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honesty and integrity
Marathon expects board members, officers, managers, supervisors and employees to maintain ethical behavior and integrity in all internal and external dealings. To promote and support ethical behavior, both in letter and in spirit, the Company provides compliance education, resources, tools and procedures for all employees.
Business Ethics
Marathon’s ethics activities are monitored at the executive level. Upstream and Downstream each has a chief compliance officer who oversees ethics and compliance efforts.
To enhance and advise on business integrity efforts, the Company established a Business Integrity Advisory Committee with members representing Upstream, Downstream, SSA (Retail) and specific functions, as well as a subject matter expert in ethics from the University of St. Thomas in Houston. This committee influences Company policy on integrity issues, provides guidance and advice related to the Code of Business Conduct, and promotes training and compliance.
Code of Business Conduct
The Code of Business Conduct sets forth Marathon’s commitment to high ethical standards. It reinforces prompt and consistent actions in maintaining these standards and the Marathon values that form the foundation of good business decisions: trust, respect, dignity and honesty. The Code covers accountability and responsibility; individual responsibilities to one another, the public, shareholders, business partners, governments and the law; and resources for assistance and reporting.
Marathon revised its Code of Business Conduct in 2006 to strengthen management’s responsibility for ethical and legal behavior, address the importance of human rights, and expand privacy issues surrounding confidential information about employees and customers. The updated Code was distributed to more than 11,200 Upstream, Downstream and SSA (Retail) employees in the U.S. and 600 employees outside the U.S. The Code is available to employees in English, Spanish, French and Arabic and on Marathon’s Web site in English.
The Business Integrity office manages Marathon’s internal ethics programs. This group reinforces the Code of Business Conduct through training and communications. Marathon offered training courses on gifts and entertainment, conflicts of interest and insider trading in 2006, with more than 11,500 training sessions completed by employees.
All Upstream employees, all Downstream employees (except Downstream employees classified as flat rate or hourly), non-U.S.-based contract employees who interact with the local government and non-U.S.-based contract employees who hold finance and accounting positions must complete an annual questionnaire and certification statement. It is available in English, Spanish and French. This certification process helps ensure Code compliance and allows employees to disclose any situations or concerns related to their compliance, particularly those about conflicts of interest. The Law and Audit departments review all responses. Approximately 6,100 Marathon employees received the questionnaire covering calendar year 2006 and all completed it as required. Of approximately 300 employee disclosures, 5 percent required further action.
A key element of the Business Integrity program is the confidential, toll-free Integrity Helpline. The Business Integrity office administers this 24-hour, global telephone resource for anonymously reporting suspected unethical or illegal activity and for seeking guidance in complying with the Code. In 2006, 203 calls were received, of which 201 have been closed. Approximately 65 percent of calls were inquiries and 35 percent were allegations. More than 90 percent of all Helpline callers received a response or action was taken within one business day. Marathon encourages employees to “ask before acting.” The high number of inquiries demonstrates that employees have responded appropriately and do place Helpline calls when faced with ethics questions.
To ensure that Marathon’s growing workforce understands the commitment to ethical business practices, in 2006 the Business Integrity office added an employee to oversee the ethics program for Upstream employees.
Maintaining a culture in which employees can come forward with questions and concerns, without fear of retaliation, can be challenging. Marathon’s ethics training in 2007 will focus on helping employees come forward with their questions and concerns. The training will specifically explain the Helpline process, emphasizing the anonymity and confidentiality available to callers. The Business Integrity office will also work with senior management to develop performance commitments for enhancing honesty and integrity in the corporate culture.
Marathon strives to be recognized as a company with a best practices ethics program. To reach this goal, the Business Integrity manager networks with ethics officer peers, participates in conferences, provides community programs on integrity practices, and gives presentations at universities and schools. Marathon also participates in the Ethics Resource Center Fellows Program in the U.S., a group of corporate, government, nonprofit and education leaders who share expertise and strong practical interest in organizational ethics.
Sarbanes-Oxley Act Compliance
Marathon complies with the Sarbanes-Oxley (SOX) Act of 2002 and related regulations promulgated by the U.S. Securities and Exchange Commission (SEC). Marathon’s SOX 404 Steering Committee, SOX 404 Team, and internal and external auditors work with business units on the compliance process. The steering committee comprises representatives and top management from Upstream, Downstream and SSA (Retail) who provide oversight of the SOX 404 process. The Team includes representatives from the Upstream, Downstream and SSA accounting departments. All employees can access Marathon’s internal Web site for information about the Company’s Sarbanes-Oxley controls and policies. Marathon also maintains a Policy for Whistleblowing Procedures as part of its compliance.
Anti-Corruption Compliance
Marathon complies with all anti-corruption laws wherever it does business. This includes the U.S. Foreign Corrupt Practices Act (FCPA), which forbids bribing non-U.S. governmental officials.
Marathon has extensive training, compliance and audit measures in place to ensure FCPA and anti-corruption compliance. Marathon’s general counsel is the chief compliance officer for the anti-corruption compliance policy.
Annual anti-corruption training is mandatory for employees outside the U.S. and for employees in the U.S. whose job responsibilities include foreign operations. Additional anti- corruption compliance training is provided for U.S. employees who transfer overseas. Employees who require training must also certify annually that they are familiar with and have complied with Marathon’s Anti-Corruption Compliance Guidelines.
Marathon maintains a comprehensive anti-corruption compliance audit program for its non-U.S. operations and non-operated interests, particularly in countries that are not in the Organization of Economic Cooperation and Development (OECD). Audits review record-keeping, financial controls, personnel training records, documents related to hiring contractors and consultants, contracts for goods and services, and business expense reports of managers responsible for operations in non-OECD countries. Audits also include management interviews.
In 2004, the U.S. Senate Permanent Subcommittee on Investigations reviewed the operations of U.S. oil companies, including Marathon, in Equatorial Guinea. There was no finding in the Subcommittee’s report that Marathon violated the FCPA or any other applicable laws and regulations. The review was part of a Subcommittee investigation and public hearing reviewing certain transactions of various foreign governments, including Equatorial Guinea, with Riggs Bank. By letter dated July 15, 2004, the SEC notified Marathon that it was conducting an inquiry into payments made to the government of Equatorial Guinea, or to officials and persons affiliated with officials of the government of Equatorial Guinea. Marathon voluntarily produced documents requested by the SEC in that inquiry. On August 1, 2005, the SEC issued a subpoena to Marathon requiring the production of the same and additional documents. Marathon has been and intends to continue cooperating with the SEC in this investigation.
Political Lobbying and Advocacy
Government legislation, regulations and policies can assist or impede Marathon’s ability to conduct business. Through its active Government Affairs program, Marathon seeks to enhance business opportunities.
The Government Affairs group represents Marathon’s interests before U.S. federal and state decision-making bodies, regulatory agencies, international organizations, trade associations and other groups focused on public policy and activities that could affect the Company’s business. The group performs its responsibilities with a high level of integrity and ethics.
The Company supports fair, reasonable and achievable legislation and regulations. At the federal level in 2006, Marathon advocated legislation and regulations related to access to energy resources on the Outer Continental Shelf, pipeline safety, security of chemical facilities and other issues.
In U.S. states where Marathon has operations, state Government Affairs representatives monitor issues including taxation, fuels, safety and environmental regulations, pricing and marketing. A key issue affecting Upstream operations in 2006 was major tax reform legislation in Texas and Alaska. In Louisiana, Marathon worked with the industry and the state Department of Environmental Quality to pass reasonable legislation for air emissions permits. An accomplishment for Downstream Government Affairs in 2006 was hosting a day-long workshop to engage leaders and emergency responders from eight states about fuel supply issues. Downstream staff encouraged responders to address these issues in state emergency preparedness and response plans.
Internal audits in 2006 and early 2007 confirmed that Upstream and Downstream Government Affairs activities complied fully with the U.S. Lobbying Disclosure Act of 1995.
Political Contributions
Marathon supports candidates for U.S. federal and state elected office through the Marathon Employees Political Action Committee (MEPAC) and, in states where it is allowed, through corporate donations. In 2006, MEPAC donated a total of $347,722 to 278 federal and state candidates, political party organizations and political action committees. Marathon corporate donations totaled $87,750 to 107 candidates and organizations. Financial donations are given to candidates and organizations to support a policy-making environment that promotes responsible energy development.
Participation in MEPAC is voluntary. Employees and Marathon’s Government Affairs group recommend and nominate candidates for MEPAC support. The MEPAC board reviews and approves candidates who have a pro-business voting record, are in decision-making and policy roles that affect the industry, or represent areas of the U.S. where Marathon has operations and employees. Political contributions are based solely on a candidate’s position on business issues, not on social issues.
MEPAC is registered with the Federal Election Commission, which requires its treasurer to file reports of contributions and expenditures. The committee also files other reports as mandated by state and local laws.
Governments
It is the Company’s policy to comply with all laws and regulations in the countries where it operates and to live by and apply high ethical standards to its business conduct. Marathon works as appropriate and within its sphere of influence to encourage local authorities to observe the rule of law.
Marathon discovered two gas fields in Syria in the 1980s. The Company recognized no revenues in any period from activities in Syria and wrote-off its entire investment in 1998. In October 2006, the Syrian government approved the assignment of 90 percent of Marathon’s interest in these fields to a non-U.S. company. Marathon closed the transaction on November 1, 2006, and received cash proceeds of $46 million. While the Company holds a 10 percent outside-operated interest, it continues to comply with all U.S. sanctions related to Syria. Marathon expects to sell the remaining 10 percent interest in 2007.
Transparency 
Marathon opposes corruption in any form. Transparency and accountability are fundamental values guiding Marathon’s business conduct and shape the foundation for sustainable development. Within its sphere of influence and where permitted by contracts, Marathon strives for financial transparency.
At the World Summit on Sustainable Development in 2002, the Extractive Industries Transparency Initiative (EITI) was launched. Marathon supports this voluntary initiative to ensure that revenues from extractive industries contribute to sustainable development and the reduction of poverty. EITI encourages governments, extractive companies, international organizations, non-governmental organizations and others to work together voluntarily to develop a framework to promote transparency of payments and revenues via aggregated reporting.
Equatorial Guinea and Gabon, nations where Marathon has operations, have signed on to the EITI. Marathon has worked with the governments of these two countries, and with other oil companies with operations in these locations, toward implementing the EITI principles and full disclosure of revenues. In 2006, revenues from oil and gas operations were published for Gabon on an aggregated basis for the oil and gas industry in accordance with EITI guidelines.
The Company remains actively engaged in these and other efforts to encourage transparency as a means of improving governance in resource-rich countries.
Business Integrity Partners Raise Awareness About
Ethics Resources
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