As Tofaş, we are committed to adhering to the rules of business ethics, which are the cornerstones of our corporate culture, and to a zero-tolerance approach to corruption and bribery in all our activities. We regulate our ethical values ​​and the rules we have to follow with “Tofaş Code of Conduct and Code of Practice” document. We define our perspective on combating corruption in our Anti-Bribery and Anti-Corruption Policy.

In our rules and policies, compliance with business ethics, protection of all kinds of company assets and information, prevention of conflicts of interest, issues to be taken into consideration in establishing business partnerships, occupational health and safety, anti-bribery and anti-corruption issues are discussed. In addition, mechanisms for reporting violations and disciplinary rules and sanctions to be applied in case of violation are among the pillars of these documents and the process is followed with precision. We recognize the 10th principle of the United Nations Global Compact (UNGC), of which is Koç Holding, one of our main shareholders, is the signatory, as an integral part of our anti-corruption approach.

Within the scope of business ethics and combating corruption, we follow a compliance program that includes risk-based assessment, monitoring, auditing, reporting and training activities under the coordination of Tofaş Ethics Committee and Internal Audit Department. In order to prevent corruption, the principle of “separation of duties” in business processes has been adopted and necessary control points have been defined. The functionality and effectiveness of business processes and control points are reviewed by periodic audits conducted by the Internal Audit Department. In addition, business processes and financial statements of the company are audited at least 2 times a year by independent audit teams.

The Tofaş Board of Directors is primarily responsible for ensuring that the company's activities are carried out in compliance with the legislation, the Tofaş Code of Ethics and the Tofaş Anti-Bribery and Anti-Corruption Policy. This responsibility is carried out by the Tofaş Ethics Committee appointed by the Board of Directors. Ethics Committee; consists of CEO, the Chief Legal Counsel, the Director of Human Resources and other relevant directors, who convene every 6 months or upon the call of one of the members.

The Tofaş Ethics Committee is responsible for the dissemination and understanding of ethical principles within the company, communication with internal and external stakeholders, revision of necessary conditions, effective management, review and settlement of employee and third parties' violations, establishment of investigative committees where necessary and is responsible for informing the authorities. The sanctions which will be applied in cases of infringement until the cancellation of the contract are organized in the Tofaş Code of Ethics and Personnel Regulations.

Tofaş Ethics Committee is also responsible for monitoring and auditing of anti-bribery and anti-corruption policy and compliance with ethical rules. The auditing activities related to compliance with these rules and policies are performed periodically by the Internal Audit Department on behalf of the Tofaş Ethics Committee. Risk-based assessment is the basis for determining the risks related to ethics, corruption and bribery. Risk-based assessments take into account many aspects such as the nature of the activity, where it is carried out, the internal and external risks that are exposed, and the current internal controls. Corruption and bribery risk are important criteria for the detection of internal and external risks. For example, the units that operate directly with the public and private suppliers and customers are considered to be more risky.

According to the results of risk assessment prepared by the Internal Audit Department, an audit plan is prepared for reviewing and strengthening the effectiveness of internal controls at required points. The audit plan is submitted to the Audit Committee for its opinion and approval. On the other hand, the units that are considered to be relatively more risky as a result of the risk-based assessment are included in the audit plan or are routinely checked. In the audit activities performed, the risks of corruption and bribery are handled and these risks are evaluated by eliminating controls. In case the controls related to the existing risks are considered insufficient, corrective actions are taken by the relevant units. The Internal Audit Department submits the results of the audit activities in writing and orally to the General Manager and the Audit Committee attached to the Board of Directors. Important complaints, problems and examination results are reviewed and assessed in the relevant Board Committees, which meet at least four times a year through the Internal Audit Department and the Ethics Committee.

We consider protecting our values ​​and ethical principles, acting in accordance with working principles as the responsibility of our employees and take their written commitments. In this context, our policy of bribery and anti-corruption has been communicated with all of our employees. In addition to the written commitments we have received from our current employees, we introduce our new colleagues who are joining us with code of ethics, anti-bribery and anti-corruption policy, in exchange for their signature.

In addition, ethical rules have been introduced in the compulsory job entry trainings given to newly recruited personnel. Also, as of December 2017, the current personnel have been periodically introduced a program of information meetings on ethical rules per unit basis. Giving importance to ethical rules and ensuring compliance of employees are among primary responsibilities of all senior and middle managers.

It is explicitly stated in our Anti-Bribery and Anti-Corruption Policy that Tofaş employees will not be held liable for any losses incurred by the company due to their compliance with the code of ethics. In addition to our employees, all members of our Board of Directors, suppliers and dealers are obliged to fully comply with these rules and policies. We see compliance with business ethics and the fight against corruption as an integral part of our activities and we strive for continuous improvement.

We conduct the communication of our rules and policies regarding business ethics and anti-corruption with our business partners through platforms such as our web site and periodicals. Our online training program has been developed with the feedbacks we have collected from our suppliers and dealers who have received our online training covering ethical rules of conduct and bribery. In addition, dealers, suppliers and non-governmental organizations were consulted during the prioritization of the issues to be included in the sustainability report. Accordingly, our stakeholders identified 95% of business ethics and anti-corruption issues as the top priority.

We are conducting due-dilligence studies including bribery and anti-corruption issues in the establishment of various business partnerships and the selection of business partners such as suppliers and dealers, we select business partners who can comply with our respective rules and policies and subject them to assessments including ethical compliance criteria prior to the establishment of the partnership.

In the selection of the companies that we will receive goods and services or that will work through representation, the objective criteria set out in the internal procedures are protected. These criteria include issues such as the risk of corruption and bribery, and the pre-evaluations are jointly carried out by the related business unit and purchasing unit. During the process of the company selection that provide the criteria and of the determination of the fee, alternatives are evaluated by the purchasing department and the most advantageous company is chosen to work with Tofaş.

In principle, the principles of ethics and transparency are adopted in company selection methods. These companies are paid only for their services in accordance with the legal regulations related to Tofaş rules and policies. In order to guarantee the appropriateness of service payments, the necessary control points have been established on the business processes, and the effectiveness of these checkpoints is periodically tested by the Internal Audit Department.

In our contracts with our business partners, we include laws, ethical codes of conduct and application principles, and we declare that this will be a cause of termination if not complied. In addition, we monitor the business partners' performance in combating corruption and bribery. There are no cases of bribery or corruption in our business partners in 2018.

In order to recognize and adopt the Tofaş Code of Ethics, our Company conducts its online training and reminder activities, including our Code of Ethics and our Anti-Bribery and Anti-Corruption Policy.

In addition to the theoretical information, our training program, which includes case examples in business life, covers not only our employees but also our suppliers and dealers.

As of the end of 2018, a total of 6,879 people, of which 3,239 are dealers employees, were given online training. Thanks to the online trainings we commissioned in 2016, we believe that the awareness of anti-bribery and anti-corruption approach is improved further than the previous reporting period. (Online ethics training, whose update was completed in the first quarter of 2018, was assigned to all employees as compulsory education and by the end of 2018, 1,629 personnel completed this training). In 2018, all employees were asked to renew their statements about whether they are in a position to cause a conflict of interest.

The adequacy of our Company's anti-bribery and anti-corruption policies, mechanisms and reporting is evaluated independently by the Board Committees at least once a year. In this context, the mechanisms, systems and procedures we have developed in the field of anti-bribery and anti-corruption were evaluated independently by the Audit Committee of Tofaş Board of Directors and found appropriate. The results of the evaluation are included in the committee meeting minutes dated 07.02.2019.

In order to ensure compliance with current regulations and the company's own rules, we follow the individuals and companies that are blacklisted based on information received from public authorities, international data providers and various media such as social media sources. According to our procedures, we provide the identification of the vehicles, suppliers, contractors and customers who are known or suspected to have bribed and initiate the termination process of ongoing contracts with such parties.

The Code of Ethics and the Anti-Bribery and Anti-Corruption Policy are easily accessible and open. In order to create employee awareness, communication channels are periodically reminded to employees, suppliers and other stakeholders. Our employees, business partners and all other stakeholders may report any cases that do not comply with our rules and policies to the e-mail address : etikkurul@tofas.com.tr with their names or on an anonymous basis. In addition, corporate addresses of the company or notifications shared with employees are also evaluated.

The confidentiality of shared information and related investigation is guaranteed by the Ethics Committee. The Ethics Committee also guarantees that employees and stakeholders who declare bribery and corruption are not subject to any negative circumstances. This is clearly emphasized in the Tofaş Code of Ethics and Code of Practice and the Anti-Bribery and Anti-Corruption Policy.

In 2018, no bribery cases were experienced in our Company and no bribery related issues were communicated to us in our communications channels. In 2018, no corruption claims were raised against the company. In 2018, Tofaş received 17 notifications on various issues via communication channels. The examination results of the notifications received are summarized in the table below.

Notifications Received via Whistleblowing Channels	2018	2017	2016	2015
Disciplinary Decisions	4	5	3	2
Incompatibility Non-Detected	13	9	6	3
Total	17	14	9	5

As it is clearly stated in our Code of Ethics, Tofaş is not a party to any political or ideological thought, tendency or organization; we do not provide in kind, material or moral support directly or indirectly to the activities or campaigns of political parties, politicians and candidates. We exchange mutual information within the framework of our transparent relations with public institutions and respond clearly to the information requests about our sector. In addition, we endeavor to address the sectoral problems through the work of sectoral non-governmental organizations. In cases where public institutions are in the position of a client or in the case of procurement, we act in accordance with the rules of free competition without compromising the principle of full compliance with laws and procedures.

Our Company carefully evaluates, and integrates all ideas, opinions and suggestions that come from our stakeholders regarding ethical compliance, bribery and corruption, into its existing practices. In this context, it is in cooperation with TEİD (Ethics and Reputation Society), the most active platform and non-governmental organization in the country, on the fight against corruption and bribery. TEID plays an important role in providing information flow to our company from the stakeholders on anti-bribery mechanisms. 2 of our company executives are active in the Board of Directors of TEİD. The activities of TEID which share information and opinions on the fight against corruption are closely monitored by the Internal Audit Department. There is no additional fee for the support received from TEID except for the membership fee.

The effectiveness of our company's anti-corruption program and reporting system is assessed annually by TEID with the Anti-Corruption Program Activity Survey, based on OECD and UN best practice guidelines, and improved in accordance with development recommendations. Our Company is also a member and active participant in the TEID, UN, OECD and B20 working groups to follow international developments in this field.

Our company has participated in Europe's largest anti-corruption collective action in this area, in line with its goal of being the industry leader in the fight against corruption. Being one of the 140 signatories of the “Business Ethics Common Principles Declaration”, TOFAŞ remains the first and only signatory in the automotive sector and encourages our large suppliers to participate in the same collective action.