Corruption risk management

Russian Railways’ corruption risk management is an integral part of the Company’s risk management and internal control system. It is implemented in line with the Guidelines for Corruption Risk Management Russian Railways’ Order No. 192/r dated 1 February 2021. as amended in 2021, Risk Management and Internal Control Policy Approved by the Company’s Board of Directors (Minutes No. 17 dated 27 May 2019) and enforced by Russian Railways’ Order No. 1223/r of 18 June 2019. and other documents.

Russian Railways’ Board of Directors Minutes No. 6 dated 30 November 2021. approved the anti-corruption risk appetite statements under which the Company follows the principle of zero tolerance for corruption in any form or manifestation.

The Company’s business units conducted an annual assessment of their corruption risks and compiled registers of such risks for 2021, with mitigation action underway.

To assess the effectiveness of the risk management and internal control system from an anti-corruption perspective, the Company carries out an annual internal audit and regularly reports to the Audit and Risk Committee of Russian Railways’ Board of Directors on the results of anti-corruption monitoring and the effectiveness of the implemented anti-corruption measures. The Code of Ethics for Internal Auditors Russian Railways’ Order No. 3034/r dated 25 December 2019. establishes main ethical norms and rules, including the objectivity principle, the 'no conflict of interest' principle and the unified mandatory rules of conduct for internal auditors.

In addition, for internal control purposes, Russian Railways’ business units and controlled entities managing regional and functional units carried out over 100 anti-corruption compliance audits, with follow-up corrective activity underway.

The established system requires that due diligence be conducted on companies intending to enter into contract with Russian Railways, including bidders competing in a tender or auction for a contract to supply goods, work or services for Russian Railways’ needs.

In accordance with Russian Railways’ regulations, the counterparty is required to include a beneficial owner certification form in its submissions for concluding a contract, which is also reflected therein. All draft contracts require approval of the Security Department that can be granted after the successful completion of a comprehensive security audit.

Contracts with counterparties also include anti-corruption and tax clauses that require the parties to comply with the relevant regulations and provide for the termination of the contract if the counterparty is found to engage in corruption.