Canadian gold mining company Kinross Gold Corporation agreed to pay $950,000 to settle SEC charges of violating the Foreign Corrupt Practices Act (FCPA) arising from the company’s repeated failure to implement adequate accounting controls of two African subsidiaries the company acquired in 2010. See SEC Press Release and related SEC Order.
According to the SEC, Kinross Gold acquired the African subsidiaries with knowledge they lacked anti-corruption compliance programs and internal accounting controls. It took roughly three years to implement proper controls but even then Kinross Gold failed to maintain them by, among other things, (i) contracting with a company preferred by Mauritanian government officials in contravention of Kinross Gold’s bidding and tendering procedures, (ii) contracting with a politically-connected consultant to facilitate contacts with high-level Mauritanian government officials, and (iii) paying vendors without regard to company policies prohibiting improper payments.
From all this, the SEC found that Kinross Gold violated books and records and internal accounting controls provisions of the federal securities laws. In announcing the settlement, the SEC stressed that “companies should take particular care to remediate known accounting controls issues when making acquisitions to mitigate the risk that company funds will be misused for unauthorized purposes.”
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