Anti-bribery and Anti-corruption

1. Overview

As a global-leading provider of telecommunications equipment and network solutions, ZTE is fully committed to maintaining the high standard of ethics and integrity in its business activities throughout the world. As such, ZTE complies with all applicable anti-corruption and anti-bribery laws and adopts best practice in combating unethical behavior in all countries where we operate. ZTE holds zero tolerance toward corrupt behavior of any form. No matter where we operate around the world, we always uphold the values of transparency and integrity in our interaction with business partners and governments.

ZTE has established a comprehensive anti-corruption program, which has been effectively implemented throughout the whole group (including ZTE Corporation and its subsidiaries and affiliates),with core elements including but not limited to the tone from the top, effective organization, appropriate resources, explicit policies and procedures, comprehensive training, risk assessment, process control, audit and monitor, etc.

Anti-corruption program is among ZTE’s company-level compliance programs assigned with an independent compliance management team of Legal & Compliance Management Department, headed by the Global Chief Compliance Officer (serves as the Project Manager) that has direct access to the Compliance Committee including all top managements. Moreover, the anti-corruption program including its progress, publicities and issues are duly reported to ZTE managements (including all top managements) through the public email of compliance.

ZTE actively attends international anti-corruption summits and organizes compliance communication meetings with different clients, business partners and third parties to share the compliance management experience and to improve anti-corruption compliance program. For instance, ZTE attended the Nordic Ethics & Compliance Summit in Stockholm held in June 10 and June 11 of 2015.

 

 

2. Policies and Procedures

ZTE has issued and implemented clear and detailed anti-corruption policies and compliance procedures applicable to all managements, employees, subsidiaries and affiliates of ZTE Corporation.

ZTE Global Anti-corruption and Anti-bribery Policy and Compliance Guidance (“Policy and Guidance”) applies to the Company’s operations globally, including operations conducted by any business unit, division, department, subsidiary, agent, advisor, intermediary or other representative who acts on behalf of the Company, as well as to the operations of any joint venture or other business enterprise in which ZTE is a majority owner or exercises management control.

The Policy and Guidance is developed based on our analysis of ZTE’s business and the applicable laws across the globe, such as anti-corruption and anti-bribery related laws in China and any other country or region where ZTE operates, FCPA and UKBA in especial. We also engage professional consulting firms to help us with our risk assessment and development of specific compliance policies and procedures for the business activities. The Policy and Guidance stipulates corporate principle policies, specific policies and compliance procedures regarding key risk areas, among others, including: facilitation or “grease” payments, gifts, meals and entertainment, company-sponsored travel, political contributions, community engagement, sponsorship and philanthropy, host government support, using third parties, joint ventures, hiring government officials and their relatives as employees, business dealings with government officials, solicitation of bribes and extortion.

In order to ensure the effective implementation, anti-corruption and anti-bribery related controls and compliance requirements have been incorporated into the processes of the relevant business activities through IT solutions for mandatory implementation, including but not limited to the processes of supplier/business partner’s certification, bidding, purchasing, sales, expense claims etc.

 

 Facilitation Payments

“Facilitation Payments” are payments to a government official, political party or party official the purpose of which is to expedite or secure the performance of a routine governmental action or function. They are sometimes referred to as “expediting payments” or “grease payments” and include, for example, payments to lower level government employees to speed up an administrative process where the outcome is already pre-determined.

ZTE prohibits facilitating payments whether they are in cash or “in-kind.” The Company also prohibits making facilitating payments through a third party, and third parties are prohibited from making facilitating payments on the Company’s behalf or in connection with the Company’s business, with or without the Company’s knowledge.

 

 Gifts and Business Meals and Entertainment

Providing and accepting corporate gifts, meals, hospitality and entertainment must be moderate, with clear and reasonable business purpose and not regularly extended to the same persons.

Gifts, hospitality and entertainment must have a clear business purpose such as related to the promotion of the Company’s products or services during a visit or an exhibition, or to the execution of a contract. Gifts and entertainment must be nominal signs of respect, friendship or appreciation, reasonable and appropriate in context, local custom, culture and business practice, and must be explicitly given without the intent or expectation of any special treatment, consideration or value in return. Gifts and entertainment must be given openly and must not place the recipient under any undue obligation.

ZTE strictly prohibits offering, providing or accepting gifts or entertainment that can appear or be interpreted as bribes or other improper forms of compensation, payment or inducement in exchange for or to influence improper acts, or as a gratitude after-the-fact. Before providing any gifts or entertainment to the outside party, employees should inquire whether this is acceptable by the organizational policy of the receiving party and the local law. If giving or receiving any gifts or entertainment would violate local laws or the company policies of the receiving party then you must not give or accept such a gift.

Most countries apply strict prohibitions against the provisioning of any type of gifts, entertainment, meals, favors or anything of value to a government official. Thus, before any hospitality expenses for a government official incurs or commit to incurring, pre-approval by the Legal and Compliance Department must be obtained to determine if stricter rules than those of this Policy apply to such government official.

The amount of gifts and business meals and entertainment shall be kept within reasonable limits. If there is any special circumstance when a gift or meals or entertainment may exceed the prescribed limit, it is necessary to be pre-approved by the employee’s supervisor and Legal and Compliance representative before implementation.

 

 Political Contributions

'Political contributions' refers to contributions of cash or in-kind support for a political party, cause or candidacy. ZTE prohibits contributions directly or indirectly to candidates for political office and political officials.

 

 Community Engagement, Sponsorship and Philanthropy

Requests for charitable donations and sponsorship sometimes can raise anti-corruption concerns. Therefore, all donations in the name of ZTE to outside beneficiaries require through review and prior approval of Legal and Compliance representative.

Donations may never be made as part of an exchange of favors with any government official or to obtain some improper benefit for the Company, even if the recipient is a bona fide charity. If a government official has promised any benefit, or issued any threat, in connection with a donation request, then the donation request must be denied.

Donations of cash are discouraged, particularly when the beneficiary is affiliated with a government entity. Whenever possible and appropriate, donations should be made “in-kind” with goods or services, rather than money.

 

 Using Third Party

The term “third party” is defined broadly, and includes consultants, contractors, agents, representatives, other intermediaries, suppliers, distributors, and business partners. Legal liability may arise if the Company or employees authorize, fund, or further such a payment knowing it will be used in whole or in part to pay a bribe.

Before entering into a relationship, due diligence on all potential venture partners or significant shareholders should be conducted to identify any business risks and legal risks, including bribery and corruption "red flag" (See the Policy and Guidance for details).

The contract is required for engaging a third party to supply goods or perform services. The contract must be reviewed and approved by a designated legal and compliance representative. The contract should contain a no-bribery pledge, right to audit and other protective provisions regarding books and records. In certain circumstances, the third parties are required to issue the Anti-bribery Undertaking Letter before engagement.

 

 

3. Trainings and Communications

Anti-corruption training and communication is one of the most important parts of ZTE anti-corruption compliance program. Various anti-corruption compliance trainings and publicities are provided to all directors, the managements and staffs within ZTE group every year, and the managements take additional compliance trainings and evaluations as required by the Compliance Committee.

The annually-held on-line training and test of global anti-corruption and anti-bribery is mandatory for all directors, the managements and staffs, which is easy to access via Computer & Handset to the internal e-learning website. In 2014, 46996 managements (including the top management) and staffs, participated in the training program, and achieved a completion rate of 98.51%. While in 2015, 49550 managements (including the top management) and staffs completed the training and test, with a completion rate of 99.82%. Oversea branches, subsidiaries are also covered in the training, and specific sections of local laws and relevant corruption risks have been specifically designed for them to raise their awareness.

Particular attention has been paid to training of managers, as they have the authority of monitoring and guiding employee behavior when dealing with customers, vendors, public institution authorities and other third parties. Every year, ZTE organizes different Management Cadres Workshops, where anti-corruption and anti-bribery compliance study is an essential course.

According to ZTE’s compliance management policies, specific managers should take compliance examination and evaluation before their appointment, reappointment/rotation or dismissal, including training and examination of compliance knowledge relevant to anti- corruption and anti-bribery and evaluation of their own compliance work effect, to further improve the anti-corruption and anti-bribery compliance consciousness and ability of the managers . In 2015, 479 managers have passed the compliance examination and evaluation organized by ZTE Compliance Committee.

ZTE Compliance Committee provides various anti-corruption publicities to all managements and staffs via public emails, compliance blogs, and Process Asset library, etc.

In 2014, ZTE Compliance Committee organized all employees to sign the Compliance Commitment Letter. And also it is necessary for the new employees to sign it before joining the company, and such undertakings are kept in their own files.

 

 

4. Audit and Monitor

ZTE reviews the performance and effective management system of anti-corruption programme every year. ZTE has established the compliance audit mechanism monitoring and reviewing the implementation and supporting the continuous improvement of the anti-corruption program.

Moreover, effective and independent organizations of compliance management have been established to ensure that the anti-corruption program is properly implemented and well monitored. ZTE Compliance Committee is the top governing body of anti-corruption programme, with top managements as the members. As appointed by the Compliance Committee, Legal & Compliance Management Department takes responsibility to implement the decisions and strategy of the Compliance Committee independently of all business units, and report the performance and progress of anti-corruption programme to the top managements every half year.

Every year, the company conducts the compliance inspect and audit referred to the anti-corruption and anti-bribery in order to reevaluate, improve and complete the company’s anti-corruption programme.In the beginning of 2015, ZTE Compliance Committee issued the notice of the Compliance Inspection covering the whole group. That program has been implemented by the independent compliance audit team. Rectification action shall be started mandatory if some shortcomings or noncompliance have been found during the compliance audit. Such rectification cannot be closed until the acceptance has been approved.

Moreover, Compliance Committee provides various channels of whistle-blowing to all managements and staffs via public emails, hotline, compliance blogs, and LCM system, etc. Employees, customers, suppliers and any other third parties are always welcome and encouraged to report any violation by ways of real-name or anonymity. Company has issued the relative regulation to encourage anyone to raise any suspected breaches and protect the real-name reporter without risk of reprisal. In according to such regulation, the Real-Name reporter may get the rewards when the violation behavior has been confirmed.

If necessary, the Compliance Committee may contact the reporter through the mail and telephone to get the more information, and the reporter may also raise the follow-up concern about the report submitted correspondingly at any time.




Advice from the CEO
——Compliance on Anti-corruption and Anti-bribery

 

At ZTE, we highly value integrity, impartiality and sincerity towards all staff, shareholders, clients and partners. We are fully committed to maintaining the high standards of ethics and integrity in our business conduct throughout the world. The continual success of our company is dependent upon the adherence and adoption of these principles. As such, ZTE complies with all anti-bribery and corruption laws and applies best practice in combating unethical behavior in all the countries that we operate in. Bribery and corruption substantially impedes corporate reputation and fair competition and threatens national and international economic and social development. As a global communications leader confronting complicated and changeable risks, ZTE must set high standards of ethical conduct, establish sound and efficient compliance management system. Compliance and legitimacy should always be the priority of the business operation.

Our attitude to bribery and corruption is simple – ZTE holds zero tolerance towards corrupt behavior in all forms. No matter where we operate around the world, in our interaction with clients, business partners and government, we must uphold the values of transparency and integrity. Within the corporate, combating corruption and upholding integrity are highly concerned. Each of us has the responsibility to take a higher ground and regulate our own behavior. In ZTE, compliance and legitimacy is a fine line that one should never cross. Anyone who tries to walk that fine line has to eventually pay the price for it.

It is vital to ensure that all our employees and those who represent ZTE or work on our behalf understand their responsibilities of compliance on anti-corruption and anti-bribery. ZTE Global Anti-corruption and Anti-bribery Policy and Compliance Guidance, together with the local anti-corruption and anti-bribery policies have been designed to provide you with a comprehensive understanding of ZTE’s policy on bribery and corruption, and identify ways in which all our employees and representatives should be conducting themselves. Our reputation for ethical business conduct must never be compromised.

Each of us is responsible for complying with these business practices and for reporting possible violations. If you have questions or concerns about the action you or others are about to take, you should use the Policy and Guidance to help determine the proper course, or you should discuss the situation with your manager or the legal and compliance representative. ZTE does not tolerate retaliation for good faith reporting of suspected misconduct and for expressing concerns.

Anti-corruption and anti-bribery policies and requirements are critically important to all of us at ZTE and to our continued success. Join me in embracing compliance policies and procedures, honoring compliance commitment and making compliance management fundamental to our company culture and business practices.

 

Zhao Xianming
CEO of ZTE Corporation

 

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