Denel SOC LTD

Based on public information, there is no readily available evidence that the company publishes a statement from the Chief Executive Officer or the Chair of the Board supporting the ethics and anti-corruption agenda of the company. TI notes the CEO statement in the Annual Report, but this does not have a strong anti-corruption focus.

Based on public information, there is no readily available evidence that the company’s Chief Executive Officer or the Chair of the Board demonstrate a strong personal, external facing commitment to the ethics and anti-corruption agenda of the company.

Based on public information, there is no readily available evidence that the company’s Chief Executive Officer demonstrates a strong personal, internal-facing commitment to the ethics and anti-corruption agenda of the company, actively promoting the ethics and anti-corruption agenda at all levels of the company structure.

Based on public information, there is evidence that the company publishes a statement of values representing high standards of business conduct, including integrity, honesty, trust, and accountability.

Based on public information, there is evidence that the company strives to adhere to the principles of the UN Global Compact, promoting anti-corruption and business ethics . However, a search of the UN Global Compact participant list shows no readily available evidence that Denel is an official signatory. There is also no explicit evidence of a clear intention of the company to join this initiative. The company therefore scores 0.

Based on public information, there is evidence that the company has appointed a Board committee with overall corporate responsibility for its ethics and anti-corruption agenda. This is the Social and Ethics Committee chaired by a non-exec director (Stella Nkomo) and attended by other non-execs, execs and the CEO. Terms of reference are set out in the latest annual report. Furthermore, the Audit and Risk committee also shares part of the responsibilities in regards to issues arising from the hotline.

Based on public information, there is no readily available evidence that the company has appointed a person at a senior level within the company to have responsibility for implementing the company’s ethics and anti-corruption agenda. TI notes the role of the Group Company Secretary, but the scope of responsibility and the terms of reference remain unclear.

Based on public information, there is evidence of regular Board level monitoring and review of the performance of the company’s ethics and anti-corruption agenda. The Social and Ethics Committee has a mandate to review policies and measures for fraud and corruption within an annual acycle. The company therefore scores 2.

Based on public information, there is no readily available evidence of a formal, clear, written plan in place on which the review of the ethics and anti-corruption agenda by the Board is based, or evidence of improvement plans being implemented when issues are identified.

Based on public information, there is evidence that the company has a process to follow up identified cases of fraud and corruption and to take corrective action. However, it is unclear whether this is a part of a formal process to review and where appropriate update its policies and practices. The company therefore scores 1.

Based on public information, there is evidence that the company has a formal anti-corruption risk assessment procedure implemented enterprise-wide. The company has an enterprise-wide risk management approach based on COSO (Committee of Sponsoring Organisations of the Treadway Commission). There is evidence that fraud and corruption are part of the assessment process. The company therefore scores 1. To score higher the company would need to provide evidence of the development and application of mitigation plans.

Based on public information, there is no readily available evidence that the company has a formal anti-corruption risk assessment procedure for assessing proposed business decisions, with clear requirements on the circumstances under which such a procedure should be applied. The Annual Report 2014 mentions guidance on making ethical choices, as well as due diligence required in all business decisions, but TI has seen no specific evidence of any procedure regarding anti-corruption risk assessment.

Based on public information, there is no readily available evidence that the company conducts due diligence that minimises corruption risk when selecting or reappointing its agents. TI notes that the company demonstrates understanding of the importance of conducting due diligence in all business decisions, but there is no evidence of a specific procedure that minimises corruption risk. The company therefore scores 0.

Based on public information, there is no readily available evidence that the company has contractual rights and processes for the behaviour, monitoring, control, and audit of agents with respect to countering corruption. TI notes that the Code of Ethics and the Annual Report discuss the company’s expectations of agents, but does not amount to specific contractual rights and processes for the behaviour, monitoring, control, and audit of agents with respect to countering corruption.

Based on public information, there is some evidence that the company makes clear to contractors, sub-contractors, and suppliers, through policy, its stance on bribery and corruption. The Code of Conduct clearly states that it applies to suppliers. However, there is no evidence as to how this is translated into contractual terms or what the consequences of breaches to these standards would be. The company therefore scores 1.

Based on public information, there is no readily available evidence that the company explicitly addresses the corruption risks associated with offset contracting.

Based on public information, there is no readily available evidence that the company conducts due diligence that minimises corruption risk when selecting its offset partners and offset brokers.

Based on public information, there is evidence that the company has an anti-corruption policy that prohibits corruption in its various forms.

Based on public information, there is evidence that the company has a zero tolerance policy for violations of its Code of Ethics. The company therefore scores 1. To score higher the company would need to provide evidence that it has a zero tolerance policy of corruption or bribery specifically.

Based on public information, there is evidence that the company's Code of Ethics is easily accessible to Board members, employees and third parties. The Code is available online in English, with evidence suggesting that the company only operates in South Africa. The company therefore scores 2.

Based on public information, there is evidence that the company’s anti-corruption policy is easily understandable and clear to Board members, employees and third parties.

Based on public information, there is evidence that the anti-corruption policy explicitly applies to all employees and members of the Board.

Based on public information, there is evidence that the company has a policy on potential conflicts of interest, which applies to both employees and Board members. The policy contains a definition and examples of potential conflicts of interest.

Based on public information, there is evidence that the company has a policy for the giving and receipt of gifts. However, it is unclear whether the upper limits apply to both giving and receiving of gifts. Furthermore, there is not enough evidence of a detailed senior authorisation procedure to ensure that such transactions are bona fide and not a subtefuge for bribery. The company therefore scores 1.

Based on public information, there is evidence that the company has a policy for the receipt of hospitality, and an upper limit is set. There is guidance in the Q and A section of the Code of Ethics on offering hospitatlity, but there is no specific definition of what hospitality constitutes and whether the policy addresses both the giving and receiving of hospitality. Furthermore, the authorisation procedure and any upper limits also remain unclear. The company therefore scores 1. To score higher, the company would need to provide further evidence of these details on regulations for hospitality.

Based on public information, there is no readily available evidence that the company has a policy that explicitly prohibits facilitation payments. TI notes that the Code of Ethics prohibits bribery and kickbacks, but does not explicitly prohibit facilitation payments.

Based on public information, there is no readily available evidence that the company prohibits political contributions, or regulates such contributions in order to prevent undue influence or other corrupt intent.

Based on public information, there is no readily available evidence that the company has a clear policy on engagement in lobbying activities, in order to prevent undue influence or other corrupt intent, or discloses the issues on which the company lobbies. TI notes a section in the latest annual report regarding public policy compliance, but this does not amount to a clear company-wide policy on engagement in lobbying activities.

Based on public information, there is limited evidence that the company regulates charitable contributions through the Social and Ethics Committee. Whilst corporate social investment is discussed in the annual report, there is no evidence that individual contributions are publicly declared. The company therefore scores 1.

Based on public information, there is some evidence that the company provides written guidance to help Board members and employees understand and implement the firm’s ethics and anti-corruption agenda. This is in the form of a series of Q&As at the end of the Code of Ethics. The company therefore scores 1.

Based on public information, there is evidence that the company has a training programme on its ethics and compliance systems, which includes an anti-corruption policy. The company therefore scores 1. To score higher the company would need to provide evidence of an explicit anti-corruption module.

Based on public information, there is evidence that the company provides ethics training throughout the company. However, it is unclear whether all employees are trained. The company therefore scores 1.

Based on public information, there is evidence that the company provides ethics training to Board members. However, it is unclear how often such training takes place and whether it deals with anti-corruption specifically. The company therefore scores 1.

Based on public information, there is no readily available evidence that the company provides tailored ethics and anti-corruption training for employees in sensitive positions. TI notes that the board and the top 100 leaders attended an ethics course, but this does not amount to a tailored ethics and anti-corruption training for employees in sensitive positions.

Based on public information, there is evidence that the company has a process by which employees declare conflicts of interest to a manager or via the Declaration of Interests section of their employment contracts. The company therefore scores 1. To score higher the company would need to provide evidence that employees report conflicts of interest to an independent department.

Based on public information, there is evidence that the company is explicit in its commitment to apply disciplinary procedures to employees, Directors and Board members found to have violated the Code of Ethics.

Based on public information, there is evidence that the company has multiple channels for employees to report concerns or instances of suspected corrupt activity. In particular, employees can report using the Ethics Hotline which is operated independently and facilitates anonymous reporting.

Based on public information, there is evidence that across geographies, all employees have access to more than whistleblowing channel. This includes the Ethics Hotline and local management channels.2

Based on public information, there is no readily available evidence that the company has formal and comprehensive mechanisms to assure itself that whistleblowing by employees is not deterred, or that whistleblowers are treated supportively.

Based on public information, there is evidence that the company has well-publicised resources available to all employees where help and advice can be sought on corruption-related issues. These resources include local management and the Ethics Hotline.

Based on public information, there is no readily available evidence that the company has a commitment to non-retaliation for bona fide reporting of corruption.