Ethics at the Grupa Azoty Group
The Group’s principles of ethics and respect for human rights, as well as the desirable attitudes and standards of conduct, are defined in the Grupa Azoty Group’s Code of Ethical Conduct,
The Group’s principles of ethics and respect for human rights, as well as the desirable attitudes and standards of conduct, are defined in the Grupa Azoty Group’s Code of Ethical Conduct, describing measures taken to foster responsible employee behaviour and build relations with the Group’s external environment. The values prescribed in the Code are applicable to all Group companies.
Grupa Azoty Group’s values:
Good management – understood as responsible management of the Group’s tangible and intangible assets based on a cost-benefit analysis so as to maximise benefits to the Group’s shareholders and other stakeholder groups;
Professionalism – making every effort to ensure that the Group’s management, operational and control system standards are effective and conductive to the delivery of its business strategy; to be professional is to apply the highest standards of care and make proper use of expertise, skills and business competence;
Cooperation – the Group believes that good cooperation means arranging mutual relations in a way that would maximise benefits to the Group while furthering and respecting the other party’s interests, which requires communication aimed at achieving a win-win situation and building mutual trust and understanding when pursuing common goals;
Respect – understood as full recognition of another person’s dignity, irrespective of their nationality, race, gender, age, physical or mental health, religion, political views or sexual orientation;
Transparency – which stands for openly communicating our decisions and reasons behind them, as well as our expectations and requirements; we are guided by this approach in all areas of our activity, except for those which must remain confidential for business or legal reasons.
The Code of Ethical Conduct of Grupa Azoty Puławy and Grupa Azoty Police consists of two sections. Section 1 sets out the core values and principles of business ethics in relations with stakeholders, suppliers and the local community, while Section 2 covers employee matters, such as equal opportunities in employment, promotion, development and in-service training. The Code also defines the procedure for reporting unethical behaviour through a line manager or the Ethics Officer.
Additionally, the Codes of Ethical Conduct implemented by Grupa Azoty Puławy and Grupa Azoty Police address issues related to the management of conflicts of interest and corruption risk, setting forth the basic rules of conduct in day-to-day work. According to their provisions, all employees are required to:
- avoid situations which may give rise to a conflict of interest or put them in a conflict of interest situation,
- carefully consider all situations for potential impact on the impartiality of work-related actions or decisions,
- promptly notify their line managers and the Ethics Officer of any situations that give rise or may lead to a conflict of interest.
An Ethics Officer has been appointed both at Grupa Azoty Police and Grupa Azoty Puławy. At the other companies, relevant appointments are also shortly planned.
Ethics Officer
In 2016 and 2017, none of Grupa Azoty S.A., Grupa Azoty Kędzierzyn and Grupa Azoty Police reported any breaches of the Code of Ethical Conduct or human rights, or any cases of discrimination at the workplace. At Grupa Azoty Puławy, one workplace harassment complaint was received in each of 2016 and 2017. However, the committee set up to investigate the matter did not confirm the complaints as valid.
In 2016 and 2017, there were no pending lawsuits regarding breaches of fair competition rules against Grupa Azoty S.A., Grupa Azoty Puławy, Grupa Azoty Kędzierzyn and Grupa Azoty Police.
In 2016, there was one confirmed instance of corruption at Grupa Azoty Puławy. The identified incident involved an attempt to hand an item of value to an employee of the company. The employee did not accept the bribe and immediately reported the attempt. The case was being investigated by the Regional Prosecutor’s Office in Lublin. In 2017, no company reported any instance of corruption or fraud.
Investment in Senegal
In the second half of 2017, tax proceedings were pending with respect to the operations of Grupa Azoty POLICE’s subsidiary African Investment Group S.A. in 2013–2015.
Reasons behind the investment in the open-pit phosphate rock mine in Senegal were to make the Grupa Azoty Group resilient to fluctuations in phosphate prices, while expanding its own reserves of phosphate rock, a basic input in the manufacture of compound fertilizers. However, the actual reserves of rock extractable from the mine turned out to be significantly lower than initially estimated. In 2016, the Management Board of Grupa Azoty Police announced that the value of AIG assets had been overestimated and, consequently, a relevant adjustment would be made to its financial results.
Grupa Azoty Police also filed claims for a refund of the undue purchase price tranches it had paid for 55% of AIG shares, but later, on December 20th 2017, it concluded a conditional agreement with DGG ECO Sp. z o.o. settling the claims (confirmed by an in-court settlement). The agreement was to result in the parties’ confirming termination of the 2013 agreement under which Grupa Azoty Police had acquired the majority interest in AIG. Reversal of the effects of the latter agreement was to entail, among other things, a refund of USD 28,850 thousand as the amount already paid for AIG shares. The conditional agreement was to have been consummated by February 28th 2018 provided that the requisite corporate approvals were granted by that date, and that Grupa Azoty Police received the first tranche of the price refund along with a bank guarantee securing receipt of the balance. By the envisaged date, the conditional agreement between Grupa Azoty Police and DGG ECO Sp. z o.o. had not been consummated.
Having regard to all circumstances of the phosphate rock project in Senegal and the non-consummation of the conditional settlement with DGG ECO sp. o.o., on March 7th 2018 the Management Board of Grupa Azoty Zakłady Chemiczne Police passed a resolution to recognise, as at December 31st 2017, an impairment loss for the entire amount of the intangible exploration and evaluation assets.
On March 29th 2018, AIG filed for bankruptcy. The Management Board of African Investment Group S.A. provided explanations to the Senegalese tax authorities (with the participation of the entity managing its accounting and tax matters). The Management Board denied most of the authorities’ allegations as groundless. However, the Senegalese tax authorities dismissed its explanationsand, on March 13th 2018, African Investment Group S.A. received a payment demand notice with an enforceability order issued by the Director for Large Enterprises, for an amount of XOF 10,435,788 thousand (equivalent to PLN 66,268 thousand as at December 31st 2017, translated at the exchange rate quoted for the reporting date). Further information will be communicated via the Grupa Azoty official channels.
Source: Prepared based on the Grupa Azoty Group’s consolidated financial statements for the 12 months ended December 31st 2017
In 2016 and 2017, at Grupa Azoty Puławy, Grupa Azoty Kędzierzyn and Grupa Azoty S.A. no instances of non-compliance related to marketing communications were reported.
In August 2017, an inspection carried out by the Provincial Agricultural and Food Quality Inspectorate revealed certain irregularities in the labelling of fertilizers and plant growth enhancers produced by Grupa Azoty Police. Information on the percentage content of ammoniacal nitrogen placed on bags did not specify the total percentage content. In accordance with the received recommendations, the Packaging Labelling Quality Requirements Sheet was revised – ‘18% (m/m) - total nitrogen (N) in ammoniacal form’.
Statements on the application of corporate governance principles
