CORPORATE GOVERNANCE AND BUSINESS ETHICS
Code of ethics and management of sensitive aspects
Compliance with contractual requirements and legal obligations is a key must-do for the business and we verify it constantly. This year we have set up a dedicated compliance unit.
As regards the Parent Company, we report expenditure of some € 223,000 for fines and penalties.
We believe that proper conduct is good for the company. It does not reduce the company's ability to generate value for itself and for stakeholders but, on the contrary, helps to gain and retain credibility, reputation, and consensus.
Because of this, it is essential that directors, management and all employees act according to the highest ethical and professional standards.
To guide our conduct we have our Charter of Values, which also includes, among others, the principle of work ethics and responsibility.
We also support the code of conduct and self-discipline code promoted by the ABI (Italian banking association). Other sensitive aspects (conflicts of interest, corruption, and internal relations) are addressed in house regulations and procedures.
This year we have defined a code of ethics for the insurance business. This joins the code of conduct prepared the previous year for the asset management business, as part of the project for the Group Code of Ethics, which is now nearing completion.
TRASPARENCY AND CONFLICTS OF INTEREST
To assure the utmost transparency and correctness of governance and in market relations, avoiding the onset of conflicts of interest, we:
- Have a three-tier control system, i.e. the Board of Statutory Auditors, the Internal Audit & Control Committee, and the Internal Controls Area. This year 654 on-site internal inspections were performed at the Group's commercial banks
- Assure timely market disclosure of significant events
- Apply a code of conduct for transactions with related parties (parties who have positions or equity interests enabling them to exercise significant influence on corporate governance). This year no related-party transaction involved the obligation of market disclosure pursuant to CONSOB Regulation 11971
- Apply rules of conduct for the management of price-sensitive information, market abuse, and for control of transactions involving the financial instruments of the bank and its subsidiary/associate companies by relevant persons (directors, statutory auditors, and top management). If they exceed € 5,000 p.a., they must be notified to the head of the Legal & Corporate Affairs Area
- Maintain an independent stance vis-à-vis auditing firms, awarding engagements and advisory service assignments to their associate firms only with the Board of Statutory Auditors' approval. This year the fees paid by Banca Monte dei Paschi di Siena for such activities for firms belonging to the KPMG network totalled about € 573,000.
ANTI-MONEY LAUNDERING AND FIGHT AGAINST CRIME
We co-operate with other banks, institutions, and control authorities, to combat crime, with special reference to:
- Laundering of the proceeds of illegal activities
- Financing of terrorist activities
- Prevention of fraud to the detriment of customers (readers should refer to the "Customers" chapter).
We do so operating in compliance with the law and using appropriate organisational and technological systems and house regulations. These permit prompt flagging of suspicious identities and transactions.
We also invest in training (1,081 employees involved for a total of 3,290 hours) and perform careful checks, also envisioning sanctions for operator negligence (seven in 2005 and two in 2004).
This year we have developed an electronic procedure that compares and links the "black list", consisting of the lists circulated by the relevant authorities, with our general customer list and with the company's accounting services. This permits more effective monitoring of any such transactions, which are reported, as necessary (first to the Internal Controls Area and then to the Italian Foreign Exchange Bureau (Italian acronym UIC)) for the necessary actions (freezing of assets, for example).
We examined 896 cases during the year, 537 of which were reported to the UIC.
We have also made ourselves available and provided support to the judiciary and to investigatory authorities for investigation of transactions executed by persons flagged by the banking industry system (162 cases in Banca Monte dei Paschi Siena). There were 13 legal proceedings for non-notification of the UIC.
PREVENTION OF CORRUPTION
We do not tolerate any form of corruption.
This is a commitment - also made internationally with our support of the UN Global Compact - that we put into practice via an organisational model compliant with Italian Legislative Decree 231/2001 (concerning legal entities' administrative liability), which envisages:
- Rules and procedures to prevent crimes being committed (fraud, bribery and corruption, etc.)
- Processes for the management and control of financial resources in activities at risk
- - An oversight body to assure good operation and constant updating of the model. This year we completed revision of the risk map to include also the new crimes subsequently defined by Legislative Decree 231. Checks in this respect were also performed as part of routine internal audit programmes, as well as by specific investigation of some more sensitive activities
- - Employee training (4,312 employees this year, for a total of 10,637 hours)
- - Reporting and disciplinary systems. This year there were no disciplinary sanctions for employees or legal proceedings against the company.
We require our suppliers to comply with Legislative Decree 231, on pain of cessation of the business relationship.
In foreign operations we do not feel any particular risk of corruption and fraud.
Our activities in countries featuring a high rate of corruption are in fact modest, i.e. € 570 million of loans, mainly of a commercial nature and mainly concentrated in Russia, Iran, Algeria, India, the Philippines, and Romania.
This is also true as regards low-tax countries, i.e. transactions totalling € 1.7 billion, mainly of a financial nature, in India, Singapore, Hong Kong and, to a lesser extent, in Kuwait and in the United Arab Emirates.
SAFEGUARDING OF HUMAN RIGHTS
Within our sphere of influence we champion and assure respect of human rights as indicated in various international declarations and conventions. It is a commitment that we have also made publicly via our adhesion to the UN Global Company.
We do not tolerate any form of discrimination, either during hiring or employment of staff, where we assure equal opportunities and accessibility for the disabled (reference should be made to the "Staff" chapter) or in our commercial activity, which we perform in a perspective of full financial inclusion (and in this case reference should be made to the "Customers" chapter).
In the workplace, we combat any cases of constraint, exploitation, and harassment and we take care of people's safety and health. In this respect, we adhere to the principles of the Social Accountability 8000 standard, which we also promote among our suppliers (see also the "Staff" and "Suppliers" chapters).
We exclude involvement in financing of terrorist activities - also by preventing money laundering - and of wars. As regards the latter, in 2000 we decided to abandon the arms industry and today we are not present in the central register of arms trading loans prepared by the Italian Cabinet Office every year pursuant to Italian Law 185/1990.
WE HAVE LONG DECIDED NOT TO FINANCE THE ARMS TRADE
We take part in the action of civil and humanitarian institutions and organisations to safeguard basic economic and social rights, such as health, housing, schooling, and work (reference should be made to the "Customers" and "Community" chapters).
We recognise the gravity and urgency of problems connected with climate change. We are therefore committed to promoting eco-efficiency and renewable energy among customers (readers should refer to the "Environment" chapter).