Kinross Gold Corporation (“Kinross”) was a Canadian gold mining company, which developed and managed mining operations in the Americas, West Africa, and Russia. Kinross' common stock was registered with the SEC and traded on the New York and Toronto Stock Exchanges.
Tasiast Mauritanie Limited S.A. (“Tasiast”), a wholly-owned indirect subsidiary of Kinross, owned and operated the Tasiast mine in the Islamic Republic of Mauritania.
Chirano Gold Mines Ltd. (Chirano), a 90 percent-owned indirect subsidiary of Kinross, owned and operated the Chirano mine in Ghana.
According to the allegations in the cease and desist order, Kinross acquired Tasiast and Chirano, including their assets and mining operations in Mauritania and Ghana, from Red Back Mining, Inc., another Canadian mining company, for approximately $7.1 billion on September 17, 2010. Kinross' due diligence determined that Red Back lacked an anti-corruption compliance program and associated internal accounting controls. Despite this due diligence finding, Kinross did not address the compliance and internal controls issues in a timely way following the acquisition. By April of 2011, Kinross' internal audit group had concluded that the internal accounting controls concerning vendor selction and disbursement for goods and services at Tasiast and Chirano were inadequate, but Kinross management took no action. The audit group issued a nearly identical report in April 2012, and later reports from the audit group continued to fault the company's internal controls.
Thus, between the Tasiast and Chirano acquisition in September 2010 and at least 2014, Kinross paid vendors and consultants, often in connection with government interactions, without reasonable assurances that transactions were consistent with their stated purpose or the prohibition against making improper payments to government officials. For certain of these transactions, the company used petty cash to pay consultants which it then failed to accurately and fairly describe in its books and records. Also, in 2014, Kinross awarded a lucrative logistics contract to a company preferred by government officials without following its own bidding and tendering procedures and further contracted with a politically-well-connected third-party consultant to facilitate contacts with high-level government officials without conducting the heightened due diligence required by the company’s policies and procedures.
In an administrative proceeding on March 26, 2018, the SEC issued a settled cease and desist order to Kinross. Under the terms of the settlement, the SEC ordered the company to cease and desist violating the books and records and internal controls provisions of the FCPA, to pay a civil penalty of $950,000, and to report to the SEC for a term of one year on the status of the implementation of the company's improved anti-corruption compliance procedures and internal controls.
