Our Compliance Team draws up internal guidelines and agrees them with the Executive Management. A new guideline was formulated in 2009 for handling employee data from our personnel administration systems which defines obligations relating to the handling of employee data that extend beyond the statutory requirements. Furthermore, the Compliance Office draws up a report for the Management Board every quarter. This report provides the basis for improving our compliance activities and if appropriate harmonising them with new legislation or provisions as necessary. We also submit a report to our parent group Telefónica S.A. on an annual basis.

The function of our Compliance Team is also to raise awareness of our business principles and guidelines both internally and externally through the media of the Intranet and Internet. This also includes organisation and preparation of training sessions for our employees on compliance issues. New employees are given an introduction to our business principles and other issues such as data protection and the four eyes principle at Welcome Days. All employees have a duty to complete detailed and high-level online training on data protection, our business principles and the General Equal Treatment Act (Allgemeines Gleichbehandlungsgesetz). We also offer our employees training workshops to address complex issues such as anti-trust law (monopolies).

Data protection training must be updated every year. Refresher training sessions on business principles and guidelines are repeated every two years. In 2009, 76% percent of our employees updated their knowledge on the issue of data protection. That means we are not meeting the expected level of refresher training. In 2010, we are aiming to significantly increase this percentage. 85 percent have already obtained accreditation in the business principles.

Every employee is responsible for understanding the business principles and the associated guidelines, and for taking decisions and acting on that basis. If our employees and managers discover actions or processes that might lead to infringement of these principles, the Compliance Office must be immediately informed. If any breaches of this nature have already taken place, those affected are informed. The Compliance Office and our internal Audit Department monitor action taken to deal with any breaches and take steps to correct them. If any internal or external stakeholders do not wish to reveal their identity when reporting a suspicion, we offer them a number of options for maintaining their anonymity:

Our external ombudsman takes confidential statements from employees and external stakeholders, for example relating to corruption, fraud, breach of trust, and on infringements of anti-trust law. These complaints are then assessed impartially.

Our parent group has also set up a Business Principles Office where employees and business partners are able to report breaches of business principles.

And the Confidential Helpline at Telefónica provides a means of contacting the Corporate Governance Officer at Telefónica Europe, who also deals with cases on a neutral and confidential basis.

A substantial incident concerning brokerage fraud and the massive breach of internal guidelines and laws was reported in 2009. We fully clarified the incident and as a consequence ended the contractual relationship with the opposition side as from March 2010.

If actions or decisions undertaken by staff contravene our business principles and our guidelines, individual employees are subject to disciplinary measures that may be as serious as immediate dismissal without notice.

Compliance is a mainstay of responsible management and successful leadership also involves operating in accordance with key corporate governance principles. This is about informing the most important stakeholders in the company - most importantly the shareholders - about all matters that relate to management and control of the company. Although O₂ is not listed on the stock exchange in Germany, our corporate management acts in accordance with strictly defined rules. Telefónica Europe pools all activities relating to corporate governance at European level.

Our parent company Telefónica S.A. has a stock-exchange listing in the USA. This means that it is subject to the rules of the U.S. Security and Exchange Commission (SEC), which enacted the Sarbanes Oxley Act in 2002. This legislation requires the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) to submit a declaration certifying that all the reports submitted to the SEC in conjunction with the annual financial statements are correct and that the internal control systems are operating effectively. The external auditor of the annual financial statements assesses this declaration separately. Telefónica S.A. analyses and updates its internal business processes on a regular basis. The objective is to ensure that a high level of quality for the annual financial statements is maintained on a continual basis.