Πρόγραμμα της Κα. Compliance Management System & Combating Corruption. Thessaloniki, 3 rd of February Fairness (Justice) Team Spirit

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1 Fairness (Justice) Team Spirit Πρόγραμμα της Κα Compliance Management System & Combating Corruption Transparency Integrity Thessaloniki, 3 rd of February 2012 Professionalism Respect the rules

2 Agenda 1 2 OTE Group today Basic principles and Compliance Management System How we treat Compliance Risk Active / Passive Corruption Our Policies Closing

3 Agenda OTE Group today Basic principles and Compliance Management System How we treat Compliance Risk Active / Passive Corruption 5 Our Policies 6 Closing

4 OTE Group today ALBANIA Leader Mobile Customers (000): 1,820 Headcount: 481 ROMANIA Incumbent/Leader Total Lines (000): 2,527 ADSL Subscribers (000): 1,107 TV Subscribers (000): 1,208 Challenger Mobile customers (000): 6,540 Headcount: 11,208 BULGARIA # 2 in the market Mobile Customers (000): 4,166 Headcount: 2,100 Employees Revenue (bil) Greece 15, ROMANIA 11, Customers F / M (mil) Population (mil) GREECE Incumbent/Leader Total Lines (000): 3,548 ADSL Subscribers (000): 1,142 IPTV Subscribers: 55,600 Leader Mobile customers (000): 7,873 Headcount: 15,902 GLOBUL 2, AMC Total 29, Note: Data as of September 30, 2011

5 Transparency International 2011

6 Transparency International 2011 Country CPI Germany 8.0 Greece 3.4 Bulgaria 3.3 Romania 3.6 Albania 3.1

7 Agenda Our Group today Basic principles and Compliance Management System How we treat Compliance Risk Active / Passive Corruption 5 Our Policies 6 Closing

8 Tone of the Top The message of the President & Chief Executive Officer of OTE S.A. and Group Chief Compliance Officer Compliance is integrated in our everyday work, in all levels of corporate hierarchy, and constitutes a conscious choice to comply with the law and regulations. The Management of OTE Group has established a Compliance System. Its main aim is to support and reinforce the fundamental principles of transparency, justice, professionalism, integrity and respect of the regulations. The effectiveness of OTE Group's Compliance System is based on the commitment and support of each and every one of us, both management and employees. It takes the consistent effort of both management and employees in order to comply with the laws, policies, as well as the internal regulations and procedures. By complying with the rules, we contribute to the business continuity of the company; we protect its reputation, its employees, shareholders, partners and customers, while impacting on the perception that the subscribers and the public have about the OTE Group. Μιχάλης Τσαμάζ Mihalis Tsamaz Πρόεδρος και Διευθύνων Σύμβουλος ΟΤΕ President and Chief Executive Officer Άρης Δημητριάδης Aris Dimitriadis Γενικός Διευθυντής Group Chief Compliance Officer Κανονιστικής Συμμόρφωσης Ομίλου ΟΤΕ

9 OTE Group CMS: Principles 1. Customer s first choice 2. Respect and integrity The second principle goes beyond respecting one another as colleagues in every day business. It is also about truly respecting customers, partners, suppliers and shareholders. Without an open and honest culture, the success of OTE and its Affiliates is at stake. 3. Fair Play and Transparency 4. Teamwork & Professionalism Respect and Integrity determine dealings with all stakeholders of the OTE Group. The Compliance Management System establishes standards to give guidance to all employees through legal and internal rules and regulations to avoid liability risks and risks of loss of reputation. In addition, an effective Compliance Management System creates transparency for management, supervisory boards and committees to consistently stimulate compliant behavior with respect to various national and international regulations and current events. 5. OTE Group is Trustworthy

10 OTE Group CMS: Organizational Structure OTE BoD COSMOTE BoD OTE Audit Committee ROMTELECOM BoD Tier 1 compliance organization COSMOTE Audit Committee COSMOTE Compliance Committee COSMOTE Compliance Officer OTE Compliance Committee OTE Compliance Officer ROMTELECOM Audit Committee Romtelecom Compliance Committee Romtelecom Compliance Officer Management by SBU compliance organization Business unit compliance organization AMC Globul Cosmote Ro ΓΕΡΜΑΝΟΣ OTE PLUS OTE INVESTMENT OTE ACADEMY OTE INTERNATIONAL OTE SAT Next Gen S.R.L. OTE GLOBE OTE ESTATE

11 OTE Group CMS: Pillars Compliance Management System Program Awareness & Prevention Detection Response Policies and Procedures Consultation Desk Ask Me Classroom training elearning Tip-Off-Portals Tell Me Detection Audits Case-Management Remediation Consequence Management Monitoring & Reporting Communication

12 Ask me process OTE Group Categories of Inquiries No of inquiries 2011 No of inquiries 2010 Sponsorships Data protection Conflicts of interest 22 7 Events Gifts/Benefits Anti-Bribery Clauses (FCPA) Whistle Blowing Policy 6 5 Integrity survey 0 1 Procurement Other Not Related to Compliance (NCR) 10 5 Total

13 Tell-me OTE Group Type of Tip Offs Manipulation of Financial Reporting 0 1 Conflict of Interest 7 6 Passive/Active Corruption 1 1 Breaches of antitrust / competition law 0 3 Embezzlement, Theft, Fraud 16 9 Misuse of customer personal data 0 3 Disclosure of trade or business secrets 0 1 Breaches of trust regarding business assets 0 2 Procurement 1 3 IT Security Policies 0 2 Employee Protection rights 0 1 Telecoms Regulatory law 0 0 Other Related-Total Valid Grand Total * 2011 : Mainly customer/citizen complaints (OTE : around 120 of them)

14 Agenda Our Group today Basic principles and Compliance Management System How we treat Compliance Risk Active / Passive Corruption Our Policies Closing

15 OTE Group CMS: Compliance Risk Landscape Category Definition Risk Key risk areas Corporate misconduct Compliance violations through executive bodies or employees of OTE/ COSMOTE or other Group OTE affiliates (agents: consultants, sales partners,...) for the perceived benefit of OTE/COSMOTE "The company becomes the offender" Direct liability of company and / or executive bodies Loss of reputation and pecuniary loss Active corruption Breaches of antitrust/competition law Breaches of telecommunication regulatory law Breaches of export law/embargos Manipulated financial reporting Incorrect or delayed information to capital market Misuse of personal customer data Misuse of personal employee data Breaches of privacy of letters, posts and telecommunications Breaches of laws concerning financial transactions (money laundry law, banking supervisory law) Breaches of consumer protection provisions Breaches of licensing, copyright and trademark law Breaches of patent law Violation of employee protection rights Breaches of environmental and health protection provisions and product safety Individual misconduct Compliance violations through executive bodies or employees of OTE Group companies for the personal benefit of the offender "The individual is the offender" Largely pecuniary loss Product and rate fraud Commission and target fraud Breaches of trust regarding business assets Embezzlement, theft, fraud Improper use of tangible & intangible assets Conflicts of interest concerning spare-time work and private investments Misuse of customer data or confidential customer information Passive corruption Disclosure of trade or business secrets Breaches of procurement policies Misuse of insider knowledge Breaches of Code of Conduct

16 Corporate misconduct Active corruption. Short definition Offering, promising and granting a benefit to cause a breach of duty by another party, e.g., in the form of a cash payment, gifts or an invitation to an event Legal provisions Law 3560/2007; Law 3666/2008; Law 2802/2000; Law 2803/2000; Law 2656/1998; Criminal code: articles 159,235,236, 237 & 263b; USA Foreign Corrupt Practices Act (FCPA) Internal policies Code of Conduct Code of Ethics for Senior Financial Officers Fraud Policy, Anti-Corruption Policy Sponsorship & Donations Policy, Event Policy Policy on Acceptance and Offering of Corporate Gifts Conflict of Interest & combating corruption Scenarios Providing a benefit aimed at securing a specific future business decision. Example: A decision-maker at the customer is invited to a high-profile sporting event in order to induce him to extend the current master agreement, which is about to expire. Providing a benefit to a public-sector employee in return for an official act, e.g., provision of high-end terminal devices to persons at the municipal authority responsible for organizing tenders. Following a merger/an acquisition of a company, cases of corruption dating back to the time before the acquisition become known and are brought in connection with COSMOTE/OTE. A sales agent/consultant offers a benefit to a public official in anticipation of the official violating his official duties.

17 Category Definition Risk Key risk areas Compliance violations through executive bodies or employees of OTE/ COSMOTE or other Group OTE affiliates (agents: consultants, sales partners,...) for the perceived benefit of OTE/COSMOTE "The company becomes the offender" Direct liability of company and / or executive bodies Loss of reputation and pecuniary loss Active corruption/fcpa Breaches of antitrust/competition law Breaches of telecommunication regulatory law Breaches of export law/embargos Manipulated financial reporting Incorrect or delayed information to capital market Misuse of personal customer data Misuse of personal employee data Breaches of privacy of letters, posts and telecommunications Breaches of laws concerning financial transactions (money laundry law, banking supervisory law) Breaches of consumer protection provisions Breaches of licensing, copyright and trademark law Breaches of patent law Violation of employee protection rights Breaches of environmental and health protection provisions and product safety Compliance violations through executive bodies or employees of OTE Group companies for the personal benefit of the offender "The individual is the offender" Largely pecuniary loss Product and rate fraud Commission and target fraud Breaches of trust regarding business assets Embezzlement, theft, fraud Improper use of tangible & intangible assets Misuse of customer data or confidential customer information Passive corruption Disclosure of trade or business secrets Breaches of procurement policies Misuse of insider knowledge Breaches of Code of Conduct 1 Overview Compliance Risk Assessment scope and process High Impact (Financial and reputational risk) Low Mid A A A B B A C C B I Low Mid Likelihood of occurrence High Measures: Scoping Compliance Risk Landscape 2011 Corporate misconduct Group OTE's compliance risk landscape Individual misconduct Conflicts of interest concerning spare-time work and private investments Inherent Risks II 1. Responsibilities / Guidelines 2. Communication 3. Training 4. Processes / Controls 5. Monitoring / Reporting Existing Actual Risks III + Planned Risk adjusted Compliance Program for the following year Risk Taking Assessment of inherent risks (likelihood of occurrence and impact) without taking mitigation-measures into account. Assessing the effectiveness of the control environment based on existing measures. If necessary, define further measures to reduce the risks to an acceptable level (risk taking).

19 Corruption Corruption can be defined as abuse of power for personal gain 1. Corruption remains a major obstacle to business according to the new international surveys. Good Compliance practices that prevent corruption: Tone from the top: a zero-tolerance culture should be established from the top, with clear direction and responsibility from the board of directors. Risk assessment: comprehensive and regular evaluations of the nature and extent of risk exposure. Anti-corruption Policies and procedures: clear, practical and accessible policies and procedures that apply to all employees and subsidiaries. Effective implementation: proper implementation and embedding of policies and procedures throughout the organization by conducting training and awareness-raising programs. Relationships with Business Partners: risk-based due diligence of all business relationships, including the supply chain, agents and intermediaries and all forms of joint ventures; and clear communication of the company s zero tolerance approach to bribery. Monitoring and Review: regular monitoring and continuous improvement, potentially using external reviewers or assurers. 1 Global Corruption Report 2006: Transparency International

20 The Seven Guiding Principles for offering or accepting gifts or benefits Value-test: what are you offering or accepting, what is the value? Acceptant-test: to whom are you giving it or who is giving it to you? Purpose-test: what do you or does the other one want to achieve, what is your or his intention? Policy-test: what OTE Group policies are applicable to the given situation? Perception-test: how can it be perceived by others inside or outside the company? Knowledge-test: do you know enough of the context (the people involved, the relationships, law, policies etc.) to make your own judgment? Self-test: are you convinced that you can make or take the offer without putting yourself or the company in a difficult or dangerous position?

22 OTE Group Policies for combating corruption Code of Conduct Policy on Acceptance and Offering of Corporate Gifts The Events Policy The Policy for Donations & Sponsorships The Policy for Insider Trading The Fraud Policy The Code of Ethics for Senior Financial Officers Also, other Policies include provisions regarding combating corruption (e.g. the Procurement Policy, Internal Regulation Manual).

23 Whistle Blowing Policy This policy deals with specific complaints regarding the infringement of policies and procedures of the Company / its subsidiaries or violations of the applicable laws The employees or third parties may report to the Compliance Office, either signed or anonymously, any concern or any complaint regarding violations of the policies / the legislation using the relevant communication channels (telephone line, fax, address, P.O. Box and Electronic Form). The most important principles of the Whistle Blowing Policy is the confidentiality and the protection of the whistleblower, with the exception of a malicious tip off. The report for legal violations or other misbehavior can be through: the ELECTRONIC FORM which is available on the corporate website. contact us whistleblowing@ote.gr or complianceoffice@ote.gr OTE Group Compliance General Directorate, P.O. BOX / GR Maroussi, Athens, Greece

25 Key Messages Corruption is unlawful in almost every country but still widespread. Violations of national and international law (even by foreign subsidiaries) bear a high risk for both the individual and the company. An effective Compliance Program helps to mitigate this risk. In order to be effective, top management needs to set the right tone at the top. 5 No compliance program can be a substitute for personal responsibility and accountability. 6 7 principles have been developed to guide people in assessing whether a gift or a benefit is appropriate. If any doubts remain compliance and/or legal should be contacted. 7 Decisions always need to be transparent and auditable.

26 What we want you to do. How would I feel if my behavior was published on the front page of a newspaper tomorrow? Bad? Then don t do it. Good? Then please proceed. Not sure? Then please contact: your Compliance Office

27 Thank you for your attention