Rules of Ethical Conduct for Employees of the State Oil Fund of the Republic of Azerbaijan

Approved by Order No. 07, dated April 06,
2022, of the Executive Director of
the State Oil Fund of the Republic of Azerbaijan.

1.1. The Rules of Ethical Conduct of the Employees of the State Oil Fund of the Republic of Azerbaijan (hereinafter referred to as the “Rules”) establish the rules of ethical conduct for employees (hereinafter referred to in the respective grammatical cases as the “employee” or “employees”) of the State Oil Fund of the Republic of Azerbaijan (hereinafter referred to as the “Fund”), the relations connected with compliance therewith, supervision over compliance with the Rules and liability for the violation thereof, as well as the corporate values and requirements of the Fund.

1.2. These Rules shall apply to all employees.

1.3. Every employee shall set an example for other employees by demonstrating adherence to corporate values and ethical standards in their activities.

1.4. Violation of the requirements of the Rules by an employee, as well as connivance at violations of such requirements by other employees, where it does not entail administrative or criminal liability, shall be deemed a breach of labor discipline and shall entail the disciplinary liability provided for in the Rules.

1.5. In the event that a complaint or other information is received from legal entities or individuals regarding non-compliance with the Rules or the occurrence of a conflict of interest by employees, as well as in the event that such information is published in the mass media, the complaint or other information concerning such employee shall be investigated by the Fund and necessary measures shall be taken.

1.6. Employees shall be guided by statehood, the rule of law, and human rights, and shall comply with the requirements of these Rules in the performance of their official duties and in their activities related to the exercise of their rights and obligations.

1.7. Every person employed by the Fund shall be familiarized with the Rules by the Human Resources Department through written confirmation.

2. Purpose of the Rules

2.1. Achieving the implementation of the following corporate values of the Fund:

Integrity – remaining uncompromisingly loyal to society's highest moral pillars and ethical principles, with inner conviction, to think truthfully, speak truthfully, and reflect this in behavior and actions;

Respect – approaching differences and opposing views with restraint and consideration, by adhering to society's highest moral pillars, ethical principles, and professional standards;

Result-oriented teamwork – engaging in sincere and productive cooperation aimed at achieving specific results;

Responsible initiative – taking a bold approach to assuming responsibility and showing initiative for the timely and high-quality execution of duties arising from the Fund's purpose and mission;

Transparency and accountability – providing complete, timely, accurate and up-to-date information to all stakeholders within the scope of activities.

2.2. Informing employees of the expected behavior.

2.3. Ensuring compliance with the Rules by employees.

3. Work environment and working conditions

3.1. Impartiality. An employee shall be impartial when performing official duties or making decisions, and shall not allow any preference, or the creation of conditions for obtaining such preference, to any person or group of persons on the grounds of race, nationality, religion, language, gender, age, origin, property status, place of residence, beliefs, or membership in public or other associations. An employee shall not permit the interests of themselves or interested parties to influence the performance of their official duties and shall firmly prevent any attempts of unlawful interference.

3.2. Cultural Conduct. An employee shall be polite, attentive, and patient in all interpersonal relations, including those with direct supervisors, senior management, and subordinates. Employees shall maintain speech etiquette, listen patiently during interactions, and refrain from using offensive or threatening language. Furthermore, employees shall avoid decisions, actions (or inactions) that might compromise the honor, dignity, or business reputation of individuals or legal entities, shall not obstruct fellow employees in the performance of their official duties, and shall treat their views with respect. The dissemination of rumors, offensive or degrading materials, or any other information that damages the reputation of other employees is strictly prohibited.

3.3. Violence and sexual harassment. Acts of violence within the Fund, including physical, verbal, written, and other threats, sexual persecution, and all physical actions deemed to constitute sexual harassment, are unacceptable.

3.4. Alcohol and Controlled Substances. To ensure the safety of the work environment and personal wellbeing of employees, as well as compliance with ethical standards and core values, employees are strictly prohibited from consuming alcohol, narcotics, or any other substances prohibited by law at the workplace or while performing their official duties. Accordingly, the use of alcohol, narcotics, or other illegal substances within the Fund, as well as entering the Fund’s premises in a state of intoxication or under the influence of prohibited substances, is strictly forbidden.

3.5. Health, labor protection, and safety. The Fund continually strives to improve health and safety conditions at the workplace for its employees, while aiming to create a physical and psychological work environment that ensures a stable and healthy lifestyle, as well as success in the work process. Occupational health is one of the most critical factors for employees to demonstrate high productivity at work.

3.6. Violations of workplace rules. It is prohibited to make unauthorized use of or steal the Fund’s information, financial resources, telecommunications, computer and other communication systems, vehicles, and other material and technical equipment for personal interests or for any other purposes unrelated to the performance of official duties. It is impermissible to use employee-related data without authorization to improve evaluation results or for similar personal purposes, to misuse the Fund’s name and logo for personal purposes, or to act against the Fund. Engaging in activities that harm the work environment, as well as using the Fund’s resources and working hours for personal purposes, is prohibited.

3.7. Professionalism and competence. The Fund encourages and supports employees in continually developing their knowledge and skills, enhancing their qualifications, pursuing self-improvement, tracking innovations related to their official duties, and maintaining a forward-looking perspective.

3.8. Reporting. It is essential that employees report any violations of the requirements of the Rules. Instances of violation shall be reported to the head of the relevant structural unit or to the ethics officer.

3.9. Open communication. The Fund promotes open communication to enhance work quality, foster team spirit, and achieve high performance. The Fund encourages employees to report work-related concerns and suggestions directly to their supervisors. If the direct supervisor is not the appropriate person to handle the matter, the employee may submit their concerns or suggestions to the relevant manager, the Human Resources Department, or senior management. Supervisors shall at all times be prepared to listen to employees' oral or written submissions.

4. Additional requirements for the ethical conduct of employees holding managerial positions

4.1. An employee holding a managerial position shall:

4.1.1. promptly prevent disputes and conflicts arising within the structural unit under their management, and take appropriate measures to ensure positive working relationships among employees;

4.1.2. accurately define the scope of official duties and powers of subordinates by taking into account their knowledge and skills, and refrain from assigning them tasks that cannot be fulfilled;

4.1.3. inform subordinates in advance of potential ethical issues that may arise in the course of official activities, and instruct them on the recommended actions in such circumstances;

4.1.4. foster an environment that enables subordinates to communicate with them directly, and prevent any bureaucratic obstacles in this regard;

4.1.5. create equal opportunities for the promotion of subordinates, taking into account their knowledge, skills, and personal qualities;

4.1.6. shall not induce subordinates to commit actions (or omissions) or make decisions that are contrary to law and universally accepted ethical standards;

4.1.7. take necessary measures to ensure compliance with the Rules by subordinates;

4.1.8. shall not exert undue influence on subordinates, personally or through intermediaries, in connection with matters driven by personal interests;

4.1.9. shall not allow discrimination, preferential treatment, or the granting of privileges toward subordinates on the basis of subjective criteria;

4.1.10. shall respect the honor, dignity, and personal integrity of subordinates, and shall refrain from harsh treatment, baseless criticism, and false allegations against them.

5. Conflict of interest

5.1. Conflict of interest – a situation or set of circumstances where the personal interests of an employee, their close relatives (spouse, grandparents, parents, adoptive parents, full and half-brothers and sisters, children, grandchildren), or persons with whom they have founding or dependency relationships conflict, or may conflict, with the interests of the Fund, and affect or may affect the personal or financial interests of the employee or their close relatives through the adoption of decisions, participation in the adoption of such decisions, or the performance of other actions related to official powers, which may consequently impair the proper fulfillment of duties, including the making of objective decisions.

5.2. In the event of a conflict between an employee's official duties and their personal interests, the employee shall not allow these interests to affect the objective and impartial performance of official duties, shall not use official duties for personal interests, shall prioritize the Fund's interests over their own personal interests, and shall avoid any actions that lead or may lead to a conflict of interest.

5.3. From the moment an employee becomes aware that a conflict of interest may arise or has arisen (potential or actual conflict of interest), the employee shall immediately provide the following information in writing to their direct supervisor and the ethics officer:

the employee's first name, last name, patronymic, position, and structural unit;

the nature of the potential or actual conflict of interest.

5.4. Upon being notified of a conflict of interest, the supervisor shall, within their authority, ensure that measures are taken to prevent or resolve the conflict of interest by reassigning the employee's official duties that cause or may cause conflict of interest to other employees, or by modifying such official duties.

5.5. Information regarding a conflict of interest obtained by the head of the relevant structural unit and the ethics officer, as referred to in paragraph 5.3 of the Rules, is confidential and may not be disclosed to other employees or third parties.

5.6. To identify a conflict of interest, each specific case shall be investigated on an individual basis, considering all prevailing circumstances.

5.7. Close relatives of the Fund's senior management shall not occupy any posts directly subordinate to them. Persons failing to comply with the provisions of this clause shall, within 30 calendar days following its discovery, voluntarily rectify the breach, be reassigned to another position precluding subordination, or, should this prove impossible, one of such persons shall be dismissed from office.

5.8. For the purpose of minimizing the risk of occurrence of conflicts of interest, employees shall:

• be governed exclusively by the interests of the Fund within the scope of decision-making on any business issues and the execution of official duties;
• abstain from financial and other undertakings capable of leading to a conflict of interest;
• make disclosures concerning personal interests that run counter to the Fund's business interests or may give rise to a potential conflict of interest;
• preclude the utilization of official positions for private interests.

6. Confidentiality

6.1. All oral, written, or electronic information generated or used for the implementation of the Fund's activities shall be considered the Fund's proprietary information. Such information is deemed the property of the Fund and must therefore be maintained confidentially, accurately, and securely, and protected against accidental or intentional disclosure, modification, or destruction. Confidential information related to the Fund's activities shall be protected, used solely for the Fund's purposes, and disclosed only to relevant parties.

6.2. An employee of the Fund shall not use the information acquired during their official activities, as well as after the termination thereof, for personal interests, and shall prevent the documents they handle from falling into the hands of persons outside the Fund.

6.3. Except as otherwise provided by legislation, employees shall uphold the confidentiality of any information acquired during the discharge of their official functions concerning the personal data, honor, and dignity of other employees.

6.4. Inquiries received from mass media shall be answered exclusively by the Fund's Public Relations Department. In order to prevent the dissemination of confidential information related to the Fund's activities, responding to requests and inquiries from other third parties shall be carried out in accordance with the Fund's Information Policy.

7. Prevention of corruption

7.1. Within the Fund, in any transaction or operation, it is prohibited to: receive, give, or offer bribes in cash or other forms; perform actions (or omissions) and adopt decisions aimed at obtaining material and non-material assets, privileges, or concessions; threaten, promote, or reward other employees or individuals for any of their actions to serve personal goals and interests; request or accept gifts—for oneself or others—provided or appearing to be provided as a reward by third parties in exchange for the performance of an employee's duties; seek methods contrary to established rules to obtain privileges; or enable external intermediaries to interfere in such matters. Where illegal material or non-material benefits (including gifts), privileges, or concessions are offered or promised to an employee (this shall not apply to the acceptance of minor gifts not exceeding the threshold stipulated by the Law of the Republic of Azerbaijan "On Combating Corruption" and instances of standard hospitality), the employee must decline them. Otherwise, the employee must promptly notify their direct supervisor. In cases where an employee is uncertain about whether to accept a minor gift or avail themselves of standard hospitality, they shall seek the opinion of their direct supervisor.

7.2. In the event that an employee receives a gift exceeding the sum prescribed by the Law of the Republic of Azerbaijan "On Combating Corruption" for reasons beyond the employee's control, such gifts shall be considered the property of the Fund and shall be handed over to the relevant persons.

8. Public and political activity

8.1. An employee's religious or political activity, or affiliation with a religious or political association, shall not cast public doubt concerning the unbiased and objective performance of their official duties.

8.2. An employee shall not use their official position to induce other employees to participate in the activities of political associations and religious organizations.

8.3. An employee is prohibitedfrom establishing or assisting in the establishment of political associations (with the exception of trade unions) and associations of religious organizations within the Fund.

8.4. Unless it falls within their official duties, an employee shall refrain from critical public commentary, public speeches, and public evaluation regarding the activities of the Fund and its management (except for unlawful activities). This provision shall not apply to speeches or academic writings related to the employee's scientific and pedagogical activities.

8.5. An employee shall not commit actions that may damage their own reputation or lower the prestige of the Fund.

9. Execution of orders, decrees, and assignments

9.1. An employee is obliged to execute the written orders, decrees, and instructions issued by their direct or higher-level supervisor in compliance with legislation and within the limits of their powers.

9.2. Should an employee be convinced that an order, decree, or assignment is contrary to legislation, they must submit a written explanation to their direct or higher-level supervisor. They shall require their direct supervisor to confirm such order, decree, or assignment in writing. Despite obtaining a written confirmation, if the employee continues to believe that it is contrary to legislation, they may refuse to execute the order, decree, or assignment, provided, however, that they shall justify their action in this case as well.

10. Environment

10.1. The Fund complies with requirements concerning the enforcement of rules and norms on environmental protection and ecology, and undertakes all possible efforts and measures to minimize the negative impact of the Fund's activities on society, nature, and the environment.

10.2. The Fund bases its approach to protecting the environment on the relevant legislation of the Republic of Azerbaijan and advanced international best practices. Accordingly, the Fund encourages employees to adopt the following behaviors:

10.2.1. to perform official duties with environmental considerations in mind;

10.2.2. to reduce waste through the reuse of materials;

10.2.3. to ensure the efficient use of resources and materials (water, electricity, office supplies, etc.);

10.2.4. to use resources that have the minimum possible impact on environmental deterioration.

11. Qaydalara əməl olunmasına nəzarət

11.1. Ongoing supervision over compliance with the Rules shall be exercised by the Executive Director of the Fund on the basis of subordination, and by the heads of the structural units of the Fund in the line of duty.

11.2. The ethics officer shall exercise general supervision over compliance with the Rules.

11.3. To ensure compliance with the rules of ethical conduct established by the Rules and to coordinate matters related to their application, the ethics officer shall perform the following duties:

11.3.1. provide clarifications (comments) regarding the Rules and issue recommendations on compliance with the Rules for the purpose of preventing and remedying violations of the Rules;

11.3.2. receive complaints and information from employees and other persons concerning violations of the requirements of the Rules, and ensure their investigation;

11.3.3. submit proposals, recommendations, and presentations for the resolution of issues arising from complaints and information received regarding violations of the requirements of the Rules and from investigations conducted;

11.3.4. assess the state of compliance with the Rules within the Fund and summarize information thereon;

11.3.5. submit an annual report to the Executive Director regarding the measures implemented concerning violations of the Rules by December 20 of the respective year.

11.4. The report specified in clause 11.3.5 of the Rules shall reflect information regarding the state of compliance with the Rules by employees,educational initiatives and investigations carried out in the field of ethical conduct, the status of reviewing incoming applications, measures taken to addressviolations of the Rules, and other matters related to the application of the Rules.

12. Inquiries concerning violations of the Rules

12.1. Should an employee have any questions concerning the implementation of the Rules, they may submit a verbal or written inquiry to their immediate supervisor, the Human Resources Department, or the ethics officer.

12.2. Reports concerning breaches of the Rules must be submitted in writing to the ethics officer. Reports regarding rule violations shall be accepted immediately and registeredon the same day.

12.3. The ethics officer shall protect the confidentiality of any information obtained by them regarding violations of the Rules.

12.4. Employees shall report to theirimmediate or higher-level supervisor, or the ethics officer, regarding any actions or omissions known to them involving breaches of the Rules.

12.5. It is prohibited to intimidate, subject to pressure, cause material or moral damage, insult and threaten, or demean the honor and dignity of persons who report non-compliance with the Rules.

13. Rules for conducting investigations

13.1. Reports regarding violationsof the Rules shall be reviewed by the ethics officer within 10 business days.

13.2. Reportsconcerning corruption-related offences shall be examined in accordance withthe Law of the Republic of Azerbaijan "On Combating Corruption" and within the timeframe and manner determinedby the Law of the Republic of Azerbaijan "On Citizens' Appeals.”

13.3. Experts from relevant structural units may be involvedto assist in the investigation of rule violations, provided that confidentiality is maintained.

13.4. During the course of an investigation, all factual circumstances of significance for the proper resolution of the case shall be examined thoroughly, completely, and objectively.

13.5. An employee under investigation has the following rights:

13.5.1. to familiarize themselves with the materials of the investigation;

13.5.2. to submit a written objection against the ethics officer conducting the investigation if there are grounds giving rise to doubt regarding their objectivity and impartiality;

13.5.3. to participate in the investigation, and submit explanations, motions, documents, witnesses, and other evidence;

13.5.4. to receive written notification of the outcome of the investigation;

13.5.5. to appeal to the Executive Director of the Fund or to a court in the event of disagreement with the outcome of the investigation.

13.6. If, following an investigation into a rule violation, the ethics officer concludes that the employee under investigation should not be held subject to disciplinary action, they shall notify the employee thereof in writing.

13.7. If, following an investigation into a rule violation, the Ethics Officer concludes that the employee under investigation should be held subject to disciplinary action, they shall submit the investigation files, along with a covering letter, to the Fund's Commission on Rules of Ethical Conduct for review and adoption of an appropriate decision.

14. Commission on Rules of Ethical Conduct

14.1. The composition of the Commission on Rules of Ethical Conduct (hereinafter referred to as the “Commission”) and the secretary of the Commission shall be determined by the Executive Director of the Fund.

14.2. Meetings of the Commission shall be deemed quorate if at least three members of the Commission, including the Chairperson of the Commission, are present.

14.3. The Commission shall examine the materials submitted by the ethics officer within 5 business days and formalize its decision by means of a protocol signed by the Chairperson of the Commission.

14.4. Resolutions of the Commission shall be passed by a simple majority of votes of the members participating in the meeting.

14.5. Where it is deemed appropriate to subject the employee under investigation to disciplinary liability, the Commission's resolution to that effect shall be presented to the Executive Director.

14.6. Where it is deemed inappropriate to subject the employee under investigation to disciplinary liability, the Commission's resolution to that effect shall be presented to the ethics officer.

14.7. The secretary of the Commission shall perform the following duties to organize the meetings of the Commission and coordinate its work:

14.7.1. informs the members of the Commission of the date, location, and agenda of the meeting;

14.7.2. drafts the protocol of the Commission meeting;

14.7.3. forwards the resolutions adopted by the Commission to the relevant parties;

14.7.4. executes organizational, administrative, and other tasks associated with the activities of the Commission.

14.8. The Commission reports directly to the Fund's Executive Director and is accountable to them.

15. Liability for violation of the Rules

15.1. Any violation of the requirements of the Rules by an employee shall result in disciplinary liability.

15.2. Where an employee violates the requirements of the Rules, the Executive Director of the Fund may impose one of the following disciplinary measures on them:

15.2.1. issuing a reprimand;

15.2.2. issuing a severe reprimand with a final warning;

15.2.3. impose a fine, provided it is envisaged in collective agreements, in an amount not exceeding 1/4 of the monthly salary;

15.2.4. terminate the employment contract under under sub-clause "ç" of Article 70 of the Labor Code of the Republic of Azerbaijan.

15.3. When applying a disciplinary measure for the violation of any provision of the Rules, the following shall be taken into account:

15.3.1. the degree of the breach;

15.3.2. the effect of the breach on the Fund's operational efficiency and reputation;

15.3.3. the employee's employment record;

15.3.4. any active disciplinary measures against the employee;

15.3.5. any mitigating or aggravating circumstances revealed during investigation.