Ethics and Integrity

Values, Principles, Standards and Rules of Conduc

The most important principle of the Company’s operations is ensuring high corporate responsibility. The corporate responsibility includes transparent and ethical behaviour that contributes to sustainable development and corresponds to the legislation and international standards of conduct. The Company’s activities in this area are system-based; therefore, in 2023, a number of activities aimed at building an anti-corruption culture were carried out.

KMG’s activities are based on the following corporate values:

• Fairness
• Loyalty
• Development
• Safety
• Responsibility

Since KMG’s business relations with shareholders, employees, subsidiaries and affiliated organisations, state bodies, partners and other interested parties are based on a harmonious combination of interests, mutual respect, trust, responsibility and observance of the rights and obligations of each party, the Company strictly follows the provisions of the Code of Business Ethics of JSC NC “KazMunayGas” when making business decisions and in everyday operations.

The Code is a public document and is freely available to KMG’s business partners and to any other stakeholders. It is also available on the Company’s website in the Corporate Documents section:  https://www.kmg.kz/en/sustainable-development/corporate-governance/corporate-documents/.

Mechanisms of Applying for Consultations on Unethical Conduct

To ensure observation of employee rights, confidential and accessible means have been made available for real-time reporting of any wrongful actions on the part of employees or third parties.

Any employee of the Group or any other person who has any doubts regarding the legality of actions taken by other employees, counterparties, or any other persons interacting with KMG and its SDEs, may inform their direct supervisor, the Ombudsman Service and the Compliance Service.

Such information can be transmitted by the following confidential channels and means of communication.

All Company employees, officers and other stakeholders have the right to contact the Ombudsman. One of the main functions of the Ombudsman is to ensure that officials comply with the provisions of the Code of Business Ethics, monitor fairness and the interests of all employees.

In 2023, KMG’s Nysana call centre received 223 appeals on safety issues, violation of rights and legitimate interests of employees, and social and labour conflicts. All appeals were answered in a timely manner, 12 appeals were considered with a visit to the regions.

The hotline contacts are available on KMG’s corporate website in the state, Russian and English languages. Similar information is available on the websites of SDEs.

The hotline is a channel for reporting suspected violations of legislation and/or the Code of Business Ethics, cases of corruption, fraud, and unauthorised disclosure of confidential and insider information. All appeals received by the hotline are registered in an electronic log.

The process of registering incoming appeals and providing responses to the applicant is fully automated, and all appeals from the hotline operator are received by the Group’s compliance officers in real time. The system also makes it possible to independently create appeals, send them to compliance officers for execution, specify statuses and comments, attach files and upload analytics.

The Compliance Service is able to analyse the quality of handling of appeals by the compliance services of SDEs.

To enhance the effectiveness of the control and prevention of offenses, improve communication and provide feedback with employees of the Company and third parties (legal entities and individuals), and protect the legitimate rights and interests of KMG and SDEs:

• All messages, including anonymous, will be received and processed by the operators and forwarded to KMG’s Compliance Service, which is in charge of their confidential review.
• The Compliance Service will communicate the results of such review to the Audit Committee and KMG’s Board of Directors on a quarterly basis.

For 2023, the hotline received 84 calls. There is a 23 % decrease in the number of complaints compared to 2022. This dynamics indicates an improvement in the conflict and complaint resolution process in KMG and its SDEs.

Regarding the work with SDEs, KMG seeks to accelerate the processes of integrating entities into the corporate culture by introducing on-site functions and forming compliance programmes tailored to the specifics of the Company. At the same time, thanks to the calls received by the hotline, it was also possible to resolve issues not directly related to anti-corruption and fraud prevention. For example, the hotline received calls related to violation of business behaviour and abuse of authority. All calls were considered in accordance with the established procedure and deadlines, with the adoption of appropriate actions to reduce the likelihood of recurrence of similar situations in the future and notification of applicants of the results of consideration.

Communications from citizens are also received via e-Otinish, which has minimised anonymous communications with unconfirmed information, often aimed at discrediting a person due to personal animosity or conflict. Total number of communications received for 2023 is 1,795 (CC and SDEs) (832 in 2022).

KMG Group’s corporate security units carry out comprehensive work to ensure that the rights of employees and other persons are respected. In doing so, they are strictly guided by the laws of the Republic of Kazakhstan and international regulations, as well as general corporate and internal documents of the Fund, KMG and SDEs.

In general, the management of KMG and SDEs pays serious attention to the issues of human rights observance and continuously works to improve this area of activity.

Anti-Corruption

KMG builds its business on the principles of legality, good faith and ethics. The Company strictly observes the human rights, takes all possible steps to prevent corruption, takes care to maintain an impeccable reputation and strives to implement high international standards of business ethics.

KMG has a Compliance Service (hereinafter, the Service). It is the responsibility of the Service to ensure that there is no risk of employees committing a corruption offence during their employment. While remaining an independent activity area of the Company, the Service is integrated with all business units of KMG.

In order to meet the standards of ethical and fair business conduct, KMG has taken steps to update existing internal compliance documents. In 2023, the Internal Control Rules of KMG were updated to delimit the rights of access to insider information and prevent the possibility of misuse of such information by insiders.

In the reporting period, the Service exercised internal control over the disposal and use of insider information.

The Service checks the Company’s counterparties to ensure compliance with the standards of ethics and fair business conduct. This helps to prevent the conclusion of contracts with unreliable partners, reduce the risks of non-delivery of goods, non-performance of work or non-provision of services.

The Service also checks candidates for vacant positions in KMG related to the performance of organisational, managerial and administrative functions. Psychological checks and polygraph (lie detector) tests for applicants who will be involved in procurement procedures have become one of the conditions for employment.

Another important area of work for compliance specialists is internal analysis of corruption risks, which is one of the systemic anti-corruption activities; its results are used to identify causes and conditions that contribute to corruption offences, as well as deficiencies in the Company’s business processes.

Thus, in 2023, an internal analysis of corruption risks was carried out in KMG CC and 23 SDEs. Based on the results of the analysis, recommendations and plans for their implementation were developed. There were no confirmed incidents of corruption during the reporting period.

KMG Group automated and put Compliance Control into commercial operation. It is a system for declaration of conflict of interest. In the reporting period, KMG Group’s employees disclosed information on the presence/absence of conflict of interest situations on a large scale.

In the reporting period, events aimed at building an anti-corruption culture in the Company were held, including with the participation of top management and representatives of the Anti-Corruption Service.

In September 2023, jointly with the Anti-Corruption Service, employees and officials were trained in effective anti-corruption methods at KMG CC. Also in the reporting period, anti-corruption training events were held in the following SDEs: Embamunaigas JSC, KazTransOil JSC, KMG Systems & Services LLP, Kazmortransflot NMSC JSC, KMG Barlau LLP, KMG Kumkol LLP, KMG PetroChem LLP, KMG Drilling & Services LLP, Atyrau Refinery LLP, KMG Engineering LLP, Ak Su KMG LLP, KMG Kashagan B.V.

The Compliance Service supports the development of professional competences and advanced training of compliance specialists of KMG Group.

From 5 to 8 December 2023, KMG Group’s compliance officers passed training Anti-Corruption Compliance in the Private Sector conducted by the Council of Europe with the support of Atameken, and today the compliance teams have specialists with professional compliance certificates issued by international and national professional compliance organisations.

KMG carries out continuous work on the development, improvement and enhancement of the compliance system in order to increase the efficiency of control over compliance with internal and external rules and regulations.