2023 Corporate Governance Refresher Course

[Audio] Welcome to the 2023 Code of Business Conduct and Ethics Refresher Course!.

[Audio] This is a 15-minute course, which aims to: To remind us that good governance starts from the Top To deepen understanding of the Corporate Governance ("CG") policies by practice To appreciate our role as stewards of good governance To know that help is available and accessible.

[Audio] Today's course will focus on the following course outline: Definition of Corporate Governance Importance of Corporate Governance The Company's Core Values Corporate Governance Policies, which will highlight the 5 Most Important Things to Know about the policies: Salient features of the policy What the policy expects of JGSHI management and employees to do What the business value is Case Scenarios and examples, and An explanation of the violations After finishing this course, kindly take the 5-item Quiz for you to get your e-certificate by December!.

[Audio] Let us revisit the definition of Corporate Governance. What is Corporate Governance? Corporate governance is a system of rules, practices and processes that help govern and direct the company's actions. Good corporate governance makes sure that the company's activities are aligned with its duties and responsibilities to stockholders and other stakeholders..

[Audio] Now, you might be wondering, what happens to a company that failed to uphold good corporate governance? Let's take a look at 2 real-life scenarios. In 2009, the world witnessed the fall of Indian company Satyam Computer Services when its Chairman admitted that he faked $1 Billion in cash in the company's books, and inflated the company's profit margins. All these, the chairman admitted, started from a "small discrepancy". LINK.

[Audio] Just before news on Satyam came out, the world was shocked to learn about Bernie Madoff and his $64 Billion Ponzi scheme, probably the biggest in history. His fraud fooled even the most experienced investors in the world. Madoff was arrested in 2008 and eventually sentenced to 150 years in prison. LINK.

[Audio] What is common about these cases? These 2 true-to-life cases both show a violation of corporate governance practices, all which would have been avoided had the Company - its management and employees – been practicing good corporate governance..

[Audio] Our Code of Business Conduct is centered on these core values: Entrepreneurial Mindset, Integrity, and Stewardship. JG Summit has an unrelenting commitment to provide our customers with better choices, creating shared success with our stakeholders..

[Audio] Here are some Corporate Governance policies that we will be discussing in this course: Code of Business Conduct Conflict of Interest Policy Anti-Bribery and Anti-Corruption Policy Supplier Relations Policy Whistleblowing Policy.

[Audio] First on the list, the Code of Business Conduct.

[Audio] Our Code of Business Conduct: Focuses on the business practices necessary for JG Summit to achieve world-class success while maintaining the highest standards of integrity Explains what behavior is expected of all JGSHI employees, its subsidiaries and affiliates, the Company's agents, consultants, and other representatives Provides the standards that guide employees' work, and how they should relate to customers, competitors, vendors, and each other.

[Audio] What does the Code expect us to do? We are expected to align all business dealings with the Standards of Company's Code of Business Conduct and the Company's core values of Entrepreneurial Mindset, Integrity and Stewardship.

[Audio] What is the business value of our Code of Business Conduct? It provides guidance on Standards of Business Conduct in the following areas: 1st area of conduct: Conflict of Interest - The Company expects its employees to perform their duties conscientiously and honestly. 2nd area: Gifts - We shall not seek nor accept, offer or give any GIFT from or to third parties intended to influence judgment or create a sense of obligation or as a condition or result of doing business with JGSHI and its subsidiaries and affiliates 3rd: Solicitations for Company Sponsored Employee-Related Activities and Events- The Company may not solicit gifts and sponsorships from third parties except those for company-sponsored employee-related events or activities that are explicitly approved by the concerned SBU Head, BU GM or Corporate Center Head, and it can only be done once per calendar year. 4th: Business meals - Business meals with management approval shall be within the bounds of good taste and with a valid business purpose 5th area: Bribes - We must never directly nor indirectly solicit, accept or offer bribes. 6th: Personal use of Suppliers, Contractors and Professional Service Providers - We must be careful when personally using the services or purchasing the goods of a person or entity that does or seeks to do business with us. 7th: Financial Interest In Third Parties – We must not have a substantial (at least 10%) financial interest in third parties doing business with JGSHI, its subsidiaries and affiliates. 8th: Loans – As a general rule, we must not accept loans from any person doing or about to do business with JGSHI, its subsidiaries and affiliates, except loans from an established financial institution in accordance with its normal lending practices and at interest rates that are generally available to and known by the public. 9th: Outside Business Activity – As a general rule, we must not engage in the practice of profession or any business. However, those that are Done in free time Outside office Will not affect schedule and deliverables Will not use company resources may be allowed, subject to approval from the Executive Committee through Integrity and Ethics Council ("IECON"), as recommended by your Immediate Head. 10th: Competition with the Company - We must not engage in business that directly and significantly competes with JGSHI, or in any business or activity in which JGSHI, or its subsidiaries and affiliates is engaged. 11th: Confidential Information - We must not disclose confidential information unless: Authorized by JGSHI, its subsidiaries and affiliates Those that are public knowledge Those covered by court orders Lastly: Preservation and Protection of JG Summit's Resources - We must always ensure that JGSHI's and its subsidiaries and affiliates' resources, including but not limited to the following, are efficiently, effectively, and responsibly utilized..

[Audio] Let's now proceed to the first implementing policy of the Code of Business Conduct, the Conflict of Interest Policy.

[Audio] Conflict of Interest happens when our personal interest interferes or appears to interfere with the interest of the Company and/or the Group. This policy ensures that all of our work-related decisions, actions or inactions, are above-board and based on sound business principles and judgment, devoid of bias or partiality..

[Audio] What does this policy expect us to do? We are expected to immediately disclose and inhibit from any action or transaction involving a Conflict of interest situation, assess risks to the Company, identify risk mitigation and management measures, and seek approval. We must submit a Self-Disclosure Form ("SDF") through https://jgsoffice.sharepoint.com/sites/cicom at least once a year, as required by the Integrity and Ethics Council [(IECON), and as often as deemed necessary..

[Audio] Here are the steps on how to submit an SDF.

[Audio] What is the business value of this policy? The Conflict of Interest Policy ensures the best interest of the Company and the Group. It is aligned with client requirements and promotes transparency, trust and integrity within the Company..

[Audio] Let's cite some actual case scenarios illustrating conflicts of interest. First case. Columbia University was fined $1,000,000 in 2007 because its leader who runs the University's student loans is also the owner of a company that provides loans to students..

[Audio] In the given case, why is there a violation? Conflict of Interest exists if one's judgment and discretion could be influenced or is influenced by consideration of personal gain or benefit. Personal Benefit refers to gain or advantage, whether material or non-material, directly or indirectly provided to or received, such as financial gain, preferential treatment in personal transaction, and other similar advantages. In the given case, the University official had a conflict of interest as he received personal benefit at the expense of the very institution which he runs..

[Audio] Here's another case. In 2007, former president of the World Bank, Paul Wolfowitz, resigned from the job as the bank's Board of Directors was not satisfied when they found out that Wolfowitz arranged a high-paid promotion for his girlfriend.

[Audio] In the given case, why is there a violation? Conflict of Interest extends to the Company employee's affiliates, which includes relatives or associates. Under our Conflict of Interest Policy, an "associate" refers to third parties with existing or previous close personal or business affiliation or relationship with a Director/Employee/Consultant in view of which the latter's decisions or actions in the best interest of JGSHI or its subsidiaries is unduly affected or compromised. Here, there was a conflict of interest when the former president exercised preferential treatment over his girlfriend, an associate..

[Audio] That ends our discussion of the Conflict of Interest Policy. Next, let us now discuss the Anti-Bribery and Anti-Corruption Policy.

[Audio] This policy: Enforces the Code of Business Conduct and Conflict of Interest Policy of the Company, Sets out guidance for the Company on how to avoid and handle bribery and corruption issues, And is adopted to comply with anti-bribery and anti-corruption laws..

[Audio] What does this policy expect us to do? Unless the Company has otherwise specified, employees may give or accept advertising novelties or gifts only during the Christmas Season. There are no restrictions in the value of the gifts that an employee may receive and accept. However, accepted gifts, with an estimated value of over Php 2,000 (PESOS TWO THOUSAND,) must be reported/disclosed by the employee to the concerned Immediate Head/Integrity and Ethics Council (IECON) at least once a year along with the Online Self-Disclosure of Conflict of Interest, or as often as necessary. Employees shall immediately report any known bribery or corruption to their immediate supervisor, department head, a representative of IECON..

[Audio] What is the business value of this policy? Observance of the Anti-Bribery and Anti-Corruption Policy strengthens and solidifies the Company's stand to maintain appropriate ethical and responsible business conduct and avoid all opportunities for bribery and corruption.

[Audio] Let's take a look at actual cases illustrating bribery and corruption. First case. In 2007, the former Chief of China's State Food and Drug Administration was sentenced to death for accepting conditions from pharmaceutical companies in exchange for favorable reviews of their products. He approved untested medicine in exchange for cash, leading to the death of at least 10 people. Source: LINK..

[Audio] Let's go to the 2nd case. In 2016, PTC, Inc. paid the US SEC $28 Million fine to settle violations of the Foreign and Corrupt Practices Act ("FCPA") for Improper Gifts and Entertainment as 2 of PTC's Chinese subsidiaries provided non-business related travel and other improper payments to a number of Chinese government officials in an effort to win business. Chinese officials were compensated for sightseeing and tourist activities in places such as New York, Las Vegas, San Diego and Honolulu. Employees of the Chinese subsidiaries also provided improper gifts and entertainment to government officials, including electronics such as cell phones. Source: LINK.

[Audio] Why is there a violation? The 2 above-mentioned cases give rise to acts of bribery, which is defined in our policy as, the offering, giving, receiving, or soliciting of any item of value to influence his or her actions, the actions of the other employees or third party. An employee who shall commit bribery and/or corruption shall be dealt in accordance with the appropriate provision/s of the Company's Code of Business Conduct i.e., Offenses Subject to Disciplinary Action (OSDA), without prejudice to any legal action or criminal case which may be filed against the erring employee or third party..

[Audio] That's it for the Anti-Bribery and Anti-Corruption Policy. The next corporate governance policy for discussion is the Supplier Relations Policy..

[Audio] This Policy: Outlines the principles and practices that shall guide and govern all business relationships of the Company, its directors, officers and employees when dealing with suppliers Ensures appropriate level of protection to information assets accessible to suppliers are in place and all dealings with suppliers have acceptable levels of information security.

[Audio] What does this policy expect us to do? As part of the Company, it is our shared responsibility to protect and maintain our Company's reputation for equal opportunity and honest treatment of supplier in all our business transactions. We should always keep in mind that all of these third-party transactions should be done within the Company's best interest, objectives and policies..

[Audio] What is the business value of this policy? The Supplier Accreditation Policy ensures the best interest of the Company and/or Group by: protecting the integrity of the procurement process promoting fairness and impartiality complying with client requirement in line with corporate governance.

[Audio] Let's take a look at sample cases illustrating a violation of this policy. First example: Giving a special favor or advantage to a supplier or company owned by a relative, to ensure that such supplier gets the contract..

[Audio] 2nd example: When you are frequently seen in the company of a supplier on certain occasions or other encounters prior to or during any business transaction with said supplier..

[Audio] Why is there a violation in the given cases? We must maintain an arms-length transaction with third-parties, such as suppliers who are currently doing or who seek to do business with the Company. Arm's length transactions assert that both parties act in their own self-interest and are not subject to pressure from the other party. This preserves the integrity of the supplier selection processes and avoids conflicts of interest..

[Audio] We have come to the last corporate governance policy for today's course, the Whistleblowing Policy..

[Audio] The Whistleblowing Policy: Provides clear reporting procedures of any actual or suspected violation of Company policies, misconduct, malpractice, irregularities or risks against the Company Ensures strict confidentiality and allows anonymous reporting Penalizes false, baseless, malicious reporting Protects the Whistleblower and Witnesses against any form of retaliation and harassment, in compliance with the Revised Corporation Code.

[Audio] What does this policy expect us to do? We are expected to report: Violations of Corporate Governance Rules; Financial and Procedural Malpractice Violations of the Code of Discipline (e.g. Offenses Subject to Disciplinary Action ["OSDA"]) Serious concerns already brought to the attention of the Immediate Head but not acted upon in accordance with the Company's standard reporting procedures.

[Audio] Employees or non-employees may report violations through the i-Speak portal via the Go! Portal at this LINK Meanwhile, non-employees may likewise report via the Company website at this LINK.

[Audio] What is the business value of this policy? The Whistleblowing Policy ensures the best interest of the Company and/or the Group by: avoidance of sanctions and penalties prevention of Company loss and damage Compliance with stakeholder requirement Regulators Clients Suppliers/Business partners Communities.

[Audio] Sharing some actual cases involving whistleblowing First is Tom Petters' case. Tom Petters was a US businessman who also ran a Ponzi scheme, just about the same time that Madoff's own scam was reaching its tail end. Petters' VP for operations, Deanna Coleman, blew the whistle on Petters to US Federal Authorities. Her efforts stopped the fraud from getting any worse. The final tally of the amount involved – still a massive $3.5 Billion..

[Audio] Enron suffered one of the biggest corporate scandals in history thanks to the company's then-vice president, Sherron Watkins. She wrote a letter to her boss regarding the fraudulent accounting practices. She demanded that the company take action. Her letter became public 5 months after she wrote it and was fodder for national outrage against those heading Enron. In spite of the public and congressional scrutiny that followed the whistle-blowing, Watkins continued to work for Enron without being retaliated against..

[Audio] Why is having an effective Whistleblowing System important? Fighting fraud and irregularities requires that these are identified while they are still small and manageable. An effective whistleblowing system that encourages and protects whistleblowers can prevent serious problems from turning into full-blown scandals, thereby effectively managing risk..

[Audio] That ends our discussion on the Corporate Governance Policies. Aside from the iSpeak portal, you may directly reach out to our IECON and IECON Secretariat should you wish to report violations..

[Audio] If you have questions about the policy, please feel free to reach out to the specified people on your screen..

[Audio] We have come to the end of our 2023 Business Conduct and Ethics Refresher Course. We hope you learned something and keep corporate governance principles at heart! To complete your compliance and before you may receive your e-certificate, please take and pass the Quiz by scanning the QR Code flashed on your screen. Thank you and have a nice day!.