DRAFT CORRUPTION AND FRAUD ETHICS POLICY INCLUDING THE FRAUD by withoutyou

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									                        2nd Draft Revision: Group Fraud Policy NP 35


          FRAUD, CORRUPTION AND THEFT POLICY

Nampak Group promotes a zero tolerance approach to fraud, corruption, theft and similar
illegal behaviour. The Group strives to maintain the highest standards of governance,
personal and corporate ethics, compliance with all laws and regulations, and values
integrity and honesty in dealings with employees, customers, suppliers and all other
stakeholders.

This policy supports and expands on the Code of Business Conduct and Professional
Management Practices.

Employees are prohibited from participating in or condoning any criminal activity or
illegal behaviour. Illegal acts involving employees may result in substantial losses to the
Group and most importantly the impairment of its reputation, loss of customers and
ultimately the reduction of stakeholder wealth.

Compliance with this policy is required of all employees. Contract labour, part-time
employees, casual employees, occasional employees and others acting for the
organisation must also comply with this policy.

Information about fraud, corruption, theft and other illegal behaviour is important in
monitoring risk trends and designing effective risk treatments and responses. For this
reason, all events indicating such behaviour must be promptly reported to Group Internal
Audit who in turn reports to the Audit Committee on the results thereof.

MESSAGE FROM THE CEO/CHAIRMAN

(To be inserted)


“ We uphold the principles of integrity, professional business ethics and internationally
  accepted standards. ”
                                                                 Values statement – Nampak Limited



“ Directors and employees are required to maintain the highest ethical standards, ensuring
  that business practices are conducted in a manner which, in all reasonable
  circumstances, is beyond reproach. ”
                   Corporate Governance statement – Nampak Limited Annual Report 30 September 2001




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                      2nd Draft Revision: Group Fraud Policy NP 35


DEFINITIONS OF FRAUD, CORRUPTION AND THEFT

Fraud

The unlawful and intentional making of a misrepresentation which causes actual or
potential loss to another.

Examples include, but are not limited to:
 ghost employees;
 fictitious overtime claims;
 fictitious expense claims;
 unauthorised alterations to cheques;
 manipulation and abuse of computer systems, access, authority levels, data and
   information, and emails;
 manipulation of prices for one’s own gain;
 procurement irregularities;
 alterations to invoices subsequent to authorisation;
 use of the Group’s assets for personal use.

Corruption

Corruption is the misuse of office for unofficial ends and/or the perversion of integrity by
bribery or favour.

Examples include, but are not limited to:
 bribing security personnel to allow the unauthorised removal of stock;
 failure to disclose one’s involvement/interest upfront with a supplier or customer;
 collusion with a supplier to inflate prices;
 threatening a supplier with termination of a business arrangement should the supplier
   be reluctant to pay kickbacks.

Theft

The unlawful and intentional misappropriation of another’s property with the intention of
permanently depriving them the use thereof.

Examples include, but are not limited to:
 Unauthorised removal of money, stock, assets, stationery and other consumables;
 Using Group time and resources to conduct activities for personal gain.

PREVENTION OF FRAUD AND RELATED CRIMES

Fraud and related crime prevention techniques generally fall into three broad disciplines:

   Operational control, that addresses related risk exposures and embraces related
    financial and audit controls, personnel selection and monitoring techniques;



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                      2nd Draft Revision: Group Fraud Policy NP 35


   Physical security that deals largely with visitor control (restricting access to sensitive
    areas by unauthorised staff, members of the public, firearms, drugs, etc.);
   Systems security that concentrates on improper usage of computer systems, e-mail
    facilities, password control, authorisations, logging off, encryption and message
    authentication.

Preventative controls should focus on prevention rather than detection, and should
encompass an understanding as well as awareness of the following:
 the ethical values and code of conduct of the organisation;
 the importance of personally contributing to crime prevention;
 the organization’s business practices, systems and manual or computer controls;
 the different crimes that can occur and how to detect them.

The following procedures are typical preventative measures, but not limited to:
 sound recruitment and selection procedures to ensure that the right calibre of
   employee is appointed. All employees should be screened before they are appointed.
   Previous employment checks should be conducted, noting names and positions of
   people from whom information has been gained;
 detailed job descriptions in place to ensure that employees understand fully what their
   responsibilities entail and the extent to which their authority extend;
 regular taking of leave by employees;
 regular supervisory review of employees in positions of trust;
 detailed system descriptions in place to ensure that all staff members are aware of
   their impact and roles within the control system;
 weaknesses in systems or weak people performance identified, and necessary
   corrective action taken;
 segregation of incompatible duties is extremely important;
 employees to have clear delegation of accountability, authority and responsibility;
 special attention given to critical risk exposures and effectiveness of controls in high
   risk areas;
 management constantly aware of any areas of exposure or which are prone to risk;
 cautious about accepting things on face value. Question statements made, logic, etc.;
 areas indicating high management turnover, and where subsequent loss of
   management or internal control could occur should be identified, addressed and
   carefully monitored;
 management’s close involvement in the day to day activities of the business of the
   Group;
 the basic attitude of staff and occurrences of minor irregular incidents could be
   indicators of more serious underlying problems;
 becoming aware of basic fraud indicators (Red flags);
 maintaining a record of irregular incidents and identifying high risk areas;
 adopting a zero tolerance approach to all employees who commit fraud, corruption,
   theft and similar illegal behaviour.




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                      2nd Draft Revision: Group Fraud Policy NP 35


Management and supervisory staff are accountable and responsible to ensure that all
reasonable steps are taken to prevent and detect instances of fraud, corruption, theft and
similar illegal behaviour in their specific areas.

CONFLICT OF INTEREST

A conflict of interest exists when employees and/or their immediate families have direct
or indirect personal interest or derive benefits from transactions to which the Group
operations are also a party. Such situations must be avoided and prevented at all times in
the interest of honest and bone fide business practices.

The onus rests on employees and directors to disclose all real and potential/perceived
conflicts of interest in writing as soon as the conflict situation arises.

In the case of all directors, including divisional directors, this information should be
disclosed to the Group Secretary, who will be responsible for recording the interest
concerned in a confidential register and submitting it to the Group Managing Director for
approval or other action deemed appropriate.

In the case of all other employees, this information should be disclosed to the General
Manager for the relevant operation, who will be responsible for recording the interest
concerned in a confidential register and submitting it to the Cluster Executive Director
for approval or other action deemed appropriate. If deemed material, then the Group
Secretary should also be informed as per reporting procedure for directors above.

RELATIONSHIPS WITH CLIENTS, CUSTOMERS AND SUPPLIERS

Relationships with clients, customers and suppliers can give rise to potential situations
where conflicts of interest, real or perceived, may arise.

Managers and other employees should not place themselves in a position where their
direct and/or personal interest could conflict with their duties to the Group. In particular,
no one may divulge confidential information of the Group to its existing or potential
competitors, customers or suppliers or otherwise make improper use of such confidential
information.

The acceptance of a bribe or any other tainted benefit is not permitted. Further, the
receipt of gifts or the giving of gifts or entertainment of existing and potential business
associates should be conducted in accordance with the guidelines set out below.

GIFTS & ENTERTAINMENT

Gifts

Gifts given to selected customers by managers (e.g. Christmas gifts) should not exceed
the value of R500.00 per customer per annum.



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                     2nd Draft Revision: Group Fraud Policy NP 35


Farewell gifts given to senior customers upon their retirement, should be approved by the
manager’s superior with a limit of R1500.00.

All gifts received, including gifts received by family members of employees, exceeding
R200.00 in value should be disclosed to the employee's manager. The general manager
of each operation must ensure these gifts are recorded in a gift register and have them
available for audit purposes.

All gifts exceeding a value of R500.00, e.g. money, discount coupons, gift vouchers,
refrigerators, cases of liquor, personnel expenses paid on your behalf, etc. could be
regarded as bribes and must not be accepted under any circumstances by employees.
Offers of this nature must be politely, but firmly declined or immediately returned to the
sender if delivered without prior notice.

Cash payments, whether of large or small amounts, may not be accepted under any
circumstances.

Any offers of travel, accommodation and/or transport to any employee or family member
of the employee must be referred to an appropriate Group director for authorisation.

Any offer of shares made to an employee or family member, by way of a preferential
allocation, as a consequence of the employee’s position in the Group, should be
immediately referred to an appropriate Group director, who shall decide whether the
offer should be rejected on the grounds that any acceptance may place the employee in a
potential conflict of interest situation.

An employee should consider the following questions when offered a gift:
 will the donor expect something substantial in return?
 is an attempt being made to persuade me to do something that is prohibited by law, or
   contrary to regulations or company policy?
 is an attempt being made to gain an unfair competitive advantage by influencing my
   discretionary decisions?
 am I using my position to obtain business courtesies?

Entertainment

The manager's superior must approve all entertainment expenses. The following are
deemed a breach of professional management practice:
 mutual in-company entertainment excesses;
 excessive entertaining by customers, which may be viewed or perceived as bribery.

Duly authorised home entertainment for business purposes will be on the basis as set out
in the Executive Benefits Manual.




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                      2nd Draft Revision: Group Fraud Policy NP 35


EMPLOYEES’ RESPONSIBILITIES

In terms of common law, a relationship of trust exists between the employer and
employee, and the employee bears a fiduciary responsibility to take reasonable action to
prevent harm to his/her employer in the interests of enhancing stakeholder wealth.
Employees are accountable for their actions and omissions.

If an employee is aware of and/or becomes aware of fraud, corruption, theft and similar
illegal behaviour taking place in his/her working environment, there is an obligation on
that employee to immediately report such circumstances using one of the methods listed
below.

Failure to do so may result in disciplinary action against that employee, depending on the
circumstances.

REPORTING OF INCIDENTS

All employees who know about and/or suspect fraud, corruption, theft and similar illegal
behaviour must immediately report the matter as follows:
1. either to their line manager, who in turn is required to immediately report the incident
   to Group Internal Audit, on the prescribed Form “Annexure A” attached, for the
   necessary response strategy and relevant guidance; or
2. an employee may opt to report the matter directly to Group Internal Audit; or
3. the Group offers a toll free Tip-offs Anonymous hotline, professionally managed by
   an independent party and to which an employee may report his/her concerns and
   remain anonymous to the Group.

The Tip-offs Anonymous hotline contact details are as follows:
FreeCall Tel: 0800 000 606
FreeFax:       0800 00 77 88
E-mail:        nampak@tip-offs.com
FreePost:      Freepost DN 298, Umhlanga Rocks, 4320

PROTECTION

All information reported to the Group will be treated as strictly confidential.

All employees of the Group who disclose information regarding unlawful or irregular
conduct taking place within the Group, either by the employer or fellow employees, may
do so without fear of retribution and /or victimisation.




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                      2nd Draft Revision: Group Fraud Policy NP 35


However, an employee will forfeit this protection under the following circumstances if:
 the information is untrue;
 the employee gained a reward for the information, other than a reward payable in
  terms of law;
 the employee is involved in the wrongdoing he/she is reporting.

INVESTIGATION AND PROSECUTION

All reported incidents will be investigated within the parameters of legislation and will
respect the basic human rights of all involved. The outcome thereof will be made known
to the Group through the relevant channels available.

In order to secure a thorough and complete investigation, the Group may employ the
services of external persons and/or specialist investigative techniques. This could
include, but not be limited to, private investigative firms, undercover agents, hand writing
experts, etc.

The Group supports the installation of covert audio and visual surveillance equipment in
high risk and/or problematic areas. This will be done in a manner so as not to violate
basic human rights.

The persons authorised to conduct investigations will have access to all records, data and
information pertaining to the investigation, including the storage thereof on any company
owned asset.

The Group supports the use of all generally accepted methods of truth verification
techniques as a medium to assist in the investigation. This will be done in a manner so as
not to violate basic human rights.

All employees are required to co-operate with the persons conducting the investigation.
Failure to do so may result in the employer taking disciplinary action against the
employee, as it deems appropriate.

The Group reserves the right to take such action it deems necessary at the time. The
highest consistency will be applied, with no discrimination, irrespective of title or length
of service.

DISCIPLINARY PROCEDURES AND RECOVERY OF LOSSES

Prompt and effective action must be taken to minimise continuing and subsequent losses
and to demonstrate to employees and outsiders the Group’s commitment of zero tolerance
towards acts of fraud, corruption, theft and similar illegal behaviour.

The management at the operation where the fraud, corruption, theft and similar illegal
behaviour occurred will be responsible to institute disciplinary action against the relevant
employee.



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                      2nd Draft Revision: Group Fraud Policy NP 35


Due care must be taken to ensure that a consistent approach is taken at all times.

An internal disciplinary hearing must be instituted and held in accordance with the
Group’s policies and practices as issued by the Human Resources Department from time
to time.

It is illegal to force an employee to pay restitution for the losses caused by his/her illegal
conduct. However, should an employee offer to pay for the damage or losses, such
payment must be accepted. In such situation the employee must sign an
acknowledgement of debt. It is important that the employee signs and agrees to this
freely, voluntarily and without any coercion.

In addition, management has the discretion to lay criminal charges against an employee
who engages in illegal activity, where a Group business has suffered losses less than or
equal to an amount of R4 999,00. However, criminal charges must be laid against any
employee who engages in illegal activity and which causes a Group business to suffer a
loss in excess of R5 000,00.

GENERAL

The company reserves the right to amend this policy from time to time.

This code will be distributed to all employees within the Group and all new employees
when they join the Group via the relevant Human Resources Managers. Furthermore, a
copy of this policy together with other Group policies is available on the Group’s
intranet.

Executive directors of the Group are responsible for ensuring compliance with this policy
and will be aided in this task by committees, such as the Fraud Committee and Audit
Committee.

Management and supervisory staff are responsible to enforce and monitor compliance
with this policy.




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                                    2nd Draft Revision: Group Fraud Policy NP 35


                                                                                            “Annexure A”
INCIDENT REPORT


Reference                                                    Last updated
Company                                                      Date
Branch                                                       Submitted by
Period of occurrence                                         Date of Detection
Title of Perpetrator                                         Approximate value
Perpetrator’s direct report                                  Original cost of loss
Recovery Prospects                                           Book value cost of loss
- from perpetrator                                           Replacement cost
- from insurance


Way detected:



Name & title of detector:


Details of incident:




Any other parties involved and/or
suspected:




Any further irregularities suspected:




Contemplated action to be taken to investigate
the incident further:




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