$950,000 Fine Proves Ethical Sourcing Goes Beyond Conflict Mineral Compliance

$950,000 Fine Proves Ethical Sourcing Goes Beyond Conflict Mineral Compliance

Conflict mineral compliance doesn’t guarantee a mineral has been ethically sourced.

Evaluating the supply chain for conflict mineral risk is the backbone of many responsible mineral sourcing programs, but a well-rounded program should have a broader focus, including an anti-bribery and anti-corruption (ABAC) program.

Companies that are in scope of Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires companies to disclose whether they have used any gold, tungsten, tin and tantalum (3TGs) from the Democratic Republic of the Congo and its neighbouring countries, will also be in scope of U.S. anti-bribery law. Additionally, they may need to comply with international laws in the more than 40 countries that have anti-bribery legislation.

The Foreign Corrupt Practices Act (FCPA) applies to U.S. businesses, citizens and residents, as well as foreign corporations trading securities in the U.S. The FCPA lays out provisions concerning the bribery of foreign officials, and can be enforced by fines and/or sanctions.

The Fine & What It Means

On March 26, 2018, Canadian company Kinross Gold was fined $950,000 and ordered to report on its remedial steps in the next year. According to the U.S. Securities and Exchange Commission (SEC) order, the company purchased two African subsidiaries without anti-corruption compliance programs and took three years to implement controls, which they then failed to maintain.

Anti-bribery and anti-corruption programs can flag issues through the supply chain, preventing situations akin to Kinross Gold’s. A robust program to identify bribery and corruption in the supply chain allows preventive action to be taken, while a singularly focused program is at risk of a major gap, which opens companies up to the risk of FCPA violations. U.S. companies can also face penalties for third-party actions if the transaction relates to their business.


Are you interested in doing more at your organization, but not sure where to begin? Download our guide, Jump-Start Your Supply Chain CSR Program, to get started.


Many companies are beginning to shift from conflict minerals programs to responsible minerals sourcing programs. As a part of this shift, more programs have expanded beyond the scope of Section 1502 of the Dodd-Frank Act to include additional minerals, such as cobalt, as well as anti-bribery and anti-corruption policies, initiatives to combat child or forced labor and environmental impact monitoring elements. This could include measures such as identifying mining companies in violation of the FCPA and facing potential sanctions by cross-referencing source of origin programs with corruption watch programs.

Expanding Issues, Broad Solutions

During a 2018 Ethical Corporation event in New York City, Rakhi Kumar, the head of environmental, social and governance (ESG) investments and asset stewardship at State Street Global Investors, said a growing number of clients are choosing to invest in socially responsible companies.

He said Section 1502 of the Dodd-Frank Act was a wake-up call for companies to take ethical considerations into account.

“What started as a comp[liance] issue, became a governance issue,” he said, “and is now a sustainability and environmental issue.”

Broad responsible mineral sourcing programs will likely become more prominent as an increasing number of companies factor ethical sourcing into supply chain and investment decisions by focusing on issues such as bribery or forced labor.

The Assent Compliance Anti-Bribery, Anti-Corruption Module can be used together with our Conflict Mineral Module to fully evaluate your supply chain, implement an ABAC policy for ethical business standards and mitigate risk of non-compliance under laws such as the FCPA and the UK Bribery Act 2010.

To learn more about how the Assent Compliance Platform can help you, or to request a demo, email us at info@assentcompliance.com.

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