Compliance and ethics
Ma’aden continually works to identify, evaluate, control and monitor compliance risks and recommends appropriate controls and remedial actions when needed. Whenever there are changes in the laws and regulations, or when there are new laws, we ensure that our departments and subsidiaries fully comply with those.
We are in the early stages of a new two-year program called SMART to strengthen our compliance culture. The program will rely on e-learning and face-to-face platforms to promote awareness, policy messaging and alignment, training and enhancements of the risk-based compliance platform and regulatory monitoring. The e-learning courses will cover Ma’aden’s values, Code of Conduct and Anti-corruption and Trade control policies.
We have been working on developing effective policies that address matters of compliance and ethics. An approved Anti-Corruption Policy came into effect across Ma’aden and its subsidiairies. The policy is based on the relevant provisions in Ma’aden’s Code of Conduct but expands upon them to address specific local legal and regulatory requirements and inter-national standards.
Under the policy, the most important addition to our compliance framework is the inclusion of specific procedures for dealing with third-party intermediaries.
It also includes a comprehensive definition of bribery and where it can arise in the context of gifts, hospitality, charitable donations, or other privileges. The policy explains to employees what they should do when they suspect wrongdoing by colleagues.
We are working on a number of policies covering disclosure and transparency, investigation and trade controls.
The corporate compliance team continued to engage employees and suppliers in 2016 with awareness and training programs and surveys. These engagements helped to create awareness about our values, Code of Conduct, conflict of interest issues and other relevant Ma’aden policies. They also helped us to identify potential gaps in our approach and policies. The top-level executive management support enabled the compliance team to engage with subsidiary boards, management and employees across the Group.
In 2016, we automated the process of annual compliance declaration, which enables staff to declare that they have complied with the key elements of our Code of Conduct, Anti-corruption and Conflict of interest policies.
A total of 42 Code of Conduct awareness and training sessions were completed, reaching out to about 30 percent of our employees. We will see this percentage going up significantly in 2017 with the rollout of our new e-learning platform.
Other key achievements in compliance during the year included:
- survey and engagement results, which validated the success of Ma’aden’s efforts to embed a values-based culture of ethics
- the publication of Ma’aden’s Code of Conduct Handbook for employees
- the development of a new electronic platform called e-compliance, enabling a paper-free communications between staff and the compliance team.
authority of the internal audit profession, have confirmed that Ma’aden internal audit function “generally conform” to IPPF.
Under the guidance of the Audit Committee, Ma’aden Internal Audit provides independent and objective assurance and consulting services to support the Group’s operations. Internal Audit reports on the effectiveness of internal control systems are delivered to the Chairman of the Audit Committee on a quarterly basis.
The primary objectives of Ma’aden Internal Audit are to:
- assess the Group’s GRC performance and benchmark with best practices to identify scope for improvement
- assess the effectiveness of the Enterprise Risk Management (ERM) processes
provide assurance over adequacy of EHSS management systems
- evaluate the internal control systems established to ensure compliance with laws and regulations, company’s bylaws, policies and procedures
- provide assurance over the reliability and integrity of disclosures of financial information
- evaluate the adequacy of controls for safeguarding of assets and ensure their
- effectiveness on an annual basis
- assess overall operations activities to ensure that their performance, directions are consistent with the strategic aspirations of the Group
- facilitate statutory (external audit) and regulatory (government agencies) audit requirements
- follow up with management on the implementation of corrective actions in response to audit findings related to internal controls.
We follow a risk-based audit methodology that works at three levels:
- field work
- recommendations to rectify weaknesses.
As a result of this risk-centric approach, we prepared a three-year internal audit plan, which is updated on an annual basis to ensure continued alignment with the organization’s objectives and emerging risks.
Additionally, Internal Audit extended consultation support to senior management that enables informed decision-making on several matters of importance.
- pre-implementation assurance over Saudi Organization for Certified Public Accountants (SOCPA) to International Financial Reporting Standards (IFRS) transition;
- pre-implementation review of policies and procedures updates to eliminate major control gaps and
- non-routine issues and business situations to ensure consistency of practices.
In 2016, we conducted 80 audit engagements across Ma’aden ensuring better risk coverage and improved overall assurance curve. This covered all key business processes, major projects and strategic initiatives. Aside from assurance activities, we conducted 25 special assignments.
Based on the wide-ranging audit exercises conducted, we believe that Ma’aden has a reasonably effective system of internal controls. We have not come across any significant risk exposures and internal control issues, other than those highlighted to the Audit Committee issues highlighted to the Audit Committee are not considered significant enough to adversely affect the completeness and accurate recording of transactions and operations of Ma’aden.
Ma’aden has been developing and financing a number of major projects and believes that it continues to have sufficiently attractive investment opportunities in which to deploy all of its free cash flow. The Board has therefore recommended to the GA that no dividend shall be distributed to shareholders for the financial year ended December 31, 2016.
There is no guarantee that the company will distribute dividends to shareholders in future fiscal years. The payment of any dividend will depend, amongst other things, on future profits, financial position, capital requirements, distributable reserves and available credit of the company, general economic conditions and other factors that the Directors of the Company may deem significant.
Our investor relations (IR) program ensures transparency in all communications while complying fully with the continuous and consistent disclosure obligations stipulated by the CMA.
We follow a policy of proactively communicating with the market and informing our stakeholders of all key developments that will have an impact on the business. We hold periodic dialogues with the investor community and share investor feedback to the company’s senior management about market perceptions. Our dialogues with shareholders have become increasingly important as our individual and institutional investors are always looking for up-to-date information on company developments and our business plans and achievements and setbacks, if any.
To create and sustain a meaningful dialogue with the investment community we ensure that the investors have easy access to management. We also ensure timely flow of information through the company website and Tadawul announcements. We also participate in investor conferences, offer access to our IR team via phone and emails, and host special events for analysts and investors.