Fraud and misconduct can be extremely costly and undermine public trust and confidence in an organization. Businesses may be susceptible to a range of threats, including:
- Fraudulent financial reporting
- Theft of cash or other assets
- Illegal or unethical acts such as bribery, corruption, market rigging or conflicts of interest.
Mining companies should also keep up with a stream of new laws and regulations from around the world -- adding a further layer of complexity to their anti-fraud and corruption efforts.
In some countries, the dividing line between accepted business practices and unlawful activity may be unclear. “Success fees” to government departments or individual officials can be commonplace, in order to clinch tenders to acquire mining licenses. Such payments, however, could easily be interpreted as bribery. With multinationals routinely using agents and consultants to negotiate on their behalf, it can be difficult to control the actions of these individuals – who themselves may receive bonuses for gaining licenses. Yet, the company has ultimate liability for any acts of bribery and needs to establish that no actions have contravened regulations.
Keeping one step ahead
Mining management needs to build an anti-fraud and corruption culture – based around a three-pronged strategy of prevention, detection and response. Standard codes of conduct set the tone and ensure that each employee knows exactly what is expected of them. Individuals in particularly vulnerable positions can also receive risk assessments and due diligence checks. Given that most crimes involve inside assistance, channels for “whistle-blowing” (e.g. anonymous telephone hotlines), can identify culpable employees and send out a message that it is acceptable to speak out against wrongdoing.
The organization needs a broad ranging assessment of the risks it faces around the world, which establishes the framework for a set of controls to guard against such risks. Third party relationships also need to be carefully scrutinized to avoid the risk of misconduct and possible punitive action, such as government investigations, financial penalties and criminal liability.
In addition, it helps to have centrally-driven anti-fraud and corruption policies, with risk assessments and training carried out at site level.
Learn more about protecting against fraud and misconduct (PDF 1.7 MB)