March 27, 2018

Gold Mining Corporation Settles FCPA Violations

A Canadian gold mining corporation agreed to settle SEC charges that the company failed to maintain adequate internal controls sufficient to prevent and detect illegal payments by two African subsidiaries.

The SEC alleged that Kinross Gold Corporation ("Kinross") failed to maintain the recordkeeping and internal accounting controls required under the Foreign Corrupt Practices Act ("FCPA"). In 2010, Kinross acquired two mining corporations operating in Mauritania and Ghana. The SEC stated that Kinross conducted due diligence on the companies' operations prior to acquisition and found that they lacked an anti-corruption compliance program and associated internal accounting controls. The SEC alleged that despite being aware of this failure, Kinross did nothing to change the control environment. After several years of internal audit reviews showing significant and substantial weaknesses, as well as high FCPA risks, Kinross enacted an FCPA policy and accompanying procedures. According to the SEC, even after implementing new controls, Kinross failed to maintain adequate standards and did not provide proper training to employees.

Kinross settled the allegations by agreeing to a cease-and-desist order and a civil penalty of $950,000, and to implement remedial measures and provide the SEC with reports on such measures.

Kinross made no admissions in connection with the settlement.


The SEC expects companies to conduct sufficient diligence on acquisition targets to identify FCPA risks. More importantly, the SEC expects the known risks to be remediated. Kinross took an unusually long time to act on the risks perceived during diligence, and then seemingly had a paper policy for FCPA compliance. The combination of failure to timely identify known risks and then ignoring its own policy assured that the SEC would bring charges against Kinross. Lesson learned? Act with all deliberate speed when addressing known FCPA risks in a newly acquired company. And then follow your own policies once the acquisition is complete.

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