PURPOSE

 

The purpose of this Business Integrity and Compliance Policy (“Policy”) is to:

 

• Set our responsibilities and of those working for us, in observing and upholding our position on bribery, corruption, conflict of interest, anti-money laundering, and fight against the financing of terrorism;
• Provide information and guidance on how to recognize and deal with bribery and corruption, money laundering and issues related to financing of terrorism; to briefly describe the scope of applicable legal instruments, and explain the required actions and expected belabors
• Ensure Ekvita’s zero tolerance policy towards bribery, money laundering, financing of terrorism and other illegal activities in business;
• Satisfy the requirements of Ekvita’s anti-bribery management system;
• Ensure continual improvement of Ekvita’s anti-bribery management system;Provide information and guidance on how to deal with potential conflict of interest situations.

 

This Policy [1] is issued to operate as an instrument for honest, ethical and compliant business conduct. In that respect, this is a part of our continuous improvement philosophy.

 

INTRODUCTION

 

 

As a professional consulting company, we are committed to acting professionally, fairly and with integrity in all our business dealings and relationships. As part of our business we are engaged in training others (the clients, business community etc.) on implementing and enforcing effective systems to counter bribery and corruption, and therefore, we must demonstrate the highest level of compliance by ourselves.

In all our business transactions, we will abide by the requirements of the Law of the Republic of Azerbaijan on Combatting Corruption as well as other relevant legislation. While geography of our operation is primarily limited to Azerbaijan, we always strive to adopt international best practices. For that purpose, our goal is to act in line with the recommended international standards such as Anti- Corruption Ethics and Compliance Handbook for Business (a joint publication of OECD, The World Bank and UNODC), the OECD’s Good Practice Guidance on Internal Controls, Ethics, and Compliance and ISO 37001: Anti-Bribery Management Systems.

 

Also, due to prevailing number of international clients in our portfolio, we will comply with our clients’ expectations and requirements. Therefore, in addition to national laws of Azerbaijan as well as best practice international standards, we are committed to adhere to the requirements of the UK Bribery Act 2010 and US Foreign Corrupt Practices Act 1977 both documents aiming to strengthen ethics and fight corruption.

 

Further, we are also committed to the fight against money laundering and financing of terrorism and abide by all national and international legal acts such as the Law of the Republic of Azerbaijan on Fight Against Legalization of Criminally Obtained Money and Other Property and Financing of Terrorism, United Nations and Council of Europe Conventions, EU Directives on the topic and other standards and tools such as Financial Action Task Force (FATF) recommendations, standards, and methods.

 

 

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1 Framework for setting, reviewing and achieving anti-bribery objectives is defined in Ekvita ABMS Toolkit in compliance with article 5.2 (d) of the ISO 37001:2016 standards.

SCOPE

 

All EKVITA employees regardless of the length of their employment, position in the company or work schedule (full/part time) are duty bound to follow this Policy. This Policy also applies to seconded employees, volunteers, interns, our agents, business partners, contractors and external consultants.

 

BRIBERY AND CORRUPTION

 

Bribery is offering, promising, giving or accepting directly or indirectly any financial or other advantage, to induce the recipient or any other person to act improperly in the performance of their functions, or to reward them for acting improperly, or where the recipient would act improperly by accepting the advantage.

 

A person acts improperly where he/she act illegally, unethically, or contrary to an expectation of good faith or impartiality, or where they abuse a position of trust. The improper acts may be in relation to any business or professional activities, public functions, acts in the course of employment, or other activities by or on behalf of any organisation of any kind.

 

An advantage, i.e. bribe, includes money, gifts, loans, fees, hospitality, services, discounts, award of a contract or anything else of value.

 

In the crime of a direct bribery, there is a convergence of views or an agreement between a bribe taker and a bribe giver.

 

In the crime of indirect bribery there is no direct agreement/contact between a bribe taker and a bribe giver. A typical example of indirect bribery would be a case where a company employs a commercial agent to help the company to win a contract. We do not engage in or tolerate such practices in any form.

 

Corruption refers to a form of criminal activity or dishonesty, i.e. any unlawful or improper behavior that seeks to gain an advantage through illegitimate means, in other words it is the “abuse of entrusted power for private gain”. Corruption includes bribery, facilitation payments or other forms of improper business practice. It can be summarized as the misuse of entrusted power or office, whether in public or private sector, for private gain.

 

Forms of bribe

 

 

Illegal gratuity - giving or receiving something of value after a transaction is completed, in acknowledgment of some influence over the transaction

 

Gifts, hospitality & entertainment

 

Kickbacks arise when suppliers or service providers pay part of their fees to the individuals who give them the contract or some other business advantage. We do not make, and will not accept kickbacks of any kind even if it is customary or expected.

 

All employees must avoid any activity that might lead to a facilitation payment or kickback being made or accepted by us or on our behalf, or that might suggest that such a payment will be made or accepted. If you are asked to make a payment on our behalf, you should always be mindful of what the payment is for and whether the amount requested is proportionate to the goods or services provided. You should always ask for a receipt which details the reasons for the payment. If you have any suspicions, concerns or queries regarding a payment, you should raise these with the Compliance Function.

Facilitation payments are small bribes to officials with a view to speeding up the routine governmental transactions to which the payer is already entitled. Examples include payments to speed up the customs clearances and extra fees to officials to avoid the long queues, secure quick decision-making. When there are officially published and approved State duties for obtaining faster services, then this will not be considered a facilitation payment as long as the fees legitimate (approved by statutory instruments). We do not make, and will not accept facilitation payments of any kind even if it is customary or expected.

 

Commission/fee - used by a company or individual to obtain the services of an agent/agency for assistance in securing a commercial contract.

 

Conflict of interest (as an element of corruption) - where an employee has an economic or personal interest in a transaction. For detail rules of identification, evaluation and managing of conflicts of interest situations shall be referred to Ekvita’s Conflicts of Interest Policy dated 13.04.2020 (ref.: ABMS-009).

 

PROHIBITED ACTIONS

 

It is prohibited to:

 

• Give, promise or offer a payment, gift or hospitality with the expectation or hope that a business advantage may be received, or to reward for an already gained business advantage;

 

• Give or accept a gift or hospitality during any commercial negotiations or tender process, if this could be perceived as intended or likely to influence the outcome;

 

• Accept a payment, gift or hospitality from a third party that you know or suspect is offered with the expectation that it will provide a business advantage for them or anyone else in return;

 

• Accept hospitality from a third party that is unduly lavish or extravagant under the circumstances;

 

• Offer or accept a gift to or from government officials, or representatives, or politicians or political parties;

 

• Threaten or retaliate against another worker who has refused to commit a bribery or who has raised concerns under this Policy; or
• Possess, conceal, use, convert or transfer criminal property or its proceeds;

 

• Become involved in an arrangement facilitating any of the above, or

 

• Possess or in any way deal with funds related to terrorist activities or funds likely to be used for terrorist activities;

 

• Engage in any other activity that might lead to a breach of this

 

 

GIFTS, HOSPITALITY AND EXPENSES

 

 

This Policy allows reasonable and ordinary hospitality or entertainment given to or received from third parties, provided that the gift, hospitality or donation is proportionate in the circumstances and must not, in any event, be excessive, for the purposes of:

• Establishing or maintaining good business relationships;

 

• Improving or maintaining our image or reputations; or

 

• Marketing or presenting our services effectively

 

Note: The limit for hospitality or donation is one hundred 100 AZN per event per person. 

Giving and/ or accepting gifts is allowed if the following requirements are met:

• It is appropriate in the circumstances taking account the reason for the gift, its timing and value;

 

• It is given openly, not secretly;

 

• It complies with any and all applicable local laws; and

 

• It is not frequent”

 

Although Azerbaijani laws allow gifts to public officials up to a certain value, we prohibit any gifts to any public official irrespective of its value.

Company promotional items such as post cards, brochures, calendars, are allowed only if the value of such promotional items does not exceed the established statutory limits.

 

Giving or receiving cash gifts or payments is strictly prohibited under any circumstances.

 

The test to be applied is whether in all the circumstances the gift, hospitality or payment is reasonable and justifiable. The intention behind it should always be considered.

 

Subject to the determined maximum cap of relevant expenses, mass gifts on the occasion of traditional holidays provided to our clients, are not necessarily to be registered in the Company’s Gifts Registry Form.

 

Public Official means any minister, civil servant, director, officer or employee or other official of any government or any department, agency or body, and/or of any government-owned or controlled company, any company or enterprise in which government owns an interest of more than thirty percent, and/or of any public international organization; (ii) any person acting in any official, legislative, administrative or judicial capacity for or on behalf of any government department, agency, body, or public international organization, including without limitation any judges, or other court officials, military personnel and customs, police, national security or other law enforcement personnel and (iii) any close family member of any of the foregoing).

 

 

DONATIONS

 

Charitable donations are permitted provided that they are legal and ethical under the laws and practices; they must never be made in an attempt to influence any decision or gain a business advantage and are always publicly disclosed.

 

ANTI-MONEY LAUNDERING(AML) AND FIGHT AGAINST FINANCING OF TERRORISM(FATF)

1.1 National institutional and legal framework

 

The national authority in Azerbaijan and the chief regulator is the Financial Monitoring Service of the Republic of Azerbaijan (FMS) (a public legal entity established in May 2018 and financed through the state budget) which is responsible for implementing unified regulation and supervision, as well as, coordination among state authorities on the matters of fight against legalization of criminally obtained funds and other property and financing of terrorism.

 

National Legal Framework regulating AML and FATF includes:

 

• Criminal Code of the Republic of Azerbaijan;
• The Law of the Republic of Azerbaijan on Fight Against Legalization of Criminally Obtained Money and Other Property and Financing of Terrorism;
• The Rules on Submission of the Information Regarding Founders (shareholders), Shares in the Charter Capital and Owners of the Securities of Commercial Legal Entities to Participants of the Monitoring and Other Persons Participating in the Monitoring;
• The Law on Banks;
• Rules and Guidelines Issued by the Central Bank of the Republic of Azerbaijan on Banking Operations; and
• Regulations of the following entities:
  • Financial Monitoring Service;
  • The Chief Department on Fight Against Corruption under the Chief Prosecutor of the Republic of Azerbaijan etc.

 

Money laundering is about trying to legitimize illegal funds; it is the process by which criminals attempt to conceal the true origin and ownership of the proceeds of their criminal activity and integrate (reintroduce) the proceeds into the economy for legitimate purposes. Typically, money laundering follows a three-stage process:

 

1. Placement – Physical disposition of monetary proceeds derived from illegal activity
2. Layering – Separating the proceeds of criminal activity from their illegal source through layers of financial transactions.
3. Integration – acquiring wealth generated from the transactions of the illicit funds, through additional transactions until the “dirty money” appears “clean”.

 

For the purposes of this Policy money laundering shall include (but not limited to) the following:

 

1. the conversion or transfer of property, knowing that such property is derived from criminal activity or from an act of participation in such activity, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in the commission of such an activity to evade the legal consequences of that person's action;
2. the concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of, property, knowing that such property is derived from criminal activity or from an act of participation in such an activity;
3. the acquisition, possession or use of property, knowing, at the time of receipt, that such property was derived from criminal activity or from an act of participation in such an activity;
4. participation in, association to commit, attempts to commit and aiding, abetting, facilitating and counseling the commission of any of the actions referred to in points (a), (b) and (c).

Reverse money laundering is a process that disguises a legitimate source of funds that are to be used for illegal purposes. It is usually perpetrated for the purpose of financing terrorism but can be also used by criminal organizations that have invested in legal businesses and would like to withdraw legitimate funds from official circulation. Unaccounted cash received via disguising financial transactions is not included in official financial reporting and could be used to evade taxes, hand in bribes and pay "under-the-table" salaries.

 

Financing of terrorism means the provision or collection of funds, by any means, directly or indirectly, with the intention that they are used or in the knowledge that they are to be used, in full or in part, in order to carry out any terrorist act.

 

1.2.       Ekvita AML and FATF Policy

 

1.2.1.     Client Onboarding

 

 

When onboarding a potential new client Ekvita personal shall ensure the implementation of the following:

 

• initial screening of the client which shall as a minimum include the performance of comprehensive identification and verification measures and collection of data from diverse government and private sources such as media institutions, and international regulators and law enforcement agencies (if possible);
• due diligence of the client’s profile, including but not limited to, the list of its ultimate beneficial owners, shareholders, senior officials, location and type of its bank accounts, the source of funds, types of transactions and/or projects attended; and thereafter
• creation of “the client risk profile” (law, medium, and high) through a risk assessment

 

 

1.2.2.     Monitoring of Existing Clients

 

Ekvita personnel shall ensure that AML and FATF monitoring of existing clients (“Monitoring”) is implemented on a daily basis. Monitoring includes but not limited to,

 

• transactions exceeding regular client thresholds (or statutory thresholds);
• transactions connected with suspicious parties and/or jurisdictions;
• changes in client legal status (mergers, acquisitions, transfer of shares, bankruptcy or insolvency, liquidation etc.);
• recording of communications and surveillance of employees to the extent permissible by the relevant legislation and the confidentiality agreements;
• adjusting to new AML and FATF monitoring requirements produced by updates (or changes) in the relevant regulations;
• market trends and the emergence of new financial tools enabling new methods and channels for money laundering and terrorism financing

 

INTERNATIONAL TRADE RESTRICTIONS, EXPORT CONTROLS AND ANTI-BOYCOTT LAWS

 

Our Company complies with applicable laws in all jurisdictions it operates including applicable trade restrictions, export controls and anti-boycott laws.

Some of our clients or couterparties might have significant business interest in UK, US and EU and therefore be subject to srticter trade restrictions. Wewill try to accommodate their regulatory compliance requirements to the extent not conflicting with imperative norms of Azerbaijani legislation including but not limited to its Constitution.

 

If we are not sure that a trade restriction is applicable to our business or whether we need to obtain a specific export or import license or authorization, we will seek the consultation of a legal expert.

 

MODERN SLAVERY

 

Modern slavery refers to situations of exploitation that a person cannot refuse or leave because of threats, violence, coercion, deception, abuse of power.

 

Our Actions to Prevent Modern Slavery

 

Company is committed to utmost respect for human rights and freedoms and expects the same from every official and employee of Company, third parties acting on behalf of Company and any party having business relationship with Company. We shall not tolerate any behavior infringing with human dignity, including but not limited to modern day slavery, human trafficking or inhumane working conditions and shall immediately cease business relationship with any party causing or failing to prevent such behavior and report any such infringement to relevant authority.

 

We take a proactive approach in preventing modern slavery by:

 

• Conducting due diligence and risk assessment in supply chains to prevent inadvertent use of forced labour or products at risk of being produced by forced labour
• Ensuring the ethical recruitment of migrant workers, including through prohibiting charging workers with fees to secure work and withholding identification documents

 

Specific attention shall be given to business dealings with jurisdictions with weak modern slavery response rating.

 

RECORD KEEPING

 

We will keep records and will have appropriate internal controls in place to document all business reasoning for payments to third parties. All accounts, invoices, memoranda and other documents and records relating to dealings with, including but not restricted to third parties, such as clients, suppliers and business contacts, must be prepared and maintained with strict accuracy and completeness and be completely transparent.

 

YOUR RESPONSIBILITIES

You must ensure that you read, understand and comply with this Policy.

 

The prevention, detection and reporting of bribery and other forms of corruption are the responsibility of all those working for us or under our supervision. Everyone is required to avoid any activity that might lead to, or suggest, a breach of this Policy. We reserve our right to terminate our relationship with any employee or third party who is found to be in breach of this Policy.

You must notify the Compliance Function as soon as possible if you believe or suspect that a conflict with this Policy has occurred, or may occur in the future. For possible 'Red Flags' indicating bribery or corruption, please see the attached Appendix.

 

PROTECTED DISCLOSURE

Employees who refuse to accept or offer a bribe, or those who raise concerns or report another's wrong doing, are sometimes worried about possible repercussions. We aim to encourage openness and will support anyone who raises genuine concerns in good faith under this Policy, even if they turn out to be mistaken.

 

If you are ever concerned that our Policy is not being followed, or simply feel unsure about any situation, it is vital that you speak up and ask a question or share your concern straightaway. Please talk, call or email Ekvita's Compliance Function, either directly or via compliance hotline tool  http://ekvita.com/contact or compliance@ekvita.com , who acts in independent manner and is duly authorized to investigate your queries.

 

Top Management and Compliance Function are responsible for ensuring those reporting to them are aware of and understand this Policy and are given adequate and regular training on it.

 

CHANGES TO THE POLICY

As part of its commitment to continual improvement of the anti-bribery management system, Ekvita may amend this procedure unilaterally at any time and at its sole discretion. Employees will be notified of all such changes. We keep our Policy under annual review and will notify all parties should there be any changes.

EKVITA Code of Conduct.