Compliance management is conducted by the Group Compliance Office, under the supervision of the General Counsel, Corporate Affairs and Group Compliance Department, interacting on a cross-business basis with all corporate functions to ensure that internal rules, processes and corporate activities constantly comply with the applicable regulatory framework and Ethical Code. The Group Compliance Office actively participates in identifying the risks of non-compliance with internal and external rules that might trigger judicial and administrative penalties, consequently also damaging Group’s reputation.

During 2011 work continued on revision of the “231” Compliance Programmes adopted by Group companies, resulting in adjustments that were deemed necessary in light of the new “presumed offences,” including criminal violation of environmental protection and the criminal offences committed by their employees and/or collaborators. Methodological support under Law 262/05 for the “Corporate Financial Reporting Manager” and assistance for Group companies to ensure that corporate activities are operated in compliance with Law 262/05 continued.

The updated version of the Group Code of Conduct was also published in 22 different languages, both internally and on the Group website.

Specifically in regard to corruption, an anti-corruption programme was launched in 2011 in the fifteen principal countries where Pirelli operates. Its aim is to examine the local statutory and regulatory contexts and assess the definition of specific anti-corruption compliance programmes. The programme is fully consistent with the approach taken by the Company which, as set out in the Group Values and Ethical Code and Code of Conduct, has a clearly stated position of not tolerating “corruption in any guise or form, or in any jurisdiction, or even in places where such activity is admissible in practice, tolerated, or not challenged in the courts. For this reason” the Code continues “addressees of the Code are prohibited from offering complementary gifts or other benefits that could constitute a breach of rules, or are in conflict with the Code, or might, if brought to public notice, damage the Pirelli Group or just its reputation.”

The Code also states that Pirelli “defends and protects its corporate assets, and shall procure the means for preventing acts of embezzlement, theft, and fraud against the Group”; and that it “condemns the pursuit of personal interest and/or that of third parties to the detriment of social interests.” The Ethical Code and Code of Conduct also constitute a training module dedicated to newly hired Group employees.

In 2011 training and communication of the administrative liability of companies continued, pursuant to Legislative Decree 231/2001: one of the key themes addressed was the prevention of corruption. As at December 31, 2011, this activity, which will be completed in 2012, had reached 86.2% of 1,605 employees at 12 Italian companies, including seven that reported a training course attendance rate of over 90% and four of 100%. Special note should be taken that 85% of the cadres and executives of these companies have completed such training.

All Group affiliates are periodically monitored for their corruption risk by the Group Internal Audit function. The Internal Control System relies on an integrated process of identification, measurement, management and monitoring of major risks, monitors the efficacy and efficiency of business operations, while guaranteeing that documents and decisions are traceable. It also audits the reliability of accounting and management information, legal and regulatory compliance and the protection of company assets.

As mentioned at the presentation of the 2012-2014 Industrial Plan with Vision to 2015, Pirelli intends to give its support to the activities of Transparency International in 2012.