The focus is on distributing information and on identifying and controlling potential business risks. Internal audits are carried out in close cooperation with the Group's finance and risk management functions, with financial administration bodies and external auditors. Internal audit reports to the Audit Committee, which approves its operational plan.
In 2011, 19 individual units or functions or IT systems were audited either independently or in cooperation with external service providers. Internal audit monitors compliance with Outokumpu's Ethical Principles, Corporate Responsibility policy and Code of Conduct, and the ways in which these principles and policies are incorporated into general operational procedures in Group companies and units. During the audits no major risks were identified.
A confidential Helpline has been set up on the company intranet and on the Internet, and this can be used anonymously to report to our internal audit any action that contravenes the Group's Corporate Responsibility principles. Three cases of possible wrongdoings were reported during 2011. In all cases charges were found groundless. One case of possible misconduct was reported through other channels, and it was handled at local level. There were no incidents, suspected wrong doings or cases involving discrimination or human rights violations.
Compliance with Corporate Responsibility policies
Outokumpu's CEO is charged by the Board of Directors with formulating and implementing any measures necessary to safeguard systematic compliance with the Group's Corporate Responsibility policy and Ethical Principles. At least once each year, based on a report by the CEO, the Board of Directors carried out an assessment of corporate responsibility issues within Outokumpu. Company management and all company personnel are expected to comply with the Group's Corporate Responsibility principles.
In March 2007, Finnish Customs authorities initiated a criminal investigation into the Group’s Tornio Works’ export practices to Russia. It was suspected that a forwarding agency based in south-eastern Finland had prepared defective and/or forged invoices regarding the export of stainless steel to Russia. The preliminary investigation focused on possible complicity by Outokumpu Tornio Works in the preparation of defective and/or forged invoices by the forwarding agent. In June 2009, the Finnish Customs completed its preliminary investigation and forwarded the matter for consideration of possible charges to the prosecution authorities. The process of considering possible charges was completed in November 2010 and the public prosecutor concluded that the Customs authorities’ suspicions regarding possible accounting offences and forgery were groundless.
The case nevertheless proceeded to court in March 2011 as charges were pressed against Outokumpu and five of its employees for alleged money laundering in connection with the export practices to Russia by Tornio Works during 2004–2006. On behalf of the Finnish State, the prosecutor also presented a claim for forfeiture of the funds subject to money laundering. This claim was, however, dropped by the prosecutor during the court proceedings. In its judgement delivered in June 2011, the Court dismissed the rest of the claims and ordered the Finnish State to pay a total of EUR 1.2 million in compensation for legal costs. In August 2011, the State Prosecutor appealed against the District Court judgement with respect to Outokumpu and three of the charged employees as well as the order to compensate for legal costs. The legal proceedings commenced in Kouvola Court of Appeal in February 2012.
Misconduct in businesses sold
Class actions involving the fabricated copper products business sold in 2005 comprised, among others, Outokumpu Copper (USA), Inc, which was served with one individual damage claim associated with ACR tubes under US antitrust laws. Outokumpu believes that the allegations made are groundless. When this business was sold to Nordic Capital, Outokumpu agreed to indemnify and hold harmless Nordic Capital with respect to this claim.
In 2003, the European Commission issued its judgement on Outokumpu's participation in a European price-fixing and market-sharing cartel involving copper air-conditioning tubes during 1988–2001. A fine of EUR 18 million was imposed. In 2004, Outokumpu lodged an appeal with the Court of First Instance for Europe regarding the basis of the calculation and the level of the fine. In 2009 the court announced that the amount is to remain unchanged.
In a cartel investigation concerning copper sanitary tubes, the European Commission issued a judgement in 2004 and imposed a EUR 36 million fine on the Group for participation in cartel activities. Outokumpu subsequently lodged an appeal regarding the level of this fine, which was paid in 2009. The court's final decision is expected to be that the amount of the fine is unchanged.
Honouring the rules of competition
Outokumpu expects all its employees to honor and respect the rules associated with competition. Since the mid 1990's the Legal Affairs has trained sales and marketing personnel on competition rules and legislation. The aim of this training is to alert participants to problematic situations to make sure they will seek professional advice and guidance to avoid possibly illegal arrangements. Training sessions are organised when they are needed.
An e-learning programme was launched in 2009 and is currently in progress within Outokumpu Group. The main purpose of the programme is to train our personnel in competition law. Upon completion of the programme in the end of 2010, some 500 participants in the commercial organisation will have been reached and duly trained. The follow-up system ascertains that each participant is able to complete the course successfully.
As mentioned in our Ethical Principles and Code of Conduct Outokumpu condemns corruption and bribery and complies strictly with competition legislation. Outokumpu obtains business in a legal and ethical way. Offering bribes and kickbacks is prohibited.