SEC fines Kinross, cites corruption violations

by Mike Caswell

The U.S. Securities and Exchange Commission has fined Kinross Gold Corp. $950,000 for violations of the Foreign Corrupt Practices Act. (All figures are in U.S. dollars.) The SEC cites payments, some in cash, to individuals linked to governments in Mauritania and Ghana. Among other things, the company paid $50-million to a government-preferred shipper that turned out to be inept and $715,000 to establish a "semi-formal liaison" with the government, the SEC claims.

The sanction for Kinross is contained in an administrative order handed down on Monday, March 26. In addition to the fine, the SEC has ordered the company to implement procedures that will prevent future violations. Kinross accepted the sanctions to settle the case, without admitting any wrongdoing.

The violations, as described in Monday's order, mostly stem from Kinross's development of the Tasiast mine in Mauritania. The company acquired the operation, along with another mine in Ghana, from Vancouver's Red Back Mining Inc. for $7.1-billion. Problems should have been evident almost immediately, at least according to the SEC. In April, 2011, shortly after completing the deal, Kinross's internal audit group concluded that there were poor internal accounting controls with the acquired assets. Despite this finding, there was no immediate action on the part of Kinross's management, the SEC says. In fact, in the four years that followed the company made many transactions without reasonable assurances that the money was going to the stated purpose, the order states.

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