Compliance Service

Amid the economic crisis caused by the COVID-19 pandemic, ethical issues remain as relevant as ever, since ethics, being a pillar of the compliance programme, foster a compliance culture whereby employees’ conduct and actions are aligned with the Company’s standards and requirements.

2020 proved a kind of a stress test for the Company’s compliance function, enabling the assessment of how nimble we are in exercising oversight and control over compliance risk management processes and how well the compliance function adapts to the extreme environment versus best practices.

Restrictions on social interactions enabled the Compliance Service to look into ways to better organise its activities in a new environment as part of upgrading the systemic organisational and practical measures to prevent corruption among the Group employees. This optionality highlighted a much greater value placed on the Company’s digital capabilities and skills, including adaptation of the way our scheduled training programme is delivered. All KMG employees took training in ethics online.

The shift to remote interactions within the Company has facilitated the adaptation of corporate policies and procedures, their simplification to maximise responsiveness and reflect changes in the protocols driven by remote work. It also increased the role of corporate communications through a greater focus on newsletters containing reminders to employees about the Company’s anti-corruption requirements, regulatory changes and hotline operation, which enabled us to cover 100% of employees, raising their awareness and boosting the engagement of employees and other persons on the use of the hotline administered by Samruk-Kazyna’s Social Partnership Centre. The hotline is a powerful tool to monitor how well the Company and its employees observe the statutory and ethical compliance standards. This is evidenced by a threefold increase in the number of hotline calls, with 118 calls received in 2020 versus 42 in 2019. All reports received were reviewed in a due and timely manner and followed up with relevant measures and a notification to the caller. Most of the calls to our hotline (52) related to HR issues, such as labour disputes, unethical behaviour, unequal working conditions, misuse of office etc. Based on its analysis of the calls received, the Compliance Service developed and submitted recommendations and preventive measures. With remote work arrangements for employees in place, one such recommendation, for instance, was to work out measures to ensure proper monitoring of employees’ compliance with work discipline, Kazakhstan’s labour laws and KMG’s internal documents, as well as to give special focus to training in business ethics for middle management, with the HR team looking into employee morale in order to prevent employee dissatisfaction with working conditions from becoming a persistent issue. Making sure that the voice of every employee contacting the Compliance Service is heard remains our priority.

The new reality has required the Compliance Service to come up with new approaches at the intersection of regulation and ethics. This is how the updated Code of Business Ethics was approved to maintain the high level of our corporate governance and drive a mindset shift towards a zero-tolerance approach to any violations among employees in line with global best practice. The Code was enhanced with the addition of a Q&A section, improved and broader definitions section, updates to KMG’s corporate values, and the introduction of limits on gifts and compliance communication channels, to bring it in line with the Samruk-Kazyna Code of Conduct and recommendations of international compliance audit firms. A procedure was also introduced for declaring conflict of interest by employees and officers.

The pandemic-driven adaptation effort also covered the Tone at the Top, a key compliance principle. In December 2020, as part of promoting high ethical standards of business conduct and zero tolerance for any form of corruption, an extended online meeting was held attended by the Chairman of the KMG Management Board and chief executives of KMG subsidiaries and associates. The meeting reviewed reports by the compliance teams of KMG and its subsidiaries and associates detailing their performance, and discussed the relevance of corporate intelligence for counterparty checks and the use of data analytics as a powerful tool to identify non-compliance within the various business processes. Measures were also announced to prevent and minimise the risk of fraud in a remote work environment, all resulting in more productive interactions on compliance and ethics issues between senior management and the Compliance Service. On top of that, the 2021 action plan was announced along with the shareholder’s expectations from subsidiaries and associates’ efforts in this area.

Integrity is a cornerstone of the entire framework of good governance, providing an assurance that the Company’s interests are protected and prioritised over own interests. The Compliance Service will continue proactive efforts to raise awareness of managers’ accountability for corruption offences by their subordinates and failure to take anti-corruption measures.