Anti-Fraud and Corruption Policy

Section I: Executive Summary

Introduction and Purpose 

EFG Hermes aims to conduct its business with honesty and integrity, and strives to promote an organizational culture that endorses ethical conduct, conforms to best practices and treats all employees, suppliers and the community with respect and takes into consideration their interests when doing business. Fraud and corruption adversely affect all of EFG Hermes stakeholders, including employees, Shareholders and the clients. This policy aims to educate EFG Hermes employees on fraud and corruption, set the framework for fraud prevention and anti- corruption actions and define each employee’s role in fighting any potential fraud and corruption within EFG Hermes. This policy applies to all employees irrespective of their position with the firm, and should be read in conjunction with the EFG Hermes Code of Conduct. Compliance with this policy is mandatory and non-compliance may lead to disciplinary action including dismissal.

Definition of Fraud

Fraud is an intentional act by an individual or a group of individuals involving the use of deception to obtain an unjust or illegal benefit, or to deny a benefit that is due to another party whether it is a business, government or individual.

Definition of Corruption

Corruption is the dishonest activity in which a person entrusted with authority of an entity (a corporation, government agency or any other entity engaged in business activity) acts contrary to the interest of the Firm and abuses his /her position of trust in order to achieve some personal gain for himself/herself or for another person or entity.

Examples of fraud and corruption include:

• The manipulation of accounts in order to obtain customer funds unlawfully.
• Providing clients’ information to third parties without prior appropriate approvals.
• Using inside information to obtain a financial advantage for oneself or a related party.
• False accounting, including material and deliberate misstatement of financial information.
• Fraudulent emails that may appear to come from the Firm and ask the client about any personal or financial information, e.g.: “Internet trading password“.
• Accepting anything of material value from third parties, with the exception of gifts that fall within the EFG Hermes tolerance level and are not intended to impair objective judgment, provided that they have been reported to the Compliance Department.
• Unauthorized use of company resources for personal benefit.
• Accepting or providing bribes or kickbacks in exchange for business with an advisor, contractor or supplier, whether or not it is to the benefit of EFG Hermes.

Section II: Roles and Responsibilities

Responsibility for the development and monitoring of controls to mitigate fraud and corruption lies with all the supervisors, and ultimate responsibility rests with the Chief Executive Officer.

Department Heads and Supervisors

Generally in Fraud and Corruption cases, the primary responsibility for establishing and maintaining internal control is with the Departments Heads. The Department Heads must ensure that all employees under their supervision are aware of all relevant legislation, conditions of service and policies, procedures, and that they all are abide by them. The Department Heads’ primary objectives of internal control are to ensure:

1. The reliability and integrity of information.
2. Compliance with policies, plans, procedures, laws, regulations and contracts.
3. Safeguarding of assets.
4. Efficient use of the Firm’s internal and external resources.

Also, Departments Heads and Supervisors will be responsible for:

1. Reporting suspected fraudulent activities and escalating accordingly.
2. Applying the fraud and corruption policy to all, regardless of seniority.
3. Complying with the principal of “Innocent until proven guilty”.
4. Maintaining absolute confidentiality.

Internal Audit

Internal Audit is responsible for assisting management in the prevention of Fraud and Corruption by examining and evaluating the adequacy and effectiveness of the system of internal control. The role of Internal Audit, pertaining to Fraud investigations, is as follows:

1. Assess the probable level of complicity in the fraud within the investigation committee in order to protect information and evaluate the credibility of information provided.
2. Co-ordinate the investigation with top management including obtaining legal advice and any other opinion as may be appropriate.
3. The Risk and Audit Committee holds regular independent meetings for receiving and handling complaints relating to accounting controls or auditing matters with external auditors. Internal Audit should ensure that those meetings are confidentially upheld; and should be reported to raise any findings or issues to Risk and Audit Committee. In case of not resolving those findings, the Internal Audit should make sure that those findings are declared in the external auditor’s engagement letter which will be disclosed to stakeholders.

Section III: Prevention, Detection and Reporting Investigation

Prevention

Employees are expected to act honestly and diligently, and follow all EFG Hermes policies and procedures when performing their duties. Employees should report identified weaknesses or loopholes in controls that could facilitate fraud. Employees must immediately report any incident of fraud or corruption, whether it is suspected or actual, either to their Line Manager who in turn will raise it with the Internal Audit Department Head, or directly to the Internal Audit Department Head.
Also, please make sure to submit all your suspicions to: Fraud–staff@efg-hermes.com Reports of fraud or corruption will be treated with the highest confidentiality, any employee who reports suspected fraud or corruption will be protected from any adverse reaction to the report, provided that the report is made in good faith and is not malicious.

Raising Concerns:

Concerns about any irregularity be it financial or otherwise can be raised in a number of ways. These include:

1. Raising the incident case with your direct manager or supervisor;
2. Contacting the Head of Internal Audit.

Reporting should be under the Firm’s confidential reporting code.

How to Report Fraud

Detection and Investigation

The Internal Audit Department Head is ultimately responsible for leading any investigation, in a consistent manner, across EFG Hermes Group. Under no circumstances are staff or management to conduct an investigation on their own or confront a suspect in relation to an allegation of fraudulent or corrupt conduct. On discovery of potential fraud or corruption, they must not take any action that could prejudice the subsequent collection of evidence or influence potential witnesses. Great care will be taken in the investigation of suspected fraudulent actions or corruption, in order to avoid mistaken accusations or alerting suspected individuals that an investigation is underway. Where an investigation reveals that fraud or corruption has occurred, the Internal Audit Department will issue a report of the investigation results to Senior Management and where appropriate to the Board of Directors through the Audit Committee. Investigation results will not be disclosed or discussed with anyone other than those who have a legitimate need to know. The Internal Audit Department does not have the authority to impose disciplinary action; senior management, in consultation with legal counsel is responsible for deciding the appropriate disciplinary action, which will range from giving notice to the perpetrator, to dismissal and referral to the regulatory authorities and taking civil action. Line managers are expected to proactively take necessary steps, such as implementing controls in order to prevent fraud or corruption from occurring or reoccurring.

Section IV. Awareness and Training

The firm recognizes that the success of its Anti-Fraud and Corruption policy and its credibility will depend largely on the effectiveness of staff throughout the organization. To facilitate awareness, the Firm supports the concept of full induction, training and follow up training. This training will ensure the responsibilities and duties of each employee in preventing, detecting and reporting Fraud. Each Department Head in EFG-Hermes is responsible to ensure that his /her staff is adequately trained to carry out their duties. Staff that ignores such training and guidance may face the possibility of disciplinary action. The Anti -Fraud and Corruption policy will be available to all EFG HERMES staff through our Intranet and to the wider stakeholders via our Firm’s website1 “subject to the approval of COO & CEO”.