Samsung SDI

Recently, there has been an increasing compliance-related risk both at home and abroad due to punitive damages, criminal penalties, and class action lawsuits. Moreover, there is a greater focus now on corporate social responsibility, which has become more standardized. Therefore, companies recognize that compliance management and ethics management are not just simple risk-management tools; they are crucial to business success and must be thoughtfully and rigorously implemented.

Samsung SDI has established and implemented a compliance program which encourages employees to voluntarily comply with business related laws, including antitrust laws. In May 2010, at our 40th anniversary ceremony, we declared compliance management and began focusing our efforts on establishing a foundation for it, including development of a compliance system and compliance training to employees by organizing a compliance team. This compliance system, inaugurated in October 2010, is an integrated portal system which supports compliance activities. It includes inspection, self-test functions and operation standards, education materials, manuals, the latest trend in laws and regulations, Q&As for employees as well as suggestions. Moreover, we made operation processes and standards clear by getting an approval from the the board of directors for the highest regulation in compliance regulation Compliance Management Guidelines and other sub-regulations including Regulation on Operation of Compliance Officer, Code of Conduct for Employees and Fair Trade Compliance Management Regulations. In 2011, we will establish a circular process of prevention, regular inspection(monitoring), evaluation, after management. And we will prevent the risk of violating laws in 6 areas, including market competition, product liability, financial accounting, intellectual property, environment and labor. The compliance management education will be executed in various ways such as online curriculum, lectures by outside experts and education for suppliers. Moreover, we will implement on-site inspection through cowork with departments and identify and improve legal compliance risks. Besides this, we will raise employees’ compliance awareness and therefore make compliance management part of our corporate culture by strengthening the roles of compliance practice leaders and each department’s officers in charge of compliance practices, which is to establish a voluntary compliance management system in each department.

We conducted corruption prevention training for all employees with the declaration of compliance management in 2010. We conducted trainings for various levels including assistant administrators, employees, resident employees and new employees, and strengthened training for departments which are related to stakeholders such as suppliers and customers. We plan to provide corruption prevention training to all employees in 2011. Specifically, we plan to provide the training to department heads and upper-level employees in Korea and to resident officers and local managers in China. In turn, they will provide education to their subordinates. In addition, the corruption prevention training will be included in the entry level course for new employees and employees receiving promotions.

Suppliers, customer contact points and other departments with a high risk of corruption are subjected to inspection at all times. The probe focuses on transaction performance and collusive relationships with certain firms. We also look for signs of fraud by systematically reviewing abnormalities in payments. Samsung SDI gathers information about ethical misconduct through the reporting function on our ethical management website. For two months starting in August 2010, we conducted a regular corruption inspection across all departments and dismissed 11 violators and disciplined 39. In 2011, our plan is to strengthen fraud monitoring aimed at preventing corruption with suppliers and also inside the company and then reinforce fraud inspection at our overseas operations such as those in China.