LATVENERGO GROUP
COMPLIANCE AND
FRAUD RISK
MANAGEMENT
Kristine Arensone
Compliance officer
13.07.2017.
Latvenergo Fraud risk management
2010
2011
The Corruption
Prevention Bureau
has opened a
criminal case
against the
Latvenergo officials
Significant activities to
improve internal control
system
Forensic audit
by KPMG Baltics
Investigations
13.07.2017.
2012
The first Fraud Risk
Management plan
approved by Management
Board
2
The first Fraud Risk Management Plan
Main activities:
Revise existing code of Ethics;
Prepare risk awareness programs,
implement regular annual trainings;
Develop fraud risk management
policy and procedures
Perform annual declarations of
conflict of interests
Establish reporting channels for
fraudulent activities
Other activities for fraud and
corruption risk prevention and
mitigation
13.07.2017.
3
Key topics covered by Code of Ethics






Ethical working practices for staff;
Gift acceptance;
Corporate invitations;
Job positions at other commercial companies;
Declarations of conflict of interest;
Ethical principles for contractors
Practical implementation:
 Training programs, seminars, consultations
 Checking of Declarations of conflict of interest
 Internal resistance
 Development of new contract forms
 Contractors resistance
13.07.2017.
4
Ethical working practices for staff
 Ethical roadmap for staff.
 The Code of Ethics supports the company’s mission by documenting
and supplying guidance about minimum standards of expected
behavior.
 Tool that broadcasts the company’s ethical standards. If they are
breached, Code of Ethics provides indicators for required disciplinary
action that may be taken.
 The Code sent a clear message that fraud and corruption will not be
tolerated and that a breach of the code will lead to prompt and
impartial disciplinary action.
13.07.2017.
5
Gift acceptance
 Employees may not accept or offer any kind of material asset, material
or other benefit – including gifts, thank-you money, commission or any
valuable object – as motivation or remuneration.
 The only exceptions are representation gifts, promotional items, or
other articles of insignificant value.
13.07.2017.
6
Corporate invitations
 Acceptance of invitations to entertainment, cultural and other hosted
events, may be acceptable if an activity is related to the cooperation
between the Latvenergo Group and the inviting or invited company,
and is common business practice in the relevant sector.
 Hosting expenses shall be commensurate to the situation.
 Travel and accommodation expenses incurred by employees of the
Latvenergo Group as a result of hosting shall be covered by the
Latvenergo Group.
 If, upon receiving a hosting invitation, there is or should be suspicion
of a potential conflict of interest, the employee shall not accept the
invitation.
13.07.2017.
7
Job positions at other commercial companies
Without the employer’s written consent, employees must not be
employed outside the Latvenergo group at other commercial companies,
work for different employers, provide services outside Latvenergo
through any other type of business activity.
Only the employer may provide such consent in writing after evaluating:
 whether combining duties in this specific case would cause a
conflict of interest;
 whether combining duties would contradict the employer’s ethical
standards or impair fulfilment of the employee’s direct
occupational duties.
13.07.2017.
8
Declarations of conflict of interest
Employees and managing specialists of all levels, experts, project
managers and other employees, who take part in decision-making within
the framework of their occupational duties, shall once per year submit a
Declaration of Conflict of Interest that approved by the relevant
employee’s direct supervisor, making a decision to avoid conflict of
interest if necessary.
New employees of the Latvenergo Group companies provide a
Declaration of Averting Conflicts of Interest in Employee’s Activities.
13.07.2017.
9
Ethical principles for contractors
Latvenergo has summarized working practices in the Code of Ethics.
The three key principles are:
 fair treatment;
 avoiding of conflict of interest situations;
 full compliance in fraud and corruption issues.
Contractual partners of Latvenergo Group are requested to follow similar
ethical principles and base cooperation on good-faith.
Latvenergo Group companies ask their partners to provide assurance to
follow high ethical standards in the cooperation.
13.07.2017.
10
Code of Ethics
13.07.2017.
11
Whistle - blowing
E-mail
[email protected]
[email protected]
Intranet
https://zino.energo.lv/
13.07.2017.
12
Fraud risk management committee
Fraud Risk Management Committee - cross functional workgroup
established to deal specifically with fraud and corruption issues and
conflict of interest.
Responsibilities:
 Organize cooperation among organisational units of the Latvenergo
Group in matters regarding fraud risk management;
 Support a common understanding of fraud risk management among
Latvenergo Group employees;
 Participate in development of the Company’s internal normative
documents regarding matters of fraud risk management;
 Ensure timely fulfilment of tasks specified for the Committee in the
Latvenergo Group Fraud Risk Management Plan.
13.07.2017.
13
Audit committee
Supervisory body of Latvenergo AS, operating in accordance with
Rules of the Audit Committee, provisions of the Commercial Law and
Financial Instrument Market Law, observing principles of good
corporate governance.
 Established on August 22, 2012 comprised of 3 external
independent members to perform independent review of the
Fraud Risk Management Plan implementation.
 Report to shareholders of Latvenergo AS
13.07.2017.
14
Fraud and corruption risk assessment methodology
Fraud and corruption risk assessment in two categories:
1. The probability of the risk occurrence (frequency and predictability);
2. Significance of potential consequences (potential losses, legal
obligations, sanctions and fines). What will be impact on Latvenergo
Group if the particular risk occurs.
When
evaluating
the
probability of the risk
occurrence, the specifics of
each function must be taken
into account, as well as the
culture of Latvenergo Group
in general.
13.07.2017.
15
Fraud and corruption risk mitigation and prevention measures
Risk mitigation or prevention measures include organisational or technical
measures that must be carried out with the goal to minimize losses caused to
the Latvenergo Group, reduce legal obligations, sanctions or reputational
damage:
 Educational measures (training, informative meetings, etc.);
 Measures oriented to the improvement of internal regulations (policies,
procedures, etc.);
 Measures for the improvement of the internal control system (changes in
the structure, employee rotation, monitoring measures, checks, etc.).
Depending on the value of identified risk and the impact of potential negative
consequences, the head of function makes the decision to carry out corrective
actions or preventive measures for risk prevention/ mitigation or submits a
request for review to the Fraud Risk Management Committee.
13.07.2017.
16
Fraud and corruption risk management today
 Documented fraud and corruption risk management process;
 Documented methodology for the fraud and corruption risk assessment;
 New IT solution for the fraud and corruption risk assessment;
 Annual fraud and corruption risk assessment;
 Annual trainings and seminars with focus on requirements of Code of
Ethics, efficient fraud and corruption risk management;
 Annual declarations of conflict of interest;
 Evaluation of possible situations of conflict of interest;
 Checking and control activities of Declarations of conflict of interest;
 Monitoring of the reporting channels, established for reporting on
fraudulent activities;
 Register of fraudulent events, decisions and risk mitigation activities;
 Checking and investigation of fraud risk incidents;
 Risk assessment based controls to identify possible fraud risk events
13.07.2017.
17
QUESTIONS
13.07.2017.
18
Thank you!
[email protected]
www.latvenergo.lv
AS „Latvenergo”
Pulkveža Brieža iela 12
Rīga, LV-1230
Latvija
13.07.2017.
19