Corporate Governance and Ethics:

1. Governance, Ethics and Global Trends Corporate Governance and Ethics: USEK Monday April 14th, 2014 Chahdan Jebeyli Group Head Legal & Compliance

2. Relation of Modern Corporate Governance ( CG ) and Ethics:

3. Causes of 2007 Global Financial Crisis: • Global Financial Crisis exposed significant shortcoming in the Governance of Corporates  and their culture and ethics. • Cases of : Interest Rate Fixing/Libor, Tax Evasion, Money Laundering, Mis-selling of Investment, Securities Fraud, Sale of Derivative with no Real Economic Basis, Self Dealing, Conflict of Interest, Management Compensation. • Greed prevailed over transparency. • Compromised checks and balance. • A Governance model favoring short term profit & focus mainly on interest of particular stakeholder, over the interest of the General Public.

4. The New York Times - MARCH 14, 2014 F.D.I.C. Sues 16 Big Banks Over Libor Rigging The Federal Deposit Insurance Corporation has sued 16 big banks that set a crucial global interest rate, accusing them of fraud and conspiring to keep the rate low to enrich themselves. The banks, which include Bank of America, Citigroup and JPMorgan Chase in the United States, are among the world’s largest.

5. Global Crisis • Need for a Reliable, Predictable, Proper, Fair, Sustainable and Profitable  CG model • Targets Durable Revenues • Need to Follow International Best Practices • Banking Sector and Global Payment System  Comply with Global Rules

6. Global Crisis • Modern Corporate Governance (MCG): A set of relationship between a Company’s management, board and shareholders to  ensure that business is done competently, with integrity, in accordance with applicable laws and with due regard to the interests of all its stakeholders / those who are affected by its performance.” • Consumers/Clients/Depositors • Staff • Government: Tax Authority

7. Element of MCG according to Basel Committee on Bank Supervision- Oct 2010 :

8. BDL Circular No 106  Article 2 All banks operating in Lebanon must: 1- Comply with the principles of Basel Committee for Enhancing Corporate Governance in Banking Institutions. 2- Prepare their own “Corporate Governance Guide” that includes: - Governance organizational chart - Governance Implementation Approach - Board of Directors’ size, role, responsibility and composition (number of independent, executive and non-executive members)

9. BDL Circular No 106  Article 2 Work charter of each of the Board committees Rules to assess performance of Senior Management and Board of Directors on their compliance with Good Governance Criteria on compensation of the Board and Senior Management Succession Plan for  Board of Directors and Senior Management’s members The Disclosure policy adopted for preparing financial statements A Code of Conduct

10. Coverage of Code of Conduct:   • Transparency: Accounting and products component ( Fair, complete, accurate and not misleading ) • Recruitment and appointment: Fair and based on objective criteria • Safety of Work Place • Free of Violence and Harassment • Anti Corruption • Environmental / Social Responsibility • Conflict of Interest / Self Dealing • Anti Tax Evasion /Tax Equality • Gift & Donations • Fair Competition  

11. Necessity to follow International StandardModern Corporate Governance and Ethics are Corner Stone

12. CORRUPTION PERCEPTIONS INDEX 2013. Lebanon

13. We need Governanceas much as we need Ethics State Corporate That’s is where the Modern World is That’s where we should progress at Private Sector and Public Sector Levels to Pass the Public Confidence Test

14. THANK YOU