> Business risks facing mining and metals 2012 - 2013
Business risks facing mining and metals 2012 - 2013
10 Fraud and corruption
Non-financial metrics are becoming increasingly important to CFOs - Strongly agree or agree
Base: All (247) ANZ (111) Asia (136)
The DNA of the CFO wheel
“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
Steps mining and metals companies can take to respond to this risk:
Know and understand the key anti-corruption and bribery laws and their reach globally
Become familiar with the accepted standards and guidance for designing and effective compliance program
Conduct a corruption risk assessment
Design and implement the anti-corruption compliance program
Monitor your anti-corruption compliance program, through programs such as Anti-Bribery and Corruption Data Analytics
Incorporate anti-corruption compliance program into M&A and joint venture due diligence
Periodically reassess risk and modify the anti-corruption and bribery program
Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.