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Fraud Control : Group Policy and Procedure

Policy
At Xstrata we are committed to the highest standards of personal and professional ethical behaviour. We will not tolerate any incidence of fraud, committed by employees or others, either from within or outside the organisation, and will take immediate and serious action (including dismissal, reporting to police and legal action), against those persons committing a fraud, irrespective of length of service or position.

This policy applies to Xstrata, all subsidiaries of Xstrata worldwide and all other parties who are given access to Xstrata information and premises. It covers all Xstrata full and part-time staff, casual and temporary agency staff and contractors collectively referred to as ‘personnel’.

The Fraud control Policy should be read in conjunction with the Xstrata Statement of Business Principles.

The guidance reflects the minimum requirements of the Group. Business Units may supplement this by adding additional requirements or guidance relevant to their own businesses.

All fraudulent acts or suspected fraudulent acts must be reported immediately by the discovering employee to his/her supervisor or manager. If a preliminary investigation undertaken by the manager confirms initial suspicions, the suspected fraud shall be reported in accordance with the procedure outlined below and rigorously investigated by an officer or team assembled for the purpose.

Responsibility and Authority
This Group Policy has been approved by Exco and is sponsored by the Group CEO. The CFO is responsible for initiating any changes to this standard, which shall be approved by Exco.

Definition
For the purposes of this policy 'Fraud' is defined as: the taking, or obtaining by deception, of money or any other benefit from Xstrata when not entitled to the benefit, or the attempt to do so; the intentional misrepresentation of Xstrata’s financial position; the intentional misrepresentation of information leading to financial loss.

Reporting
In all cases the discovering employee reports suspected fraud to his/her supervisor or manager. The supervisor/manager shall advise his/her immediate manager and the General Manager of the operation of the suspected fraud and, with the permission and involvement of the General Manager, conduct a preliminary investigation to verify the information. The discovery is then reported by the supervisor/manager to the following officials:

Where the amount involved is not expected to exceed US$25,000

• Business Unit CEO
• Business Unit CFO
• Business Unit Human Resources Manager
• Business Unit Legal Counsel
• Business Unit Corporate Affairs Manager
• Group Insurance Manager
• Regional Head of Xstrata Group Internal Audit
• Chairman of the Business Unit Audit Committee

Where the amount involved is expected to exceed US$25,000 or, irrespective of the value of the loss, it could have serious reputational consequences for Xstrata, or involves a senior official, then in addition to the above, the following officials shall be notified:

• Group CEO
• Group CFO
• Group Controller
• Group Head of Internal Audit
• Group Legal Counsel
• Group Head of Corporate Affairs
• Chairman of the Plc Audit Committee

The template included as Appendix 1 details the information to be included in the report.

Ongoing reporting
Regular progress reports and a copy of the final report shall be issued to all recipients of the initial report.

Summary reports detailing incidents of fraud and the outcome of investigations shall be tabled at the regular meetings of the Business Unit and Plc Audit Committees.

Investigation
Preliminary investigation
The supervisor/manager and the General Manager of the operation shall carry out the preliminary investigation as quickly and discreetly as possible.

Detailed investigation
The General Manager of the operation shall appoint an investigating officer or team after obtaining the approval of the Business Unit CEO. Internal Audit shall be included as part of the investigating team.

Other Matters
Whistleblowing
All information provided by personnel as a result of a reasonable suspicion that fraud has, or is about to, occur will be treated as confidential subject to prevailing external legislation.

Where for good reason the discovering employee cannot report the suspicious activity to his immediate superior, he should make use of either the toll-free call line operated independently on Xstrata’s behalf by KPMG or the confidential e-mail address which are mentioned on the back page of the Statement of Business Principles. Any concerns reported through the call line will be relayed in confidence to the Head of Internal Audit for appropriate action and e-mails to ethics@xstrata.com are read only by the Head of Internal Audit. The Head of Internal Audit is independent of management and has a reporting line to the Xstrata Plc Audit Committee.

The Head of Internal Audit shall conduct a preliminary investigation to verify the information. The discovery is then reported to the nominated officials in accordance with the process outlined above under ‘Reporting’.

Where the person reporting suspicious activity has acted on the basis of a legitimate concern, no penalties will apply and their identity must be kept confidential to provide protection against discrimination or retaliation after the event. A protected disclosure indemnity will be provided by Xstrata if requested by persons making a report.

Personal Security
Consideration should be given to the need to provide security, or access to security, for the person reporting the suspected fraud, members of the investigating team and employees closely associated with the gathering of evidence.

Security of Evidence
All evidence gathered during the investigation must be secured at an early stage of the investigation to ensure a successful outcome.

Personnel being investigated for suspected fraud may be denied access to Xstrata’s premises and information systems.

The person delegated with the responsibility for the investigation, is responsible for ensuring that evidence, physical assets and records, which may be used in subsequent investigations, are secure.

Involvement of Police
The investigation team shall contact police after consultation with the relevant Business Unit CEO, at an early stage of the investigation.

Disciplinary Action
Any decision relating to employee suspension or dismissal will be made by the investigating team in conjunction with the appropriate Business Unit CEO, Human Resources Manager and Legal Counsel.

Internal Audit Involvement
For all cases where fraud has occurred, Internal Audit will produce an audit report containing findings, which shall include, but not be limited to, the likelihood of further fraud in the area and the lessons to be learned both for the specific site and the wider Group.

Managing the Risk of Fraud
Identifying fraud risk
The responsibility for considering this issue, and the implementation of an appropriate strategy to assess fraud risks, lies with Business Unit and Head Office Management. However, it remains the responsibility of all personnel to be vigilant of risk of fraud within Xstrata and to report it as soon as they are aware of significant fraud risks.

What is a fraud risk?
This is where there is the potential for fraud to occur, usually as a result of internal controls not being in place or being ineffective in preventing or detecting fraud.

Fraud awareness
Further information on how to prevent, detect or report fraud and fraud awareness training is available by contacting Internal Audit.

Document		Published	Size (Kb)
Xstrata Fraud Control Policy		June 2006	36 Kb

 

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