Adrienn Nagy dr. Leader Corporate Services Business Supervision and Process Management Budapest 14/11/2007 Procurement Audits

AGENDA What is Audit about? Procurement Lifecycle Audit Audits in Recommendations Audit Effects Process Transparency Ethical Behavior

Audits Audit Outcomes affect: Procurement processes Practices Ca. 30 Procurement Audits Prepared Logistics Road transport; Rail / Barge Chemical Road;Bitumen Road + Follow-up IT IT Procurement General Notebook Tender 2007 Retail Tebodin project management regional Contract execution BT Pipeline Technical specification Tank cleaning Bid evaluation Procurement Policy elaboration (Moscow) / update / supervision Contract testing: compliance, archiving Audit Initiated by CS DirectorGCFO Inter-business Procurement Leader Procurement Process Subsidiary Audits MOL Romania + Follow-up Branch Audits Pakistan/Kazakhstan Moscow + Follow-up Audit performed by: CS Business Supervision Set-up in Q Monitor Procurement Practices Introduce and unify best practices Yearly Audit Plan and single initiations to investigate Audit Report with Recommendations Audit Follow-up Regulations update, Process improvement -Contact for Suppliers complaints, networking -Advises on Transparency, Ethical and Procurement Process issues -Cartel Risks; follow-up, risk mitigation -Breach of Contract supervision Suppliers Relations

Procurement Lifecycle Audit AUDIT Investigates the complex Procurement Process 6. Post-evaluation of Supplier Performance GRADING 1. Supplier pre-qualification 2. Bidding Procedure 3. Bidding Evaluation Negotiation and communication with Suppliers 4. Contracting 5. Contract Performance Fair & Reliable Guarantee issues, Eventuel Breach of Contract Basis for Invitation to Bid (ITB) AUDIT RECOMMENDATIONS

Impact of Audit Recommendations Process compliance with laws and Group regulations Process rationality and efficiency Input for decision making Opens discussion on future procedure, introduces new best practices New control point elaboration AUDIT FOLLOW-UP! PROCESS MONITORING AND FEEDBACK TO PROCUREMENT AUDIT RECOMMENDATIONS PROVIDE

Positive Effects of Audit Recommendation How to communicate suppliers in a bidding process – fair procedure & international standards Enforce open gates principle – always invite newcomers from the relevant market New Group level Ethical Code Draft Procurement Ethical Code Initiates Procurement Process Changes & Practices Affects Change in Regulatory Environment Process Transparency & Ethical Behavior

TRANSPARENCY and Procurement Why to enhance TRANSPARENCY? What is to be TRANSPARENT? Common Business Value Duly Keeping Processes & Deadlines Open Gates Principle TRANSPARENT Communication with Suppliers

Process Transparency - We expect the same Approach! MOL ensures that Suppliers are familiar with the Procurement Processes, deadlines. OPEN GATES PRINCIPLE: market surveys and invitation of new Suppliers NO Cartels / effective detection / MOL surveys Supplier activity and has the possibility to submit Cartel suspicion to National Competition Authorities or even to the EU Commission MOL expects fair and complete documentation, correct pricing from Suppliers in a Bidding Keep deadlines, do not wait for the last seconds when submitting your documents in a Bidding NO Cartels / individual pricing / ensure individual strategic behaviour in the bidding Correct Contract Performance / warranty issues / influences evaluation and the fact that you get on the invited list for the next Bidding! MOL OFFERSYOU ARE REQUESTED TO

ETHICS and Procurement Corporate Ethics Group level OBLIGATIONS & EXPECTATIONS MAIN Source: MOL Group Ethical Code International Standards & Best Practice Ethical Code is to be attached to all contracts for signature NEW

Ethical Behavior We expect the same Approach! All information with regard to relations between MOL Group and its suppliers is considered confidential. We will not misuse our position in the marketplace, Creating equal conditions for all our business partners. We expect our Bidding and contracted partners to act in the same manner. Avoid personal financial interests and do not misuse occupied position. Honesty and Integrity We condemn any form of bribery or the acceptance of unlawful business advantage We discourage the offering of gifts, and we forbid our employees to accept them. Mutual Trust and Respect Conflict of Interest Prohibition of Unlawful Advantage Ethical Code is attached to all Procurement Contracts but have to stick to it throughout the Bidding Process!

Contact & Thank You for your attention! § § PROCUREMENT AUDIT helps MOL Group Procurement to be EXCELLENT in the CEE Region.