Corporate compliance gained relevance as the Russian Government tried to promote economic growth and attract foreign investment.
Alexander Shitov, Vice President of Control & Compliance at Polyus, Russia’s largest gold producer, and EY alumnus, has worked in the area of risk and compliance for the last 16 years. He remembers when the new regulations came into place and calls this time ‘the SOX age’ after the Sarbanes-Oxley act passed in 2002 with the aim of improving financial disclosures and preventing fraud.
He explains, “For the last ten years, compliance was so-called rules-based compliance. So, the compliance was based on the relevant regulations in different countries to different companies.” He is enthusiastic about a more recent shift in this approach: “But, I believe now and further on, compliance will move from rules-based to principles-based.”
A matter of ethics
Alexander says that companies are moving beyond what is legally required of them and coming up with their own values to adhere to: “Ethics should be the key part, and will be the key part of compliance, in the near future, going over and beyond regulation to create more ethical businesses.”
For Polyus, this has meant a renewed focus on internal procedures. “We've combined the organizational and operational compliance together to make the compliance more visible and to support our management in making the right decisions.” He adds, “We are focused not only on the external compliance with regulations, but also on internal procedures. We want our decisions, and our transactions, to be compliant with internal regulations.”
He is proud that they have four independent Directors on their board, a higher number than most Russian companies and underlines the importance of having their opinion. He also says that Polyus complied with LSE regulations in the gap between when they left in 2016 and when they rejoined a year later, as they saw how effective those regulations were in building trust and transparency.
Alexander believes “that good corporate governance helps companies do their business more ethically, transparently, and efficiently,” and that when you take this approach “you just sleep better, and I think management should be focused on sleeping better.”