“Bribery and corruption remain a threat to participants in the mining and metals sector. Companies are increasingly concerned about the potential negative impact on its reputation, and realize the importance of having an active anti-corruption control program in place that includes continuous rather than periodic monitoring.”Paul Fontanot
Fraud Investigation & Dispute Services, Oceania Managing Partner, Ernst & Young

Fraud and corruption remains on this year’s risk radar due to the increased political risk we’ve observed in a number of key mining and metals companies’ investment destinations, and also increased regulation and enforcement activities.

The effects of fraud and corruption can impact a company’s reputation, social license to operate and bottom line.

Additionally, the extent of fraud and corruption and the associated effect on both private and public citizens of countries have led governments to implement far reaching regulatory changes.

In response to new regulation and enforcement, companies are actively changing the way they do business:

• Compliance monitoring — this is becoming crucial in itself and additionally many companies are seeking assurance of their compliance
• Third party liability — mining and metals companies are substantially increasing due diligence initiatives around third parties as part of their corruption gap analysis, which includes specific anti-corruption provisions in their standard contract terms
• Whistle-blowing — companies have been forced to become active in encouraging internal whistle-blowing by providing a credible alternative to external whistle-blowing

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Contacts

• Ernst & Young’s Global Mining & Metals Center