first time with the Group and which may become or be regarded by others as an agent, representative or cooperation partner of the Group sign a Compliance Certificate in the form of Exhibit C-3 hereto and have it updated each year before it signs contracts with the Group; and (iii) an existing Business Partner which is not an agent, representative or cooperation partner (excluding those which meet the conditions of waiver on small amount contracts initially) sign a Compliance Certificate in the form of Exhibit C-2 hereto and resign the same once every two years thereafter.
The Policies are unlikely to be comprehensive and thus are not intended to be inclusive but to provide guiding principles only. The Policies also encourage communications and dialogues with respect to the codes of conduct involved in the Policies. The Group encourages employees to discuss issues or doubts with respect to the Anti-bribery Laws, briberies, remunerations, entertainment, gifts and relevant matters with the Chief Compliance Officer.
All issues in relation to the policies and procedures herein can be brought up with or consulted with the Chief Compliance Officer. As to the compliance issues outside China, the Chief Compliance Officer shall consult with the external legal counsels in the countries involved when necessary.
All employees of the Group must keep alert to and report to the Chief Compliance Officer any “Suspicious Case”, “Dangerous Signal”, “suspicious behaviors”, “Suspicious Representative” and any suspicious fact and circumstance that may involve fraud, bribery, other corruptive payment , collusion or coercion, or any other misconduct mentioned in the Policies. The Group sets up consulting and reporting hotlines (recommended) and encourages employees or any third party to report any fraud, bribery, corruption, collusion, coercion or any other behavior or circumstance of the Group not in compliance with the Policies promptly. The Chief Compliance Officer is the key person in charge of receiving reporting on fraud or corruption. The methods of reporting are as follows:
(Disciplinary issues or Briberies)
Hotline Number: 0731-85628301
Mailing Address: 788, Segment 1, South Furong Avenue,Changsha,Hunan
Office: Room 1808
Working Hours: 8 am to 5 pm, Monday through Friday
（Other Compliance issues）
Mailing Address: 788, Segment 1, South Furong Avenue,Changsha,Hunan
Office: Room 1609
Working Hours: 8 am to 5 pm, Monday through Friday
The subsidiaries of the Group shall also set up their own consulting and reporting hotlines, which will be noticed public by themselves together with the Group’s hotlines.
If an informant has concerns over reporting to the Chief Compliance Officer, he or she may report to any member of the Compliance Committee.
Upon receipt of a report, the Chief Compliance Officer shall conduct investigations into the issues reported immediately. The Chief Compliance Officer has the power to meet and hold discussions with the persons involved, Business Partners and third parties other than the employees of the Group and collect written evidence such as documents, etc. All employees and other departments of the Group shall cooperate with their best efforts.
When necessary, the Chief Compliance Officer may conduct a specific compliance audit on the matters reported jointly with the audit department.
The investigation of a report shall be completed within one (1) month in general. As to matters reported which are complicated and multi-faceted, the Chief Compliance Officer may extend the time of investigation after discussion with the Compliance Committee, provided that he or she shall report the progress of the investigation to the Compliance Committee regularly. During the investigation, as soon as the Chief Compliance Officer finds that there are behaviors which may have compliance risks, he or she has the power to order the suspension of such risky behaviors, even during the course of investigation, until the formal investigation results become available.
After the investigation on the matters reported has been completed, the Chief Compliance Officer shall submit the investigation results and his opinions on disposal to the Compliance Committee for review. After the review by the Compliance Committee, the Chief Compliance Officer shall notify the informant of the investigation and disposal results and carry out the opinions on disposal.
The Group encourages real-name reporting, because such reporting helps the Compliance Committee to conduct investigation, verification and response. Anonymous report is also welcomed. All information about the informants will be kept strictly confidential. The Group strictly prohibits any harassment or revenge on the informants.
Penalties on violations of the Anti-bribery Laws are severe. Those companies may face criminal punishment and civil fines for breaking the law and those individuals who break the laws may be subject to civil and criminal fines and imprisonment. The penalties on briberies and commercial briberies in China include term imprisonment, penal servitude and fines. The behaviors which are in violation of the Policies, according to the nature of the behavior, may lead to corresponding punishments like affecting performance assessments or up to dismissal in accordance with relevant regulations including Regulations of the Chinese Communist Party on Disciplinary Sanctions, Interim Measures for Investigation of Administrative Responsibilities. Any individuals who break the laws will be transferred to the judicial organs in accordance with law. You shall keep alert to “Suspicious Case”, “Dangerous Signal”, “suspicious behaviors”, “Suspicious Representative” and any suspicious fact and circumstance that may involve fraud, bribery, other corruptive payment , collusion or coercion, or any other misconduct mentioned in the Policies. In the meantime, the Group will give rewards to those departments, subsidiaries and employees awarded excellence in the Compliance Audit in pursuant to the recommendation of the Chief Compliance Officer and approved by the General Manager.