Strictly following the laws and regulations related to anti-corruption and business ethics, such as the Anti-Unfair Competition Law of the People’s Republic of China, and the Anti-Money Laundering Law of the People’s Republic of China, Haitian International has set up a series of regulations to standardize the Group’s management mechanism. In addition, all employees, suppliers and partners are required to strictly abide by the integrity and ethical standards and work together for the Group’s sustainable development. In daily management, the Group incorporates business ethics matters (e.g., anti-corruption) into corporate risk management and takes it as the guidance to conduct business audits. All business sectors are audited by the Internal Control Department at least once every three years.

Each year, we audit targeted entities which are selected from every business sector through on-site or remote auditing. The process of selection is combined with random and risk-driven according to professional advices of senior auditors and approval of auditor leader. The annual audit work plan and resources are reviewed and agreed with the Audit Committee. Besides annual plan, ad-hoc projects and investigative work are conducted as may be needed.

Our audit scope covers risks identified from annual risk assessment. For instance, to monitor risks of interested party transaction and procurement, we audit identification of interested parties (suppliers included), management of interested parties, process of procurement and etc.

For any finding or concluded issue, our internal auditors report directly to the Audit Committee without the need to consult with management, and via the Audit Committee to the Board. Our internal auditors have unrestricted access to all areas of the Company’s business units, assets, records and personnel in the course of conducting its work.

The Group provides regular integrity education and training to employees and directors every year. We organize online anti-corruption training, which includes the dissemination of laws and regulations on anti-corruption and operational compliance, interpretation of the latest Corporate Governance Code and relevant listing regulations, clarification of the responsibilities of personnel at all levels in anti-corruption efforts, and case analysis. An E-Learning platform has also been set up to provide exercises and tests for employees and track their completion rate of the training.

In 2023, a total of 7,382 employees completed online training with a focus on business ethics and anti-corruption, covering 100% of full-time and part-time employees for the financial year. All members of the Board of Directors and senior management also participated in the training on anti-corruption.

Additionally, we provide business ethics and anti-corruption training to all suppliers and contractors. It is stated in the supply agreement that our suppliers and contractors must be informed of our business ethics and anti-corruption policies. They are prohibited from engaging in any form of commercial bribery in their business activities with us. They are also required to establish anti-corruption rules and regulations and take corresponding measures to regulate their employees’ business behaviors. All suppliers and contractors are required to sign the Supplier Integrity Letter to confirm their full understanding of our policies and the consequences for violation. We will immediately terminate the business relationship with any supplier that breaches such integrity clauses. In 2023, we provided business ethics and anti-corruption training to 100% of our suppliers and contractors.

The Internal Control Department of Haitian International has established for thirteen years and plays a crucial role in monitoring corporate governance. The department has more than ten professional auditors who conduct audits for the company.

The Board of Directors is responsible for the leadership and supervision of the audit process, and conducts research and processing of more complex and substantial audit projects involving finance, infrastructure, engineering and technology. The Internal Control Department carries out audit supervision of the company’s financial income and expenditure and various economic activities in accordance with relevant policies. In performing its duties, it has unrestricted access to all categories of business entities, assets, records and employees.

The Internal Control Department conducts audits of business segments to evaluate and improve the effectiveness of risk management, internal controls and corporate governance processes, helping the company to achieve its objectives, and carries out ad hoc projects and investigations as requested by management or the Board of Directors. The frequency of audits is determined by factors including identified risks, structural changes, the overall materiality of each entity, the results of previous internal audits, the opinion of the external auditor, management’s opinion, etc. Each business segment is audited at least once every three years.

The Internal Control Department shall consult the audited entity before issuing the audit report, and if the audited entity disagrees with the audit report, it shall further verify, investigate and confirm. The audited entity shall formulate a rectification plan based on recommendations made due to serious internal control deficiencies, and the Internal Control Department shall follow up on the rectification plan.

The Internal Control Department of Haitian International is responsible for reviewing and improving the effectiveness and compliance of internal control functions. It conducts internal audits and invites third-party institutions to conduct external audits to prevent and timely detect any bribery and corruption risks. At the end of each year, it formulates the internal audit work plan for the following year. The scope of the audit includes: compliance and effectiveness of internal business ethics standards and anti-corruption policy, the adherence of all departments and units to relevant laws, regulations, and internal standards, and opportunities for improvement in internal controls and operational management. The Internal Control Department conducts internal audits of all domestic operating bases annually and conducts one internal audit of operating bases in four different countries overseas each year, ensuring coverage of all overseas operating bases every two years. Based on the results of internal audit inspections, it reports relevant risks, violations, and countermeasures to the management, thereby continuously promoting the improvement of the anti-corruption and business ethics system and policies. In 2023, Haitian International conducted 17 internal audits. While enhancing the internal audit system of the Internal Control Department, the Group also engages third-party organizations to conduct external audit activities to prevent and promptly identify any bribery and corruption risks.

Additionally, our Group also reviews the business ethics standards and policies every three years to ensure that the current policies always comply with the latest regulatory requirements.