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Crime Prevention and Anti-Fraud Policy December, 15 2010 CRIME PREVENTION AND ANTI-FRAUD POLICY The Board of Directors of Iberdrola Renovables, S.A. (the “Company”) has been entrusted with the responsibility of formulating the strategies and general policies of the Company, as well as organising suitable internal control systems. Accordingly, at its meeting of 29 February 2009, the Board of Directors approved an Anti-Fraud Policy for the purpose of combating all types of fraud by adopting a “zero tolerance” policy. On 23 November 2010, Iberdrola, S.A. (“Iberdrola”), within the framework of internationally recognised recommendations on good governance and the social responsibilities accepted by the Company, approved the Code of Ethics of Iberdrola and its Group of Companies (the “Iberdrola Group”), intended to develop and formalise the vision and values of the Group, and to serve as a guide for the actions of its professionals in a global, complex and changing environment. This Code, which forms an integral part of Iberdrola’s Corporate Governance System, also makes up a basic reference for the rest of the Iberdrola Group companies, which includes Iberdrola Renovables, S.A. In addition, to implement the duties prescribed in the Criminal Code Reform Act 2010 (Ley Orgánica 5/2010) of 22 June throughout the Iberdrola Group, on 14 December 2010 the Board of Directors of Iberdrola approved the Crime Prevention and Anti-Fraud Policy of Iberdrola, S.A., applicable to all managers and employees of Iberdrola Group companies and, therefore, to the managers and employees of the Company. The Crime Prevention and Anti-Fraud Policy of Iberdrola, S.A. entrusts the Code of Ethics Committee with responsibility for supervising and evaluating the Iberdrola Group’s crime prevention programme. Therefore, in order to ensure that crime prevention and anti-fraud actions are coordinated with Iberdrola, as the Company is a part of the Iberdrola Group, the Company’s Board of Directors, at its meeting of 15 December 2010, agreed to adopt the Iberdrola Policy as its own, making all the provisions established there applicable to the Company. The text of this policy is as follows: The Board of Directors of Iberdrola, S.A. (the “Company”) has been entrusted with the responsibility of formulating the strategy and approving the Corporate Policies of the Company, as well as of organizing the internal control systems. 1. Purpose: The Company shall have a crime prevention program (as a set of measures designed to prevent, detect and react to possible crimes), which shall also cover the prevention and control of fraud, administrative violations and serious irregularities, all within the framework of the process of review and adjustment to the new duties imposed by the Spanish Penal Code after the amendment thereof by Organic Law 5/2010, of June 22, without prejudice to the laws and regulations applicable in any other jurisdiction in which the Company or the companies belonging to the group of which the Company is the controlling entity, within the meaning established by Law (the “Group”), carry out their activities. The purpose of such program is to assure third parties and judicial authorities that the Company exercises over its directors, managers, employees and other subordinates, based on the governance model of the Group, such proper control as is legally required thereof, including the monitoring of possible situations of crime risk that may only arise within the Company’s scope of activity, even in those cases in which the attribution of such situations to a specific person is not possible; an additional objective is to strengthen the existing commitment to work against all forms of fraud and corruption, including extortion and bribery of public officials or other persons. In order to develop specific action programs, the Board of Directors has approved this Crime Prevention and Anti-Fraud Policy in order to convey to all managers and employees of the Group, as well as to third parties establishing relations therewith, the unambiguous message that it opposes and is determined to combat the commission of any wrongful acts, whether in the nature of criminal offenses or otherwise, and to guard against any possible erosion of the image and reputational value of the Company and, ultimately, of the price of its shares and the value of the brand. The Company assumes the responsibility to set up, through the competent Divisions and organizations, a specific and effective crime prevention and anti-fraud program based on the implementation of action and supervision protocols designed to reduce the risk of commission of criminal wrongs, supplemented by effective and permanent control systems that may be updated as required. Moreover, the efficient management of the prevention of and fight against fraud requires a clear message from the management decision-making and supervisory bodies of the 3 Company and the Group, reflected in a commitment of unwavering vigilance and punishment of fraudulent acts and conduct, in effective mechanisms for communication and awareness-raising among employees, and in the development of a corporate culture of ethics and honesty. Accordingly, the purpose of the Crime Prevention and Anti-Fraud Policy is to foster and promote a firm commitment to prevent and combat all crimes and fraudulent practices that may occur within the Group’s scope of action in accordance with the principle of “zero tolerance,” such that any sign of the commission of a criminal or fraudulent act that comes to be known shall lead to the commencement of the corresponding investigation and, in the event that proper evidence establishes the existence of any unlawful conduct, the appropriate corrective and disciplinary measures shall be applied. 2. Scope: This Crime Prevention and Anti-Fraud Policy shall apply to all managers and employees of the Company and of the other companies belonging to the Group. The Group has a governance model in which decentralized executive responsibilities are discharged by the subholding companies of the Group, which take care of the day-to-day effective management of each business subgroup and of day-to-day supervisory duties through their respective boards of directors and management decision-making bodies, which shall ensure the implementation and monitoring of the action principles set forth in this Crime Prevention and Anti-Fraud Policy, without prejudice to appropriate coordination at all levels within the Group. Furthermore, all persons acting as representatives of the Group at companies and entities not belonging thereto shall comply with the provisions of this Crime Prevention and Anti-Fraud Policy and shall promote, to the extent possible, the enforcement of the principles contained herein at the companies and entities at which they represent the Group. Managers and employees of the Group who are also subject to other rules or policies, whether applicable to a particular industry or deriving from the national legislation of the countries in which they carry out their activities, shall also be bound hereby. The appropriate coordination shall be established in order to ensure that such rules or policies are consistent with the principles set out in this Crime Prevention and Anti-Fraud Policy. 3. Action principles: The principles governing the Crime Prevention and Anti-Fraud Policy are the following: a) Integrate and coordinate a set of actions required to prevent and combat both the possible commission of wrongful acts by any professional within the Group and, in general, possible situations of fraud, as a basic pillar of the Crime Prevention and Anti-Fraud Policy, in line with the General Risk Control and Management Policy and the General Corporate Social Responsibility Policy. b) Create a transparent environment, integrating the various systems developed to prevent crimes and correct fraud and maintaining appropriate internal channels to favor the communication of possible irregularities, including the use of the channel of communication with the Audit and Risk Supervision Committee to report financial or accounting irregularities. c) Act at all times in compliance with applicable law and within the framework established by the Code of Ethics, as well as pursuant to the internal regulations of the Company. d) Foster a preventive culture based on the principle of “zero tolerance” in respect of the commission of wrongful acts and in fraud matters and on the application of principles of ethical and responsible behavior by all professionals of the Group, irrespective of their level and the country where they work. e) Ensure that the Code of Ethics Committee has the physical and human resources required to monitor the operation, effectiveness and observance of this Crime Prevention and Anti-Fraud Policy, without prejudice to the responsibilities attaching to the management decision-making bodies of the subholding companies of the Group and to equivalent bodies in other jurisdictions. 4 CRIME PREVENTION AND ANTI-FRAUD POLICY f) Develop and implement appropriate procedures for the control and comprehensive management of crime and fraud prevention at all companies of the Group. g) Keep the focus on proactive activities, such as prevention and detection, rather than on reactive activities, such as investigation and punishment. h) Investigate any claim of an allegedly criminal act or of any fraudulent or irregular act, regardless of the amount thereof and as soon as practicable, guaranteeing confidentiality in respect of the reporting party and of all investigations carried out. i) Seek a fair, non-discriminatory and proportional application of penalties as provided by applicable law from time to time. j) Notify all professionals of the Group of their duty to report any act amounting to a possible criminal offense or which might constitute fraud of which they have evidence, as well as any sign or suspicion that a planned transaction or operation might be connected with money laundering or the financing of any unlawful activity. k) Implement appropriate training programs for professionals of the Group regarding the duties imposed by applicable law. 4. Supervision and Evaluation: a) Supervision: The Code of Ethics Committee shall be responsible for supervising the implementation, development and fulfillment of the Group’s crime prevention program. For such purposes, the Code of Ethics Committee shall have the power of initiative and control required to oversee the operation, effectiveness and observance of this Crime Prevention and Anti-Fraud Policy, ensuring that the crime prevention program responds to the needs and circumstances of the Group at all times. The foregoing is without prejudice to such bodies or units specifically focusing on the control of criminal or fraudulent activities that it may be necessary or advisable to create at other companies of the Group in order to comply with the industry-specific or national laws of the countries in which they carry out their activities, with which relations for coordination purposes shall be established as appropriate pursuant to the respective applicable law. b) Evaluation: At least once per year, the Code of Ethics Committee shall evaluate the observance and effectiveness of this Crime Prevention and Anti-Fraud Policy and of the Group’s crime prevention program”. 5 Prepared by: IBERDROLA RENOVABLES Design and Layout: IBERDROLA
"Crime Prevention and Anti-Fraud Policy"