Ethics and governance

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Performance in 2008

Structure of the board 2008 (%)

Board structure

At the end of December 2008, the board of AngloGold Ashanti comprised 10 members (2007: 17). It should be noted that:

the chairman and deputy chairman are independent;
eight directors (80%) are independent and non-executive; and
there are two executive directors (20%).

In October 2008, the board reviewed its definition and criteria for determining which of its members qualified as being independent.

The board is guided by a board charter that governs its powers, functions and responsibilities. Among other issues, potential conflicts of interest are a standing item on the board’s agenda. The board met on 11 occasions in 2008, including three subcommittee meetings of the board. A formal process is in place to determine the qualification and experience of board members and potential Board members. A formal and regular process is in place to evaluate the performance of the board.

Board subcommittees

There are eight board subcommittees that meet on a regular basis to facilitate the activities and deliberations of the board. The subcommittees comprise members of the board and have written terms of reference governing their powers, functions and activities. Members of board committees have access to management and the records of the company, as well as to external professional advisers should the need arise. The board subcommittees are:

Audit and Corporate Governance Committee;
Transformation and Human Resources Development Committee (formerly the Employment Equity and Development Committee);
Executive Committee;
Investment Committee;
Nominations Committee;
Political Donations Committee;
Remuneration Committee; and
Safety, Health and Sustainable Development Committee.

The Safety, Health and Sustainable Development Committee oversees this report. The work of the Transformation and the Human Resources Development Committee is also reported in the Social and Labour Plan reports.

Safety, Health and Sustainable Development

The Safety, Health and Sustainable Development Committee is tasked with overseeing the company’s performance regarding safety, health and environmental performance, and its social interaction with the communities in which it operates. It is also responsible for establishing targets in relation to each of these areas. The committee comprises non-executive directors and executive management (including the chief executive officer).

The committee met on four occasions during 2008. Members of this committee are Bill Nairn (chairman), Mark Cutifani, James Motlatsi, Sipho Pityana and Joseph Mensah. Members of management are invited to attend meetings at the committee’s discretion.

The committee operates in accordance with its Charter which specifically addresses the economic, social and environmental performance of the company. On an annual basis the committee undertakes a self-assessment of it performance against its mandate, which is then reported to and reviewed by the board.

Safety, health and environmental performance, and relations with government, community members and other stakeholders, form an integral part of the management of operations. These aspects are considered when a manager’s operational and individual performance is reviewed. Safety targets and performance in particular form part of the Remuneration Policy for senior and middle management at operations. See the Remuneration Report in the Annual Financial Statements regarding the linkage between compensation and performance.

Transformation and Human Resources Development

The Employment Equity and Development Committee, which changed its name in October 2008 to the Transformation and Human Resource Development Committee, is responsible for overseeing the company’s performance in respect of employment equity, transformation and staff development by taking into account the requirements of applicable legislation, relevant international labour conventions and the monitoring of targets set by the company. The committee is also responsible for developing employee skills in a manner that seeks to retain and nurture talent, and to provide employees with the opportunity to enhance their skills and knowledge. The committee met on four occasions during 2008. Its members are: James Motlatsi (chairman), Frank Arisman, Reginald Bannerman, Mark Cutifani, Bill Nairn and Sipho Pityana.

Executive management

The Executive Committee, chaired by Mark Cutifani, is responsible for overseeing the day-to-day management of the company’s affairs and for executing the board’s decisions. The committee meets at least monthly and is actively involved in the strategic review of the company’s values, safety performance, operation and exploration profiles, and financial status. In 2008, Thero Setiloane was appointed Executive Vice President: Sustainability, to oversee and combine the functions relating to sustainable development, and is a member of this committee.

Risk management

Significant emphasis is placed on the assessment, mitigation and management of risk, particularly regarding safety, health, environment and community-related risks.

The board is ultimately responsible for risk management and the group’s strategy and policies regarding risk are reviewed by the executive directors and senior management. Management has established a group-wide system of internal control to identify, evaluate and manage significant risks within the group.

A full review of risk control and disclosure is undertaken twice a year and considers key findings from ongoing monitoring and reporting, management assertions and independent assurance reports. These are then reported to the Executive Committee and the Audit and Corporate Governance Committee.

The group takes due cognisance of the precautionary principle in its risk identification and assessment processes. In line with AngloGold Ashanti’s adoption of the ICMM Sustainable Development Principles and Framework, risk assessment is undertaken using scienctific data and methodologies. A full discussion of the risk management process and some of the risks that could materially affect AngloGold Ashanti may be found in the Annual Financial Statements section of this report.

Legal issues

The head of AngloGold Ashanti’s legal department is responsible for ensuring that significant legal issues considered as part of the risk management process are brought to the attention of the Audit and Corporate Governance Committee, which is responsible for risk management. A register of litigation matters to which the company has a possible financial exposure is maintained and reviewed on a quarterly basis. The following is a summary of the significant legal issues raised during 2008, with feedback on those reported in previous years. A significant legal issue is defined as one that could result in a potential liability to the company and an issue with a potentially negative consequence for the company’s reputation, as assessed by the company executive. In prior years, significant legal liabilities have been defined as those with an impact of $1.5 million or higher and/or which could have an adverse effect on the company’s reputation as assessed by the company executive. AngloGold Ashanti has revised the criteria for 2008 and considers reputation risk to be more relevant than a monetary threshold. A monetary threshold has therefore not been set for purposes of this report.

Feedback on legal issues reported in 2007

In April 2005 AngloGold Ashanti instituted action against various mining companies and government ministers claiming that the mines upstream from its Vaal River operations are responsible and liable for pumping underground water that arises from their mines. As reported last year, the issue was largely resolved with the formation of the not-for-profit Margaret Water Company. The Margaret Water Company is in the process of purchasing the relevant shafts from the Stilfontein Gold Mining Company (in liquidation). (See case study in 2007 Report to Society: Progress in settlement of KOSH water issue ).
An action was instituted by Mr. Thembekile Mankayi, claiming approximately R2.6 million ($0.32 million) for damages allegedly suffered by him through contracting silicosis while employed in mines now owned by AngloGold Ashanti. An exception was filed by AngloGold Ashanti against the claim, which was argued at a hearing in February 2008 and upheld in the judgment delivered in June 2008. The plaintiff has been given leave to appeal the judgment, and a date is awaited for the appeal to be heard by the Supreme Court of Appeal. In response to the effects of silicosis in labour-sending communities, a number of mining companies, under the auspices of the Chamber of Mines, together with the National Union of Mineworkers (NUM) and the Department of Health (at national and regional level) have embarked on a project to assist in the delivery of compensation and relief to affected communities.
In a similar action, claims have been lodged by 19 plaintiffs against Anglo American Corporation of South Africa regarding damages resulting from lung diseases allegedly contracted during the plaintiffs’ former employment with Anglo American. Exceptions filed by Anglo American against 10 of the claims were upheld, reducing the number of claims to nine. Pleadings have closed in these matters, and no trial date is expected until the first quarter of 2011.

Legal issues that arose during 2008

In Mali, on 13 May 2008, Yatela SA, SEMOS SA, Morila SA, AngloGold Ashanti Exploration and Somilo, were served with papers from the Action for Environment and Health (APES). APES was formed in May 2008 and alleged that mining companies are causing damage to the environment. APES applied for an urgent court action requesting the Presiding Judge to appoint an environmental expert, a doctor and a veterinarian to determine what harmful impact the mining activities have had on the environment, human health and animal health, respectively. In addition, APES filed a petition for damages for various losses caused by the actions, practices, methods and substances undertaken and sued by the above mentioned companies. APES were claiming damages in the amount of FCFA 150 billion (approximately $357 million) for harm caused to the people and their environment and to the petitioner itself. The amount claimed was unsubstantiated. In November 2008, the Judge made his final decision and rejected APES’ request to nominate experts and for the mining companies to pay the approximately $357 million. APES may appeal this decision. AngloGold Ashanti management believes that this case has no merit and that the appeal is unlikely to be upheld.

Engaging with employees, business partners/stakeholders

AngloGold Ashanti recognises that a wide range of people – employees, their families, communities and others – have interests in its business. Similarly, AngloGold Ashanti has an interest in the communities and countries in which it operates.

A wide variety of formal and informal structures are in place to deal with these business and social partners and other stakeholders, and a comprehensive, but not exhaustive list (PDF - **KB) of these is available. Also see the section on stakeholder engagement and the Country and Operational Reports at www.aga-reports.com.

In addition to extensive internal communications systems that are in place at an operational level, employee surveys are undertaken to enable employees to raise issues of concern. See case study on Keeping a finger on the pulse in Brazil. Employees are also encouraged to raise issues with their line management; significant issues may be escalated through management, to the executive and to the board.

Engaging with shareholders

The group has an active investor relations programme in place and regularly engages with significant shareholders. All pertinent information resides on the company’s website and is updated regularly and timeously. Shareholders may provide feedback to the company in both a formal and informal way. See the Corporate Governance section of the Annual Financial Statements for further information.

Voluntary compliance

In addition to its legal regulatory obligations, AngloGold Ashanti firmly believes in self-regulation and holds the view that local and international industry leaders should establish robust standards against which companies should perform and be measured. The group is actively involved in a wide range of organisations and initiatives, and is either a member of or signatory to the organisations listed below. It actively supports their aims and objectives, and participates in their development and functioning:

Following a strategic review of AngloGold Ashanti’s organisational memberships during the year, the company stepped down from its seat on the Strategic Management Advisory Group of the Communities and Small-scale Mining (CASM) intiative, and, while remaining involved, is focusing its efforts on the ICMM Artisanal and Small-scale Mining Working Group, which is the industry’s liaison point with the CASM.

Membership by operations and regions of voluntary organisations may be found in the Country and Operational Reports at www.aga-reports.com.

Gordon Cassim

Acting Asset Protection Leader, Johannesburg, South Africa

“My job is highly rewarding. My responsibility is to safeguard the security of AngloGold Ashanti’s employees, assets, visitors and executive residences.”

Kristina Vlahov

Knowledge and Information Administrator, Perth, Australia

“Continued emphasis needs to be placed on people’s safety at work.”

Voluntary memberships in 2008
Organisation	Date of adoption/membership	AngloGold Ashanti’s participation	Aims	Developments during the year
United Nations Global Compact (UNGC)	August 2004 (Ashanti, August 2001).	The principles of the Global Compact are considered by the company and reported in the Report to Society.	The Global Compact provides a framework for businesses to align their operations and strategies with 10 universally accepted principles in the areas of human rights, labour, the environment and anti-corruption.	AngloGold Ashanti is an active participant in the local UNGC committee, administered by the National Business Initiative in South Africa. The committee meets quarterly to network, share ideas and solve challenges related to the implementation of the Global Compact.
International Council of Mining Metals (ICMM) (www.icmm.com)	Founding member in 2001.	Active participation in drafting codes of practice.	The ICMM was formed by the world’s leading mining leadership position in sustainable development. ICMM members believe that by acting collectively the mining, minerals and metals industry can best ensure its continued access to land, capital and markets as well as building trust and respect by demonstrating its ability to contribute successfully to sustainable development.	During the year the ICMM launched the finalised Assurance Procedures for corporate members, issued a position statement on indigenous people, and launched a good practice note on biodiversity, mine closure, HIV & AIDS, TB and malaria. Guidlines were also published in the Resource Environment Series and on REACH. The leadership guidance section of Phase 1 of Fatal Accident Presentation was completed in 2008 and published in 2009. Work is in progress on Phase 2.
Responsible Jewellery Council (RJC) (www.responsible-jewellery.com)	Founding member in 2006.	Formerly known as the Council for Responsible Jewellery Practices, the RJC was re-named late in 2008. AngloGold Ashanti is represented on the board by Alan Fine.	The council’s aim is to promote responsible ethical, social and environmental practices throughout the diamond and gold jewellery supply chain, from mine to retail.	AngloGold Ashanti, thought its representation on the board, continues to participate in the development of standards and related practices.
Global Reporting Initiative(GRI) (www.globalreporting.org)	2003	Organisational Stakeholder of GRI.	GRI has pioneered the development of the world’s most widely used sustainability reporting framework. The framework sets out the principles and indicators that organisations can use to measure and report their economic, environmental and social performance	AngloGold Ashanti’s 2004, 2005 and 2006 reports were compiled in accordance with GRI 2002. The 2007 report was compiled in accordance with GRI’s G3 guidelines. .
Extractive Industries Transparency Initiative (EITI) (www.eitransparency.org).	2006	Organisational supporter.	The EITI is a coalition of governments, companies, civil society groups, investors and international organisations. It supports improved governance in resource-rich countries by the verification and full publication of company payments and government revenues from oil, gas and mining.	As a matter of principle, AngloGold Ashanti has established a practice of disclosing payments made to governments all in its annual Report to Society, regardless of whether the country is a formal supporter of the EITI. Furthermore, in countries where governments have indicated a desire to be part of the process, AngloGold Ashanti is actively involved in contributing to the success of the initiative. These countries include Ghana, Guinea, Mali and the DRC.
International Cyanide Management Code for the Manufacture, Transport, and Use of Cyanide in the Production of Gold (Cyanide Code)(www.cyanidecode.org)	Founding signatory to the Code 2005.	A key target of the code is to achieve full participation by all signatories, and an independent audit of this by all operating subsidiaries of participants.	The Cyanide Code was developed by a multi-stakeholder steering committee under the guidance of the United Nations Environmental Programme (UNEP) and the then International Council on Metals and the Environment (ICME). The code is a voluntary industry programme for gold mining companies. It focuses exclusively on the safe management of cyanide and cyanidation mill tailings and leach solutions. Companies that adopt the code must have any mining operations that use cyanide to recover gold audited by an independent third party to determine the status of code implementation. Those operations that meet the code’s requirements can be certified. The objective of the code is to improve the management of cyanide in gold mining, to assist in the protection of human health, and to reduce the environmental impacts of cyanide.	Ongoing implementation of the code, with operations certified to be in compliance by year-end.
Voluntary Principles on Human rights (www.voluntaryprinciples.org)	May 2007	Signatory	These Voluntary Principles were developed out of a multi-stakeholder process involving companies and NGOs as a means of helping companies in the extractive sector to improve their performance in relation to security risk assessment and the control of security operatives, and to improve relations with communities on security issues.	A review of security issues, including the application of the Voluntary Principles was undertaken during the year. See case study: Improving security practice in line with the Voluntary Principles on Security and Human Rights.

Disclosure

AngloGold Ashanti subscribes to a policy of full, accurate and consistent communication in respect of both its operating and financial affairs. A Disclosure Policy (PDF - 49KB) has been adopted by the company to guide and ensure compliance with the rules of the various exchanges on which AngloGold Ashanti is listed and provide timely, accurate and reliable information to stakeholders, including investors and potential investors, regulators and analysts. This Disclosure Policy is applicable to all employees of AngloGold Ashanti and its subsidiaries and members of the Board of Directors.

It deals with:

communication with stock exchanges;
disclosure standards;
methods of public disclosure;
regular disclosure and market guidance;
other meetings, presentations and disclosure, mine-site visits, group meetings and presentations, and private meetings with analysts and investors;
communication of information on the website;
authorised spokespersons;
dealing with rumours and market speculation; and
closed periods.

Adherence to this policy is guided by the company’s Disclosure Committee, which meets periodically. The Annual Financial Statements and the Report to Society were both reviewed by the Disclosure Committee.

A review of the company’s Disclosure Policy is in process, and the revised policy is expected to be published in 2009.

Political donations

Given South Africa’s fairly recent transition to democracy, a policy on party political donations was developed specifically to cater for this region. Where political donations are made in other countries they are subject to similar criteria, including full disclosure. The political donations policy (PDF - 34KB) is available.

AngloGold Ashanti believes that the principle of multi-party democracy, as contained in the founding provisions of South Africa’s constitution, deserves support. When appropriate, the group has provided financial support to political parties with the aim of promoting political competition and public scrutiny of policy and law-making.

The group’s purpose in this is not to advance its immediate, narrow commercial interests; however, the group will continue to vigorously argue the case for good governance, and to encourage a policy-making environment in which there is a healthy and robust competition of ideas. A subcommittee comprising independent non-executive members of the board has been set up specifically to deliberate on any political donations. The committee did not meet during the year and no political donations were made. It is anticipated that donations will be considered in the run-up to the general elections in South Africa in 2009.

Political donations were made by operations in Brazil and the United States. The Brazilian operations contributed $476,415 (BRL805,000) towards political parties in the municipalities in which its operations are located. In the United States both the Democratic ($15,150) and Republican ($11,1150) parties received donations in accordance with the Colorado campaign finance laws.

Dealing with contractors

AngloGold Ashanti endeavours to do business with those companies that share its business ethics and values. Human rights screening is an important part of the group's investment decisions and in reviewing prospective contractors and business partners. (See the Human Rights section of this report).

The group’s procurement and supply chain operations ensure the application of AngloGold Ashanti’s principles at two levels.

At a contractual level. Suppliers are assessed for capability as well as product acceptability in terms of standard and quality. Contracts have specific clauses in them relating to safety, health, labour and environmental issues as these are applicable to the contract, and to the country and community in which the goods or services are being delivered.
Strict application of policy regarding gifts. This ensures that no supplier receives undue favour and that employees do not compromise their integrity and impartiality.

Interaction with contractors and suppliers takes place formally on an annual basis, primarily in respect of gifts and hospitality, and also in respect of the company’s values and business principles. An internal Group Forensic Unit investigates suspected fraud, malpractice and unacceptable activities. In 2008, 169 cases were investigated of which 16 resulted in disciplinary action and nine were reported to the authorities for criminal investigation. A Supplier Monitoring Committee (SMC) considers and takes action against contractors or suppliers found to have breached our Code of Ethics. In 2008, 24 cases were tabled at the SMC: this resulted in four companies being excluded, six companies being given warnings, with five companies being monitored.

Policies and procedures

AngloGold Ashanti has a number of policies and procedures in place to ensure that employees are aware of what is expected of them and conform as appropriate. Employee induction in respect of these policies and procedures is mandatory. Some of the policies in place are discussed below.

The Market Abuse (Insider Trading) Policy applies to employees and directors and effectively prohibits them from trading shares when they have access to unpublished, material information concerning the company or its operations.
A Gifts, Hospitality and Sponsorship Policy aims to ensure that no supplier receives undue favour and that employees do not compromise their integrity and impartiality by the receipt or giving of gifts. The policy was amended during the year to include sponsorships.
A Conflict of Interest Policy aims to ensure that the company’s commercial transactions take place in a manner that ensures the integrity and fairness of the company’s contract and tender processes. The policy applies to all employees (temporary, part-time and full-time), who may have actual, potential or perceived conflicts of interest between their personal interests and the interests of the company. The policy was amended during the year to include the coherent and comprehensive response that must be made once a conflict has been declared.
A Code of Ethics for Employees, a Code of Ethics for Senior Financial Officers, and a Confidential Reporting (whistle-blowing) Policy encourages employees and other stakeholders confidentially and anonymously to report acts of an unethical or illegal nature affecting the company’s interests.

These policies and procedures are available on the company website.

Code of Ethics and confidential reporting (whistle-blowing) in practice

To comply with the obligations of SOx and the King Code, and in the interests of good governance, the company has systems and procedures to introduce, monitor and enforce its ethical codes (including risk related to corruption at all operations). The whistle-blowing policy and process encourages employees and other stakeholders confidentially and anonymously to report acts of an unethical or illegal nature that are prejudicial to the company’s interests and compromise its values.

Specifically, AngloGold Ashanti’s whistle-blowing process provides a channel for the reporting of practices in conflict with the group’s business principles, such as unlawful conduct and financial malpractice, or that endanger the public and the environment. The process encourages reports to be made in good faith, in a responsible and ethical manner. Senior management oversees compliance with the Code of Ethics by:

assessing the integrity of new appointees in the selection and promotion process;
adherence to the policy when delegating authority;
induction and training of directors and employees in the company’s values, policies and procedures;
risk assessment of all business units for risk related to corruption; and
compliance with a strict disciplinary code of conduct.

Employees are informed of the company’s policies and procedures at engagement and regularly thereafter. Employees are encouraged to discuss concerns with their direct managers first where this is appropriate and, if not resolved or where management is involved, to report these through the whistle-blowing line or directly to the internal audit or legal departments. The codes and the whistle-blowing policy are available on the company’s website.

There are several means by which reports can be submitted such as the intranet, internet, telephone, fax and post. An initiative is being undertaken to implement text messaging as a medium for reporting.

All reports made in terms of the whistle-blowing policy are administered by a third party, Tip-Offs Anonymous, which ensures all reports are treated confidentially or anonymously, depending on the preference of the caller. The information is relayed through a reporting structure to an independent official and internal audit for investigation. Feedback on reports is given when requested. A report is provided to the Audit and Corporate Governance Committee on a quarterly basis. Both the Code of Ethics and the Confidential Reporting Policy are available on the company website.

The whistle-blowing process was reviewed during the year to ensure that it was accessible to all employees, in applicable languages and time zones where possible.

Whistle-blowing issues are categorised on the basis of information made available regarding the alleged offence.

Whistle-blowing reports
received 2008

Reports received in 2008
Category	Completed	In progress	Total
Bribery and corruption	1		1
Conflict of interest		2	2
Enquiry	5	1	6
Fraud	8	6	14
Irregularities	5	7	12
Misconduct	6	4	10
Theft		2	2
Unethical behaviour		1	1
Unfair labour practice	2		2
Total	27	23	50

In 2008, a total of 50 reports were made (2007: 39): 27 investigations had been completed by year-end and 23 were still in progress. These reports related largely to fraud, perceived irregularities and misconduct. The results of the investigations completed by year-end are shown in the table below. Of the 27 investigations completed, four resulted in criminal investigations, two resulted in disciplinary action (reprimands) and two employees resigned.

Results of cases completed
Category	Allega- tions could not be proven	Allega tions un- foun- ded	Coun- selling	Crimi- nally repor-ted	Disci- plined	Employee resig- ned	En- quiry	Indep endent review con- ducted	Infor- mation provi- ded	Non Anglo- Gold Ashanti issue	Resol- ved with depart- ment	Total
Bribery and corruption	–	1	–	–	–	–	–	–	–	–	–	1
Enquiry	–	–	–	–	–	–	4	–	1	–	–	5
Fraud	–	–	–	4	–	–	–	3	–	–	1	8
Irregularities	–	–	1	–	–	1	–	–	–	1	2	5
Misconduct	2	–	–	–	2	1	–	–	–	–	1	6
Unfair labour practice	–	–	–	–	–	–	–	–	1	–	1	2
Total	2	1	1	4	2	2	4	3	2	1	5	27

Marketing and communications and customer privacy

AngloGold Ashanti does not conduct extensive marketing programmes, other than ongoing investor relations initiatives. The latter are conducted in line with the regulations of the markets in which the company is listed and the company’s own Disclosure Policy. No sanctions or non-adherence to codes or regulations were reported in 2008.

Obuasi, Ghana

Cerro Vanguardia, Argentina

Next > Objectives for 2009 Performance in 2008

ANGLOGOLD ASHANTI Report to Society 2008