Ethics and Compliance

Value Chain Boundaries

Impacts of this topic reach Argos’ procurement processes and the supply chain.Supliers
Impacts of this topic are evaluated throughout all Argos operations.Argos
Impacts of this topic reach our industrial and/or retail clients.Clients
Impacts of this topic reach our communities, authorities and other individuals of the society.Society

Our management approach

Added value to the company

Integrity is the guiding principle for the way we do things in harmony with our corporate cultural pillars, knowing that ethical behavior is a shared corporate value that is reflected in the decisions we make as a company.

Added value to society

Developing our operations in an ethical and transparent manner promotes the strengthening of relations based on trust with all our stakeholders. As a result, we foster better business environments by positively impacting local communities and society as a whole.

103-2 102-16 Corporate culture pillars

Group achievement
Respect
Leadership
Learning
Sense of purpose
Flexibility
Transcending results

103-2 Initiatives, commitments and policies


Code of Business Conduct

103-2 Governance

Employees from different positions have cross-functional roles and belong to different committees to ensure a transparent and ethical environment under the coordination of the Conduct Officer. Five of the nine Vice Presidents belong to the Governance Committee, which supports the Executive Committee.

The Operating Conduct Committee receives organizational reports and represents all regional areas with members who serve as research officers on different categories, such as labor relations, fraud, corruption, money laundering and financing of terrorism, communities, and conflicts of interest. The actions of these officers are transversal to the entire organization and are coordinated by the Conduct Officer, who is a high-level executive.

We are part of the Central Committee of Conduct that Grupo Argos leads and in which strategies, experiences, and good practices are aligned between the enterprises of the group.

We are signatories of the UN Anti-corruption Call to Action, an appeal from business to governments to address corruption and foster systems of good governance.
Employees at Rioclaro Plant, Colombia Region

2016 performance

  • We continued designing and structuring our Global Compliance Program, which provides the policies, guidelines, and protocols that will allow us to more efficiently manage risks associated to fraud, corruption, money laundering and financing of terrorism, as well as noncompliance with applicable antitrust legislation.
  • We implemented compliance controls in some of our key operative processes, such as third party relationships, procurement, charitable donations, and political contributions.
  • We conducted 222 training sessions on antitrust matters in all of our operations.

Regulatory Compliance

In 2016, we fully complied with environmental laws and laws related to the supply and use of products and services.

Our Competition Policy defines standards and guidelines for employees in relation to competitors and the market. In general, our compliance and transparency standards exceed minimum legal requirements.

206-1 Due to Colombia cement market conditions, we report on some current investigations with no final decision for Argos:

  • The Colombian Superintendence of Industry and Commerce initiated an investigation on August 21, 2013, regarding five Colombian cement companies, including Argos, for alleged commission of restrictive business practices. Consequently, it also initiated an investigation regarding four of our employees. The evidentiary stage of these proceedings concluded in December 2014. We are addressing the matter with the certainty that we have always fully complied with the law, and we are confident that Colombian authorities will ultimately recognize this. In May 2016, a request for information issued by the Superintendence of Industry and Commerce was properly answered. The legal action is pending.
  • In December 2008, the Superintendence of Industry and Commerce imposed a financial penalty on Argos and two other Colombian cement companies in the amount of COP 923 million each, for alleged restrictive business practices. In the same action, the legal representative of the three companies was fined in the amount of COP 138 million. This ruling was appealed for reversal by Argos and subsequently confirmed by the Superintendence in January 2010. Argos filed a lawsuit against that ruling before the Colombian administrative jurisdiction, and in a decision issued December 3, 2012, the Administrative Court of Cundinamarca ruled that both decisions were invalid, thereby exonerating the company and the legal representative of all fines. The Superintendence of Industry and Commerce decided to appeal, and the final decision is currently pending before the State Council.

Transparency Hotline

Our Transparency Hotline is a communication channel for many of our stakeholders. It allows for anonymous reporting and identifies behaviors that contradict our Good Governance Policy and Code of Business Conduct, as well as all other company Policies and any other internal or external norms.

Transparency Hotline operation

1.Reception of calls or emails by an external call center

Email: lintransparencia@argos.com.co
Colombia: 018000522021
USA: +1(888)5676629
Panama: 011008001571011*
Dominican Republic: 18001485009*
Honduras: 8002799378*
Landline phone

2.The call center sends the case to the Research Officers according to a previous classification.
3.The Operating Conduct Committee, led by the Conduct Officer, reviews the cases.
4.The Governance and Procurement Committee reviews the most relevant cases.
5.Cases are resolved and responded to,
and corrective actions are taken.
2016
Communities Quantity
Impacts on the environment 13
Impacts on mobility 4
Impacts on water 0
Impacts on air 0
Noise impacts 1
Impacts due to vibrations (Peace, rest, and tranquility) 4
Visual impacts 2
Damage/impacts on private property 20
Unfulfilled commitments 5
Road safety 12
Total communications received 61
Tracking of communications received in 2015 that were still open 28
Total communications addressed 89
Total communications closed 76
COMMUNICATIONS CLOSED WITH ADMINISTRATIVE OR LEGAL ACTIONS 1
2016
Labor Practices Quantity
Disrespect, damage to working environment 42
Possible human rights violations, harassment 3
Possible human rights violations, respect to working / personal time balance 0
Possible human rights violations, discrimination 4
Possible human rights violations, freedom of association and collective bargaining 5
Possible human rights violations, fair compensation according to law 0
Total communications received 54
Tracking of communications received in 2015 that were still open 21
Total communications addressed 75
Total communications closed 48
COMMUNICATIONS CLOSED WITH ADMINISTRATIVE OR LEGAL ACTIONS 3
2016
Corruption Quantity
Giving / receiving illegal payments 16
Undeclared conflict of interest 9
Purchasing manipulation, tenders 5
Bribery, Foreign Corruption Practices Act -FCPA 1
Total communications received in 2016 31
Tracking of communications received in 2015 that were still open 14
Total communications addressed during 2016 45
Total communications closed in 2016 27
COMMUNICATIONS CLOSED WITH ADMINISTRATIVE OR LEGAL ACTIONS 3

In 2016 we provided training on transparency issues to 3,640 employees and suppliers.

Employee at Honduras offices, Caribbean and Central America Region

103-2 Upcoming challenges

  • To implement of the Global Compliance program in all the regions in which we operate.
  • To implement the training and communications plan for compliance matters in all regions.
  • To consolidate the Transparency Hotline as the official channel to receive reports related to violations of our Code of Business Conduct in the CCA and USA regions.
  • To assess operations in terms of compliance risks (fraud and corruption) in the CCA Region.
  • To provide trainings on the organization’s policies against fraud, corruption, asset & money laundering and financing of terrorism.
2016 – 2018 goals
···
· We will implement a large-scale compliance program.
· We will expand the coverage of the training to other stakeholders outside of Colombia, including suppliers for CCA and USA regions.
· We will structure a training and dissemination plan of the Code of Business Conduct, ensuring that the message reaches all regions and is translated to all the required languages.
· We will audit our Transparency Hotline to improve the effectiveness of feedback and complaint submissions.