HUMAN CAPITAL FRAUD AND CORRUPTION PREVENTION

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1 1. Policy Statement Grindrod Limited ( Grindrod ) is committed to its responsibility of protecting its revenue, expenditure, assets and reputation from any attempt by any person to gain financial or other benefit in an unlawful, dishonest or unethical manner. Fraud, corruption, theft, maladministration or any other dishonest activities of a similar nature will not be tolerated. Incidents and suspicions will be investigated and treated with the application of the full extent of the law. Grindrod realises the importance of securing sound and sustainable management of the financial affairs of the company as well as its subsidiaries and is furthermore committed to the strict compliance with both the letter and the spirit of any legislation or codes of best practices impacting on the company. This commitment of Grindrod stretches further than the mere adherence to legislation and encompasses the principles of good governance as expounded in the King Report on Corporate Governance. This policy confirms Grindrod s stated commitment to the principles of transparency, fairness, integrity and accountability reflected in good corporate governance practice. 1.1 Grindrod has instituted and maintains an anti-fraud environment. Grindrod will not tolerate crime within the organisations with which we interact. Fraud reduction is the focus of all governing and independent structures. All employees have a responsibility to assist in combating fraud and to report fraud in terms of the Fraud Response Plan. 1.2 Grindrod understands and manages its risks. We wish to be a risk intelligent company and as such: Our fraud and corruption risks are assessed regularly. Mitigating activities will be implemented to address emerging risks. Cognisance to fraud risk is given in all procedural implementations and changes. Internal controls and audit measures are in place to identify and manage fraud risk. 1.3 Grindrod is proactive in defending its assets. Grindrod actively and continuously searches for evidence of fraud and corruption through appropriate prevention and detection mechanisms. Grindrod is monitoring direct and indirect losses incurred via fraud, through effective information and communication. Grindrod encourages the practice of well-intentioned whistle blowing. page 1 of 5

2 1.4 Grindrod reacts swiftly when a crime is uncovered. Grindrod reacts swiftly and appropriately when a crime is uncovered, indicating our complete commitment of zero-tolerance towards crime. 1.5 This policy applies to any actual or suspected fraud, to: All employees of Grindrod Limited and their immediate family All members of the various subsidiaries of Grindrod Service providers and their employees Government bodies and other stakeholders. 2. Background The objective of fraud and corruption prevention within Grindrod is to manage the susceptibility to risk with a view to reducing it and to raise the level of fraud awareness amongst employees and other stakeholders. Fraud and corruption prevention is a process that is intended to reduce the risk of fraud and, upon the occurrence of a fraud, ensure detection and provide contingency plans that will protect the interests of Grindrod, where possible, and result in successful investigation and prosecution of the offender. Fraud prevention strategies must be integrated into and synchronized with the overall business strategies and policies, and comply with relevant legislation and government initiatives. In this policy document and where the context lends itself to it, the word fraud should be read to include other whitecollar crimes such as corruption and theft. 3. Stance Toward Fraud And Corruption Grindrod Limited views any threat to its revenue, assets or reputation as material and will act with a zero tolerance stance to reported or suspected instances of irregular behaviour or misconduct, as described in this policy. The Board, management, staff and other stakeholders place a strong emphasis on fraud prevention to reduce opportunities for fraud, and fraud deterrence which may persuade individuals not to commit fraud. Prevention and deterrence measures are considered favourable to detection and investigation measures and the purpose of this policy is to communicate the Group s stance in this regard. Buy-in to this policy exists from the Board and executive management and the policy supports the Board s efforts in creating a culture of honesty and ethical values, as well as to communicating acceptable behaviour and expectations of each employee. 4. What Is Fraud? Fraud comprises the intentional and unlawful making of a misrepresentation which causes actual prejudice or has the potential to cause prejudice to another. For purposes of this document, and for ease of reference, fraud is deemed to include other crimes and offences committed against Grindrod. All references to fraud in this report should also be read to refer to any activity involving dishonesty or deception, which may result in damage to Grindrod, either through financial loss or reputational damage, whether or not there is any personal financial benefit to the perpetrator. For purposes of this policy, and for ease of reference, actions constituting fraud include but are not limited to: Activities involving dishonesty and deception. Misappropriation of funds or other assets through misrepresentation or deception of any nature. Theft of money, consumables or assets of any nature, including intellectual property and is the unlawful and intentional taking of another s property with the intention to deprive the owner of its rights permanently. Misconduct in the handling or reporting of cash or financial transactions. Disclosing confidential or proprietary information to outside parties for financial or other benefit. page 2 of 5

3 An omission in respect of information where one has an obligation to disclose. Requesting or accepting anything of material value from contractors, suppliers or other parties where such acceptance is contrary to Grindrod s Code of Conduct or anything that could be considered reasonable business practice. Misstatements of qualifications, experience and other material facts on job applications and CV s for recruiting purposes. Misstatements of material facts by bidders on tender, proposal or quotation documentation (including BEE ownership). Deliberately omitting or refusing to report or act upon reports of irregular or dishonest behaviour. Abuse of company facilities. Bribery, blackmail, secret commissions and / or extortion involving the Group s employees. The potential perpetrators of fraud include employees in management and other positions within the Group, persons acting within governing structures, employees and other service providers and employees and owners of companies providing goods and services to Grindrod. 5. What is Corruption? Broadly-speaking, corruption is the giving or offering or accepting of any gratification, whether for the benefit of that person or another, as an inducement or reward for certain improper actions. It differs from fraud in that both parties are knowingly involved and both benefit in some way from the agreement. The Anti-Corruption Act 8 of 2003 was promulgated on 16 July 2003: Exercising preferential treatment in the awarding of tenders. Manipulating the value of assets. Manipulating the procurement process. Performing favours for relatives and friends. Disclosure of confidential information by an employee about his / her company / department. Avoiding compliance with laws and regulations. Manipulating the value of assets. Being influenced in the allocation of public funds. Performing favours for relatives and friends. Averting the legal consequences of unlawful acts or omissions. Avoiding compliance with laws and regulations. Intentional dereliction of duties as a result of payment or favours received from third parties. Gratification as referred to above can include any of the following: Money, whether in cash or otherwise. Any donation, gift, loan, fee, reward, valuable security, property or interest in property of any description, whether movable or immovable, or any other similar advantage. The avoidance of a loss, liability, penalty, forfeiture, punishment or other disadvantage. Any office, status, honour, employment, contract of employment or services, any agreement to give employment or render services in any capacity and residential or holiday accommodationany valuable consideration or benefit of any kind, including any discount, commission, rebate, bonus, deduction or percentage. Any valuable consideration or benefit of any kind, including any discount, commission, rebate, bonus, deduction or percentage. page 3 of 5

4 6. Protected Discolsures Any disclosure made in good faith in accordance with any reporting procedure prescribed by Grindrod is considered to be a protected disclosure. An employee making such a protected disclosure is protected, inter alia, from being subjected to any occupational detriment as a result of the protected disclosure. Any employee or other stakeholder who suspects or reports suspected dishonest activity or such activity that he / she witnessed, should be afforded the opportunity to remain anonymous should this be his / her wish. It is the responsibility of every employee of Grindrod to report all incidents of fraud, corruption, theft and maladministration or any other dishonest activities of a similar nature to his / her manager. All information received via a protected disclosure tip-off relating to irregularities will be treated as highly confidential. The investigation will be handled in a confidential manner and no information will be disclosed or discussed with any person other than those who have a legitimate right to such information. This is to avoid damage to the reputation of a suspect who is, subsequent to an investigation, found innocent of wrongful conduct. No information with regard to the issues covered within this policy may be shared with any external parties or the media without the express permission of the Chief Executive Officer. 7. Reporting Requirements Legislation and regulations create reporting duties with which there must be compliance and that, inter alia, sanction non-compliance by disciplinary action or criminal prosecution. It is important to understand that an employee does not have to be involved in the commission of a crime for the reporting duty to apply. Knowledge or suspicion of criminal conduct triggers the reporting duty. Furthermore, these triggers are not confined to a subjective belief - when somebody ought to have known or suspected a criminal action, the reporting duties also apply. Thus, wilful blindness and negligence in failing to detect or report an obvious fraud will also be punishable. 7.1 The reporting duty in terms of the AC Section 48 of the AC stipulates that any person who knows or ought reasonably to have known or suspects that another person has committed or is involved with any activity where: Gratification has been demanded, solicited, accepted or obtained for any person in contravention of any provision of the AC, or if an attempt has been made to demand, solicit, accept or obtain any gratification from any person in contravention of any provision of the Act, that person must, as soon as possible, report such fact together with the name or any other information relating to the identity of the other person or persons involved. In terms of Section 48 (2) of the AC, failure to comply with this obligation will constitute an offence. Provision is made for a sentence not exceeding 25 years and / or a fine not exceeding N$ In terms of Section 48 (2) of the AC, each and every person has a duty to report corruption and as such Grindrod requires that every employee must not only report corruption in terms of its policies, but also in terms of the AC, without delay. 7.2 The reporting duty in terms of common law principles related to the employer employee relationship As the employer - employee relationship includes the requirement of trust; every employee has a common law duty to report to the employer knowledge of any fact that might have a negative impact on the employer s business. The Board expects employees, stakeholders and service providers to report any reasonable suspicions, of whatever value, to the Financial Director. The ultimate decision to pursue an investigation is the responsibility of the Financial Director who will weigh the evidence and decide on the appropriate action to be taken. Failure of an employee to comply with this requirement may result in disciplinary action. page 4 of 5

5 8. Reporting Procedures And Resolution Procedures It is the responsibility of all employees to immediately report all allegations or incidents of fraud to their immediate manager or, if the employee has reason to believe that his / her immediate manager is involved, to the next level of management. Should employees wish to report allegations of fraud, they can report their suspicion directly to either: Any member of operational management The Group Internal Auditorthe Financial Director The Group Secretary The applicable Executive Director The Financial Director The Chief Executive Officer or anonymously to the Grindrod Ethics Hotline (Tip-offs Anonymous), the contact details of which are as follows: Use of a dedicated FreeCall number which is: South Africa & Namibia Maputo (Mozambique) Singapore Use of one unique address which is grindrodethics@tip-offs.com. FreePost address: Free Post KZN 138, Umhlanga Rocks, FreeFacsimile: (Only from SA and Namibia) / International fax: +27 (0) Access to the Deloitte Tip-offs Anonymous website which is Send a SMS to at a cost of R1,00 per SMS (SA only). For issues raised by employees or members of the public, the action taken by the Board will depend on the nature of the concern. The matters raised may be referred to the: Risk and Internal Audit Services; External audit service provider; or South African Police Services. A formal Fraud Response Plan has been developed to guide the Company in ensuring appropriate and timeous resolution of any suspected irregularity. Any reasonable period of time after the incident: Instituting recovery of financial losses, including formal civil action; Initiating criminal prosecution by reporting the matter to the SAPS or any other relevant law enforcement agency; and Any other appropriate and legal remedy available. 9. Administration Of The Policy The custodian of this policy is the Financial Director who will be responsible for the administration, revision, interpretation and application of this policy, which will be reviewed annually and revised as required. Any alteration to this policy is subject to approval by the Board / Audit Committee. page 5 of 5