All of our activities in Tofaş are guided by our commitment to the rules of business ethics and “zero tolerance” against corruption and bribery, both of which are the cornerstones of our corporate culture. We regulate our ethical values ​​and the rules we have to follow with the “Tofaş Code of Conduct and Code of Practice” document. We define our perspective on combating corruption in our Anti-Bribery and Anti-Corruption Policy.

These rules and policies address the following issues: 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. In addition, there are mechanisms for reporting violations, as well as disciplinary rules and sanctions to be applied in case of violation, and the process is followed up precisely. We consider the 10th principle of the United Nations Global Compact (UNGC), to which Koç Holding, one of our main shareholders, is a signatory, as an integral part of our anti-corruption approach.

a. Anti-Corruption Policy and Systems

Within the scope of business ethics and anti-corruption, we follow a compliance program that includes risk-based assessment, monitoring, auditing, reporting and training activities carried out under the coordination of Tofaş Ethics Committee and Internal Audit Department. 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 periodically through audits conducted by the Internal Audit Department. Furthermore, business processes and financial statements of the company are audited at least twice a year, by independent audit teams.

The Tofaş Board of Directors bears the primary responsibility for ensuring that the activities of the company are carried out in compliance with the relevant legislation, the Tofaş Code of Ethics and the Tofaş Anti-Bribery and Anti-Corruption Policy. Activities regarding this responsibility are carried out by the Tofaş Ethics Committee appointed by the Board of Directors. Ethics Committee consists of the CEO, the Chief Legal Counsel, the Director of Human Resources and other relevant directors, and convenes every 6 months or upon the call of one of the members. The Tofaş Ethics Committee is responsible for: ensuring that the ethical principles are understood and implemented within the company, communicated with internal and external stakeholders, managed effectively, and revised when necessary; the investigation and conclusion of reports on violations by employees and third parties; the establishment of investigation committees where necessary; the execution of resolutions in accordance with disciplinary procedures; and informing relevant authorities.  The sanctions, including termination of a contract, which are to be applied in case a violation is determined, are stipulated in the Tofaş Code of Ethics and the Personnel Regulation.

The Tofaş Ethics Committee is also responsible for monitoring and supervision of compliance with the anti-bribery and anti-corruption policy and ethical rules. The activities regarding the supervision of compliance with these rules and policies are performed regularly by the Internal Audit Department on behalf of the Tofaş Ethics Committee. When determining the risks regarding ethics, corruption, and bribery, risk-based assessments are taken as a basis. This ensures considering many factors, such as the nature and location of the activity, the internal and external risks to which the activity is exposed, and the current internal controls. The risk of corruption and bribery is among the significant criteria used when determining internal and external risks.

Based on the results of risk assessments carried out by the Internal Audit Department, an audit plan is prepared for reviewing and strengthening the effectiveness of internal controls at the required points. The audit plan is submitted to the Audit Committee for consent and approval. The units that are considered to be relatively riskier according to the risk-based assessment are primarily included in the audit plan or are routinely checked. In the audit activities performed, the risks of corruption and bribery are considered, and these risks are evaluated through eliminatory 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 verbally to the General Manager and the Audit Committee affiliated with the Board of Directors. The complaints, problems and examination results that are considered important by the Internal Audit Department and the Ethics Committee are reviewed and assessed in the relevant Board Committees that convene at least four times a year. In the audits carried out in 2019, no bribery case was encountered.

We hold our employees responsible for protecting our values ​​and ethical principles and for acting in accordance with working principles, and we take their written commitments in this regard. In this context, our anti-bribery and anti-corruption policy have been communicated to all of our employees. In addition to the written commitments we have received from our existing employees, our newly-hired colleagues are also provided with our code of ethics and anti-bribery and anti-corruption policy, in exchange for their signature. Furthermore, a session about ethical rules has been included in the compulsory orientation training delivered to newly recruited personnel. Since December 2017, we have been implementing a unit-based program that includes regular informative meetings on ethical rules for the existing personnel.

Giving importance to ethical rules and ensuring the employees’ compliance with these rules are among the primary responsibilities of all senior and middle level 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. The obligation to fully comply with such codes and policies applies not only for our employees but also for our business partners and internal and external stakeholders, including all members of our Board of Directors and our suppliers and dealers. We consider compliance with business ethics and anti-corruption as an integral part of our activities and we strive for continuous improvement.

We continuously communicate our codes and policies regarding business ethics and anti-corruption with our business partners through our web site.

Before establishing business partnerships and selecting business partners, such as suppliers and dealers, we carry out due-diligence that includes bribery and anti-corruption issues among others; we select business partners who can comply with our respective rules and policies; and we evaluate them on the basis of various criteria, including ethical compliance.

In the selection of the companies that will supply goods and services or that will serve as a representative, we pay regard to the objective criteria, including issues on the risk of corruption and bribe, set out in the internal procedures.  Preliminary evaluations of such companies are carried out jointly by the respective business unit and purchasing unit. After the evaluation of alternatives, the final selection among the pre-qualified companies as well as the determination of the price are performed by the purchasing unit, considering the most advantageous conditions for Tofaş. Basically, the principles of ethics and transparency are adopted in the company selection process. Supplier companies are paid for their services only if such services are in accordance with the legal regulations and comply with the codes and policies of Tofaş. Necessary mechanisms for the supervision of business processes have been established to ensure the appropriateness of payments made for services; and the effectiveness of such mechanisms is reviewed regularly by the Internal Audit Department. In the contracts we execute with our business partners, we refer to relevant laws as well as ethical codes of conduct and application principles, and we clearly state that non-compliance with such laws and codes will constitute good cause for termination. Moreover, we monitor the performance of our business partners in the fight against corruption and bribery. To the best of our knowledge, there was no case of bribery or corruption in relation to our business partners in 2019.

The adequacy of our Company’s anti-bribery and anti-corruption policies, mechanisms and reports is evaluated independently by the Board Committees at least once a year. In this context, the mechanisms, systems and procedures we have developed regarding anti-bribery and anti-corruption were evaluated independently by the Audit Committee of the Board of Directors of Tofaş and found appropriate. The result of the evaluation is included in the minutes of the committee meeting dated 04.02.2020.

To ensure compliance with applicable regulations and the company’s own rules, we follow the individuals and companies that are blacklisted based on information we collect from public authorities, international data providers and various media sources, including social media channels. We identify the dealers, suppliers, contractors, and customers who are known or suspected to have been engaged in bribery, and we initiate a process in accordance with our procedures for the termination of ongoing contracts with such parties.

We have established easily accessible communication channels for notifications on violations of the Code of Ethics and the Anti-Bribery and Anti-Corruption Policy. Such communication channels are periodically reminded to employees, suppliers, and other stakeholders to raise their awareness. Our employees, business partners and all other stakeholders may report any cases that they believe are not in compliance with our rules and policies to [email protected] by stating their names or on an anonymous basis. In addition, notifications made through other communication channels of the company, i.e. corporate websites and customer services hotline, as well as the notifications made by employees are also evaluated.

The confidentiality of both the information shared and the respective investigation is guaranteed by the Ethics Committee. The Ethics Committee also guarantees that employees and stakeholders who report a bribery and/or corruption case will not experience any adverse consequences. This is clearly emphasized in the Tofaş’s Code of Ethics, Code of Practice, and Anti-Bribery and Anti-Corruption Policy.

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, whether directly or indirectly, to the activities or campaigns of any political parties, politicians, or candidates. We exchange information with public institutions within the framework of our transparent relations and respond explicitly to the requests for information on our sector. Furthermore, we endeavor to utter the sectoral problems and development opportunities through the studies of sectoral non-governmental organizations. If a public institution is our client or if there is a tender procurement process, we act in accordance with the rules of free competition without compromising our principle of full compliance with laws and procedures.

b. Reporting of the Fight against Corruption

To ensure the familiarity with and adoption of Tofaş’s rules, we provide online training and reminder activities regarding our Code of Ethics and our Anti-Bribery and Anti-Corruption Policy. These training programs are intended not only for our employees but also for our suppliers and dealers and include theoretical information as well as case studies which they may encounter in business life. In 2019, a total of 4,337 people, 2,656 of which were the employees of dealers, were trained online.

Also, in 2019, our employees were asked to resubmit their conflict of interest statements.

Our online training program that was launched in 2016 was updated in 2018. Our online training program was improved based on the feedback received from our suppliers and dealers who participated in our online training courses, including ethical code of code of conduct and bribery. Besides, in order to prioritize the issues to be included in the sustainability report, we consulted with our dealers and suppliers as well as non-governmental organizations. Accordingly, 95 percent of our stakeholders identified business ethics and anti-corruption as issues to which priority should be attached.

In 2019, no bribery case was experienced in our Company and no bribery-related case was reported through our communications channels. In 2019, no corruption-related allegation was made against the company. Tofaş received 23 notifications on various issues, reported via the company’s communication channels, in 2019. The results of examinations of these notifications are summarized in the table below.

Our Company rigorously evaluates all ideas, opinions, and suggestions from our stakeholders regarding ethical compliance as well as fight against bribery and corruption and integrates them into its existing practices. In this context, we cooperate with the Ethics and Reputation Society (TEİD), a non-governmental organization that is the most active platform in Turkey, on the fight against corruption and bribery. TEİD has a significant role in providing our company with the flow of information on anti-bribery mechanisms from various stakeholders. Two executives of our company are members of the Board of Directors of TEİD. The Internal Audit Department is following closely and participating in TEİD’s activities where information and opinions on the fight against corruption are shared. Except for the membership fee, no additional fee is paid for the support received from TEİD.

The effectiveness of the anti-corruption program and reporting system of our company is assessed by TEİD on an annual basis through the Anti-Corruption Program Effectiveness Survey, developed based on the guidelines of OECD and UN on best practices, and is improved in accordance with respective recommendations. To follow international developments in this field, our Company continues its membership to, and active participation in, the working groups established under TEİD, UN, OECD, and B20.

In line with its goal of being the industry leader in the fight against corruption, our company has participated in Europe’s largest collective action on anti-corruption. Tofaş is one of the 140 signatories of the “Declaration on the Common Principles of Business Ethics”, as the first and only company from the Turkish automotive sector and encourages its large suppliers to participate in the same collective action.