Promoting ethical behaviour through good governance

Ensuring good governance and sound ethical behaviour is fundamental to our ability to create and sustain value over the longer-term. We are committed to taking a strong leadership role on issues relating to corruption and ethics, and are recognised in the sector for our positive stance in this area. Our approach to this issue is governed by our mandatory Code of Ethical Conduct, which reflects the Group's values and principles, and is periodically updated to provide for the changing regulatory context. Any identified breaches of the Code are investigated by management at the business unit level, with sensitive matters to be addressed by the Social, Ethics and Sustainability Committee of the Board.

In August 2011, an independent assessment of the ethical culture and risks in the Sanlam Group was conducted by KPMG. This was the fifth such assessment that they have conducted on a biennial basis since 2003. The assessment was undertaken in the format of an online survey made available to all staff members, with the aim of evaluating their understanding of ethical dilemmas and assessing their perceptions on the management of ethical concerns within the organisation. The response suggests an overall favourable perception of Sanlam's approach to encouraging ethical conduct, with a significant majority of employees expressing their belief in the integrity of the board and the Group CE. Transgressions of the Ethics Policy observed by respondents remained few. The types of misconduct most frequently observed by respondents to the survey related to discrimination against employees, mismanagement of organisational resources, and violating employee compensation, overtime, or benefit rules.

We have identified the provision of training on ethics as a priority and this has been implemented at a business level. This year we have developed a centrally coordinated training programme on conflict of interest to be rolled out by the businesses. We are also currently exploring the potential for the coordination of ethics training at the group level. Furthermore we would want to channel feedback from training interventions via an online platform to contribute to the measurement of the ethical culture and risks in Sanlam.

We adopted a zero tolerance policy towards unethical conduct. We have an anonymous hotline available for employees and others to report breaches of Sanlam ethical code, our preference is to create an open reporting environment, usually through our line managers. Over the past ten years we have had 176 calls to the hotline of a staff complement of over 9,000. Of these, less than ten percent of all callers felt the need to subsequently remain anonymous. We had 17 calls to the hotline in 2011 (  13  2  for SPF ), up from eight calls in 2010. All cases are investigated and a process is in place to track , report and close out all calls received. Actions taken as a consequence of resulting investigations include termination of employment, and cancellation of contracts in the case of suppliers and contractors.

In addition to addressing ethics and anti-corruption issues internally, we also take an active role in driving anti-corruption activities more broadly in the country. Sanlam is well represented at national and international anti-corruption forums through Business Unity South Africa (BUSA), the National Anti-Corruption Forum, UN Global Compact, B20 and Transparency International Anti-Corruption Working Groups. Sanlam chairs the ASISA Standing Committee on the control of money laundering and the prevention of the financing of terrorism.

Sanlam Group Compliance is currently conducting a high-level group-wide assessment of the readiness of the Sanlam businesses for the proposed Protection of Personal Information Bill (POPI). A detailed roadmap will be presented to the business for an in-depth impact study to prepare the Group for POPI. A project is currently underway within the Sanlam RSA businesses to prepare for the implementation of the underlying principles of international anti-money laundering (AML) standards. South Africa, as a member of the Financial Task Force (FARF) will have to adopt the revised international AML standards due to be adopted in 2012.

Engaging on policy development

Sanlam strives to play a constructive role in the development of national policy and regulation that impact our business. Our engagement on policy issues is undertaken with government primarily through industry associations such as BUSA, ASISA, various Business Chambers, Business Leadership and the NBI. The Sanlam Group CEO serves as Chairperson of ASISA and represents the industry at the highest levels of policy making and regulation. This year we have been active in engaging around the new and expected legislation relating, for example, to Treating Customers Fairly, the establishment of a National Social Security System (NSSS) and National Health Insurance (NHI), the Financial Sector Charter, as well as legislation on conflict of interest, money laundering, privacy and data protection, and the National Skills Accord.

We do not provide financial support to any political party.

Ethical management practices: addressing the issue of anti-corruption

Currently, there is no dedicated employee training aimed at "anti-corruption". During the course of 2011, there were, however, a number of training and awareness initiatives aimed at addressing the issue of corruption. The definition of "unlawful conduct" in the Sanlam Group Financial Crime Combating Policy includes a reference to corrupt practices. General fraud awareness campaigns are conducted by the forensic functions of Sanlam Personal Finance and Sanlam Sky to focus on the prevention, detection and reporting of unlawful conduct.

In terms of the Sanlam Group AML/CFT (Anti-Money Laundering & the Countering of Financing of Terrorism) Policy, each business must ensure that they adopt and implement their own internal rules to give effect to the policy. Each business then adopts its own strategy in respect of training and awareness. In terms of the FAIS regulations, each business must ensure that a conflicts of interest (COI) training programme is developed and initiated. We are currently in the process of finalising the training programme and it is anticipated that training will be complete by the end of March 2012.

Should breaches of the Code of Ethical Conduct occur, relevant individuals will be investigated by management at business unit level, with sensitive issues passed through the Social, Ethics & Sustainability Committee. Relevant policies applied across the Group include the Group Disciplinary Code, the Group Financial Crime Combating Policy and the Group Policy on the Group Giving or Receipt of Gratifications.