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Journey to ethics excellence Claire Lewis

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1 Journey to ethics excellence Claire Lewis
Head, Compliance Coordination & Corporate Compliance Officer SNC-Lavalin Group Inc. December 2014

2 Agenda Reputational Restoration………………………………………………………… Our Commitment to Ethics Excellence…………………………………………. Delivering on Our Commitment: Progress To Date…………………………… Our Ethics & Compliance Program and its 4 Building Blocks……………….. Prevention: Tone from the Top / Policies / Training / Due Diligence………... Detection: Compliance Control Framework / Hotline / Investigation...……… Respond and Improve……………………………………………………………. The Independent Compliance Monitor………………………………………….. 3 4 5-8 9-10 11-24 25-27 28-30 31-32

3 A Key Objective: Restoring Reputation and Trust with All Stakeholders

4 Our Commitment to Ethics Excellence
SNC-Lavalin is committed to doing business with highest integrity Our ambition is to become the global benchmark against which other companies measure themselves. We strive to set a higher standard for: How ethics is woven into the fabric of the way we do business, and Transparency in the way we report to our stakeholders.

5 Delivering on Our Commitment (1) Early Steps
Key leadership and structural changes Updated Code of Ethics and Business Conduct EthicsPoint Hotline Ethics and Compliance Committee Agent Review Committee Initial Revision of Corporate Policies including: Commercial Agents and Representatives Policy (#1151) Management Override Policy (#1001) Levels of Authority Policy (#1009) Political Contributions Policy (#1010) Employee Expense Account Policy (#1453) Third party screening of new hires and appointments to the Management Committee and the Office of the President

6 Delivering on Our Commitment (2) Establishment of Compliance Organization
New Chief Compliance Officer function established on March 1, 2013 Ethics and Compliance Awareness Session at April 2013 Management Committee Global Compliance Organization fully ramped up since June 2013 Compliance Consultation Centre established Compliance intranet-website established 90 days Amnesty Program from June until August, 2013 1st Compliance Officer Meeting in July 2013 Anti-Corruption Manual issued with guidance information on relevant Compliance topics New Policy on Business Partner Compliance Due Diligence effective August 1st, 2013 Compliance Investigations integrated in Ethics & Compliance function in September 2013

7 Delivering on Our Commitment (3) Implementation of Compliance Processes
External validation / monitoring of compliance program implementation by WBG independent compliance monitor started August 2013 Global Compliance in-person training program started in September 2013 Initial report by independent compliance monitor submitted to the World Bank on December 13, 2013 Business Partner Compliance Due Diligence workflow supporting IT-Tool established in December 2013 2nd Update of the Code of Ethics and Business Conduct effective January 2014 New Policy on Gifts and Hospitality issued in January 2014 Specific key-user training on Compliance Due Diligence process and Gifts and Hospitality Policy started New Policy on Prohibition of Facilitation Payments issued in February 2014

8 Delivering on Our Commitment (4) Continuous Improvement
2nd Update of the Code of Ethics and Business Conduct effective January 2014 SNC-Lavalin gets AMF approval to bid on Quebec public contracts in February 2014 Employee certification on the updated Code of Ethics and Business Conduct performed during Q (99.99% certification) Launch of New Governance Framework: “House of Policies” 2nd Compliance Officer Meeting in April 2014 First Semi-Annual Report issued by the independent compliance monitor to the World Bank in May 2014 Announcement to acquire Kentz Corporation Limited, a leading Oil & Gas services company with 14,500 employees operating in 36 countries on June 23, 2014 following extensive Ethics & Compliance due diligence Comprehensive Ethics & Compliance Risk Assessment, July-August 2014

9 Ethics & Compliance Program: 4 Building Blocks

10 Program Implementation and Validation
Prevent Detect Respond Management Responsibility Tone from the Top Policies and Procedures Compliance Risk Management Training & Communication Support and Advice Business Partner Due Diligence • M&A Due Diligence Personnel Processes Collective Action Effective Controls Resources & Skills for Global Investigations Regular E&C Audits Compliance Reviews Disciplinary Sanctions Unbiased Consequences Remediation of Systematic Deficiencies Prevention of Recurrence Compliance Organization Independent Compliance Monitor / External Validation

11 PREVENTion General focus on prevention of wrongdoing through:
Tone from the Top Policies and procedures Education and training tailored to compliance risks Clear communications Compliance organization as trusted advisors Business Partner due diligence Integration in personnel processes Collective action against corruption

12 Tone from the Top All managers have to deliver the Tone from the Top:
Clear and consistent messages from top leadership team Engage middle management in compliance communication Include compliance messages in regular management meetings and events Management leads by word and deed Encourage open communications Reiterate that everyone is responsible for ethics and compliance Recognize exemplary ethics and compliance behavior Integrate ethics-and-compliance-related performance criteria into compensation system

13 Policies and Procedures
Maintain a Framework of Good Governance Business Partners Gift & Hospitality Facilitation Payments Political Contributions Sponsorships & Donations Reporting of Misconduct Investigation Protocol House of Policies

14 Education and Training
Create appropriate awareness with staff at all levels TARGET# STATUS TRAINING TARGET GROUP In-Person Training Anti-Corruption Business Partner Overview General Management Procurement, Business Development, Project Management, Government Relations 3156 employees globally 2628/3156 trained 180 sessions to date 83 various office & project sites Tone at the top ExCom / OpCom Board of Directors 18 11 April 14/2014 Code of Ethics Certification All staff / consultants by March 31st, 2014 30500 99.99% Certified As of July 15, 2014

15 Compliance In-Person Training
Sweden Germany Poland Romania 61 3 Russia Belgium France U.K. Canada United States 2034 177 Algeria Morocco Tunisia 103 Egypt Jordan 4 Venezuela 14 China Thailand 27 229 106 Saudi Arabia U.A.E. India Indonesia South Korea Malaysia Colombia Panama 33 39 Angola Cameroon Equatorial Guinea 13 New Caledonia 40 154 Brazil Peru 8 26 Australia South Africa 56 29 Chile As at July 15, 2014 In person Anti-Corruption and Business Partner Policy Training to be provided to approximately employees in ‘sensitive roles’ 8 U.S. cities / 29 Canadian locations / 46 international locations / approximately 200 training sessions / 4 languages 2628 employees in ‘sensitive roles’ have received training to date

16 Compliance Communication
Clear and Consistent Messages to All Stakeholders: Internal Communication Frequent and consistent placement of compliance messages Use of all possible communication channels External Stakeholder Management Clients Business partners and suppliers Governmental agencies Industry associations Media

17 New Ethics & Compliance INTRANET Page
Useful information on compliance Frequently asked questions Compliance process descriptions Contact information for compliance Available in French and English Frequently updated

18 Anti-Corruption Manual
A new resource intended to complement the Code of Ethics, setting out mandatory principles in seven (7) key corruption risk areas: Gifts and Hospitality Prohibition of Facilitation Payments Corporate Charitable Donations Sponsorships Business Partners Recordkeeping Mergers and Acquisitions, Joint Ventures, and Minority Stakes The Manual provides information on consultation and approval protocols for a range of common business activities: Compliance Officers are prominently featured as a key point of contact.

19 Compliance Organization
Board of Directors President and Chief Executive Officer Chief Compliance Officer Compliance Program, Monitoring & Reporting Corporate Functions Compliance Infrastructure Group Compliance Power Compliance Ress., Env. & Water Group Compliance Africa, Asia & Middle-East Compliance Compliance Training and Consultation General Construction compliance Transportation Construction Compliance Mining & Metallurgy Compliance Latin America Compliance Compliance Coordination Operations & Maintenance Compliance Infrastructure Engineering Compliance Oil & Gas Compliance Europe Compliance Compliance Investigations Infrastructure Concessions & Investments Compliance Environment & Water Compliance Project Office

20 Compliance OfficerS @ SNC-Lavalin
Mandate and Responsibilities Promote an ethics-based culture in day to day business Support tone from the top within BU/regions Encourage reporting of compliance violations and concerns Develop and implement training and awareness initiatives Provide compliance advice and support to employees Develop and execute compliance operating plans within BU/regions Conduct compliance monitoring, oversight and reporting Coordinate compliance input for acquisitions, joint ventures, and related transactions

21 Business Partner Due Diligence
Full transparency and accountability for third party risk Risk level of the proposed relationship between SNCL and the Business Partner will determine the depth of necessary Compliance Due Diligence (CDD) and the required level of authority for management approval Responsibility for CDD rests with the Business Unit that wants to engage the Business Partner Overall process is supported by a user-friendly IT-solution Basic Red Flag Evaluation Integrity Check Lower Risk Medium Risk Higher Risk Risk Assessment Due Diligence Approval BU LoA BU EVP BU CO Chief CO © SNC-Lavalin

22 M&A Compliance DUE DILIGENCE
Thoroughly analyzing the target company’s Ethics & Compliance standards in a dedicated Ethics & Compliance Due Diligence work stream Measuring the target company’s Ethics & Compliance status-quo against the reference framework of the 11 Integrity Compliance Guidelines of the World Bank Group Reviewing all Ethics & Compliance relevant documents and information made available in the data room Performing integrity checks on the target company’s senior management and ownership structure Conducting in-depth personal interviews with the target company’s senior management, including the CEO, CFO, Compliance Officer and other key functions Developing a detailed integration plan along the identified gaps between SNC-Lavalin’s and the target company’s Ethics & Compliance program

23 Non-Financial Objectives
2014 Goal Structure Financial Objectives (Overall Weight: 2/3) Non-Financial Objectives (Overall Weight: 1/3) Objective 1 Ethics and Compliance (25%) 15% - Company Program Implementation: continue to implement an effective and sustainable ethics and compliance program 10% - Program execution: effectively execute and operationalize the Ethics and Compliance Program within area of responsibility HSSE (10%) Goal 1 Goal 2 Objective 2 Strategy, Organization and People (65%)

24 Collective Action Against Corruption
Several initiatives being explored to promote fair and equal market conditions: Partnering Against Corruption Initiative (PACI) United Nations Global Compact Transparency International International Anti-Corruption Academy (IACA) Construction Sector Transparency Initiative (CoST) Ordre des Ingénieurs du Québec Endow Faculty Chair on Global Business Ethics at Canadian University Harvard Business School Case Study

25 DETECT AND MONITOR Identify misconduct and compliance gaps through:
Effective controls Resources / skills for global deployment of compliance investigations Regular Ethics & Compliance audits Regular compliance reviews Periodic and “spot” risk assessments External review and assessment of program

26 Compliance Control Framework
Independent and continuous testing of the effectiveness of all modules of the SNC-Lavalin Compliance Program “Tone from the Top” Compliance Organization Case Monitoring Effectiveness 10 1 3 2 Tracking Training & Program Communications 4 Implementation of Policies and Procedures 3rd parties / Business Partners Tender & Contracts Gifts & Hospitality Finance & Accounting Integration with Personnel Processes 9 8 7 6 5

27 Channels for Whistleblowing and Consultation
! ? TELL US ASK US Channel Duty to Report Ethics and Compliance Hotline (EthicsPoint) Amnesty Program* Compliance Consultation Centre (CCC) Purpose Reporting of Allegations and Complaints Reporting of own involvement in wrong doing Requesting advice and support on compliance in business activities How to contact Any Channel By Phone + Online Any Channel By * Amnesty Program period from June 3 to August 30, 2013

28 RESPOND Measures to respond to improper conduct
Swift and fair disciplinary sanctions Unbiased consequences regardless of position / performance in the organization Remediation of systematic deficiencies and harm to immediately stem any further consequences Prevention of recurrence No Retaliation

29 Compliance Investigation
Expeditious investigation of potential misconduct: “Duty-to-report” and EthicsPoint hotline are important enablers in order to enforce compliant behavior and to sanction misconduct Highly experienced investigation team consisting of 15 investigators with professional investigation background was set up to investigate compliance violations, separate from internal audit function Clear mandate for compliance investigations Investigation reports are issued to Ethics & Compliance Committee, who will approve disciplinary sanctions and further preventive measures

30 CONTINUOUSLY IMPROVE Encourage open discussion and feedback
Debrief on all incidents Also identify “near misses” Tracking of remediation activities Continuously look for improvement opportunities Re-align policies and processes Communicate lessons learned Walk the talk and recognize role model behavior

31 Independent Compliance Monitor
Providing External Validation of Compliance Program Engaged by SNC-Lavalin in accordance with a Negotiated Resolution Agreement, the Monitor reports to the World Bank Reviews the implementation and effectiveness of the SNC- Lavalin Ethics & Compliance Program, measuring against the Integrity Compliance Guidelines of the WBG Provides recommendations for further improvements of the Ethics & Compliance Program

32 Independent Compliance Monitor
The Monitor notes that, while challenges remain, “…SNC-Lavalin has continued to demonstrate deep commitment to its Compliance ‘journey’ and to continue to make steady, strong, and visible progress down that path”. *  Extract from the Monitor’s First Semi-Annual Report , May 2014 “…the Compliance Group’s strong leadership in not only cementing the measures already put in place since 2012 but by continuing to evolve the program” *  Extract from the Monitor’s second Semi-Annual Report , November 2014 1. Prevent Preventative systems and controls to avoid compliance violations 3. Respond 2. Detect Measures to discipline and remedy improper conduct and prevent its recurrence Instruments to identify misconduct and compliance gaps

33 Individual Responsibility Is Key!
Questions to guide you towards compliant and responsible behavior Is it the right thing for SNC- Lavalin? Is it consistent with my core values and SNC-Lavalin’s? Is it legal? Is it ethical? Is it something I am willing to be held accountable for? If the answer to those questions is “Yes”, Don’t worry, be confident!

34 SNC-Lavalin strives to keep its global community informed of its progress towards achieving the best ethics, compliance, governance, quality, sustainability and health & safety standards in everything that it does. For more information on how SNC-Lavalin is delivering on its commitment to ethics excellence, Follow Us online:

35 WE CARE about the quality of our work.
WE CARE embodies SNC-Lavalin’s key corporate values and beliefs. It is the cornerstone of everything we do as a company. Ethics, health and safety, employees, the environment, communities and quality: these values all influence the decisions we make every day. And importantly, they guide us in how we serve our clients and therefore affect how we are perceived by our external partners. WE CARE is integral to the way we perform on a daily basis. It is both a responsibility and a source of satisfaction and pride by providing such important standards to all we do. WE CARE about being world-class in matters of governance and ethics for our shareholders, clients and employees. WE CARE about the health and safety of our employees, of those who work under our care, and of the people our projects serve. WE CARE about our employees, their personal growth, career development and general well-being. WE CARE about the communities where we live and work and their sustainable development, and we commit to fulfilling our responsibilities as a global citizen. WE CARE about the environment and about conducting our business in an environmentally responsible manner. WE CARE about the quality of our work.


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