China Petrochemical Corporation (Sinopec Group) is a super-large petroleum and petrochemical group established in July 1998 on the basis of the former China Petroleum Corporation. It is a state-owned enterprise solely invested by the state and a state-authorized investment organization whose controlling shares were held by the state. Since its birth, the Group has developed a well-balanced and smoothly-running corporate governance structure that features integration of power and responsibilities, and established a management system that conforms to the market environment.
Sinopec Group executes in accordance with the law investors’ powers inclusive of benefiting from assets, decision-making of major issues and selecting executives concerning the state-owned assets of its wholly-owned, equity-holding and equity-sharing branches and subsidiaries. Also pursuant to the law, the Group operates, manages and monitors state-owned assets, and bears the responsibility to retain and increase the value of those assets. China Petroleum & Chemical Corporation (Sinopec Corp.), whose controlling share is held by Sinopec Group, launched its global IPO of H shares at Hong Kong, New York and London Stock Exchanges in October 2000. In August 2001, Sinopec Corp. issued A shares in its home market and was successfully listed in Shanghai.
Internal Control
Since the establishment of a leading group and department dedicated to internal control in 2003, Sinopec Group has developed a companywide internal control system. The system has undergone amendment and update annually in light of the changes of external supervision and internal management, and in conjunction with problems and opinions arising in implementation. Meanwhile, the Group conducts systematic risk assessment on a regular basis and formulates risk management strategy and solution accordingly. As a result, risks of all kinds are kept under control and the level of business administration and ability of risk prevention is improved.
Sinopec Corp. makes continuous effort to regulate its operation and improve its corporate governance. It adopts a corporate governance structure consisting of meeting of share-holders, board of directors, supervisory committee and senior management team. Three special committees affiliated to the board of directors, namely strategic committee, audit committee and remuneration & performance evaluation committee, function as independent directors. In 2009, Sinopec Corp. re-elected its fourth board of directors and supervisory committee. Personnel adjustment was made to its senior management. Adjustment was also conducted to the three special committees and heads of departments of the Headquarters, subsidiaries, branches, and related institutions.
Anti-Corruption
Sinopec Group intensifies its anti-corruption efforts with focus on identifying sources of corruption, handling key cases and ensuring that the corrupted be punished.
At the beginning of 2007, the Group formulated and put into force a regulation that obligated each institute to sign the Agreement on Business Ethics and Principles with the other party during trading activities including construction, procurement, sales and asset transaction. In 2009, based on good practices and experience accumulated over the years, the Group has gradually built up a culture that advocates integrity and stifles corruption. Such a culture serves as a solid basis for the company’s sustainable and balanced development.
Audit
Sinopec Group puts forth persistent efforts to make its audit system more regulated, standardized and with larger extent of IT application. The level of supervision has been further enhanced. Basic management has been strengthened. Firstly, the Group places special focus on translating audit supervision outcome into concrete actions to correct existing problems and giving full play to the important role audit plays in corruption prevention. Secondly, the Group lays particular emphasis on audit supervision on external economic activities and parameters that have effects on cost and profitability, which saved expenditure of RMB 1.442 billion. The Group makes great efforts to enhance special audit on management and profitability, promote audit on economic responsibilities, carry out independent audit on internal control, and deepen the special audit on investment projects. Thirdly, the Group engages in innovating its audit management and strengthening the basis of audit supervision. Project heads will be held responsible for audit operation. The supervision mechanism featuring dual management will be developed and implemented. The Group has revised a number of important audit regulations including Codes on Internal Audit. Audit Information System (AIS) has been applied to all branches and subsidiaries. The development of an integrated audit information system was in steady progress.
Anti-monopoly
A firm advocator of fair competition and a strong opponent against monopoly, Sinopec Group strictly observes Chinese laws and regulations on anti-monopoly and unfair competition. Embracing the principles of honest operation and fair competition, we have never maligned our rivals or acquired business secrets by illicit means. Neither have we ever abused our favorable market position to trespass consumer rights and interests. We abide by the laws and regulations of countries that invest in us, trade with us or are our customers. Based on cooperation and mutual benefit, we are committed to protecting the interests of all stakeholders.