SAMPLE FRAUD POLICY

 Background

This corporate fraud policy is established to facilitate the development of controls that will aid in the detection and prevention of fraud and forms part of the Human Resources Manual (HR Manual). The intention is to promote consistent organizational behaviour by providing guidelines and assigning responsibility for the development of controls and conduct of investigations.

Scope of Policy

This policy applies to any irregularity, or suspected irregularity, involving employees as well as consultants, vendors, contractors, outside agencies doing business with employees of such agencies, and/or any other parties with a business relationship with The Company.

Any investigative activity required will be conducted without regard to the suspected wrongdoer’s length of service, position/title, or relationship to The Company.

Policy

Management is responsible for the detection and prevention of fraud, misappropriations, and other irregularities. Fraud is defined as the intentional, false representation, or concealment of a material fact for the purpose of inducing another to act upon it to his or her detriment. Each member of the management team will be familiar with the types of improprieties that might occur within his or her area of responsibility, and be alert for any indication of irregularity.

Any irregularity that is detected or suspected must be reported immediately to the Internal Auditor who coordinates all investigations with the Legal Department and other affected areas, both internal and external.

Actions Constituting Fraud

The terms defalcation, misappropriation, and other fiscal irregularities refer to, but are not

limited to;

• Any dishonest or fraudulent act.
• Misappropriation of funds, securities, supplies, or other assets.
• Impropriety in the handling or reporting of money or financial transactions.
• Profiteering as a result of insider knowledge of The Company’s activities.
• Disclosing confidential and proprietary information to outside parties.
• Disclosing to other persons, securities activities engaged in or contemplated by The Company.
• Accepting or seeking anything of material value from contractors, vendors, or persons

providing services/materials to the Company. Exception: Gifts less than $50 in value.

• Destruction, removal, or inappropriate use of records, furniture, fixtures, and equipment; and/or
• Any similar or related irregularity.

The relevant HR Policy and any Confidentiality agreement signed on acceptance of employment applies.

Other Irregularities

Irregularities concerning an employee’s moral, ethical, or behavioural conduct should be resolved by departmental management utilisation of the related Company and any other appropriate HR policy along with the HR Manager where necessary. If there is any question as to whether an action constitutes fraud, contact the Internal Auditor for guidance.

Investigation Responsibilities

The Internal Auditor has the primary responsibility for the investigation of all suspected fraudulent acts as defined in this policy. If the investigation substantiates that fraudulent activities have occurred, the Internal Auditor will issue reports to the Managing Director, and if appropriate, to the Board of Directors through the Audit Committee. Decisions to prosecute or refer the examination results to the appropriate law enforcement and/or regulatory agencies for independent investigation will be made in conjunction with legal counsel and senior management, as will final decisions on disposition of the case.

 Confidentiality

The Internal Auditor treats all information received confidentially. Any employee who suspects dishonest or fraudulent activity will notify the Internal Auditor immediately, and should not attempt to personally conduct investigations or interviews/interrogations related to any suspected fraudulent act (see Reporting Procedure section below).

Investigation results will not be disclosed or discussed with anyone other than those who have a legitimate need to know. This is important in order to avoid damaging the reputations of persons suspected but subsequently found innocent of wrongful conduct and to protect The Company from potential civil liability.

 Authorization for Investigating Suspected Fraud

Members of the Investigation Unit will comprise The Internal Auditor, The Human Resource Manager, the Legal Officer and an external industry specialist in the area under investigation (as necessary).

The Investigation Unit will have

• Free and unrestricted access to all Company records and premises, whether owned or rented; and
• The Company to examine, copy, and/or remove all or any portion of the contents of files, desks, cabinets, and other storage facilities on the premises without prior knowledge or consent of any individual who might use or have custody of any such items or facilities when it is within the scope of their investigation.

Reporting Procedures

Great care must be taken in the investigation of suspected improprieties or irregularities in order to avoid mistaken accusations or alerting suspected individuals that an investigation is being carried out.

An employee who discovers or suspects fraudulent activity will contact a member of the Investigation Unit immediately. The employee or other complainant may remain anonymous. All inquiries concerning the activity under investigation from the suspected individual, his or her attorney or representative, or any other inquirer should be directed to the Investigations Unit or the Legal Department. No information concerning the status of an investigation will be given out. The proper response to any inquiries is, “I am not at liberty to discuss this matter.”

Under no circumstances should any reference be made to “the allegation,” “the crime,” “the fraud,” “the forgery,” “the misappropriation,” or any other specific reference.

The reporting individual should be informed of the following:

• Do not contact the suspected individual in an effort to determine facts or demand restitution.
• Do not discuss the case, facts, suspicions, or allegations with anyone unless specifically asked to do so by the Legal Department or The Investigation Unit.

Termination

If an investigation results in a recommendation to terminate an individual, the recommendation will be reviewed for approval by the designated representatives from Human Resources and the Legal Department and, if necessary, by outside counsel, before any such action is taken.

The Investigation Unit does not have the Company to terminate an employee. The decision to terminate an employee is made by the employee’s manager in accordance with HR Policy#HR010-2010. Should the Investigation Unit believe the management decision inappropriate for the facts presented, the facts will be presented to the Board of Directors for a decision.

Administration

The Board of Directors is responsible for the administration, revision, interpretation, and application of this policy. The policy will be reviewed annually and revised as needed.

Approval ________________________________ _______________

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