Corporate Governance

Introduction

The Debswana Board embraces the corporate governance principles of openness, integrity and accountability. Fundamental to the fulfilment of the company’s corporate responsibilities and the achievement of its financial objectives is an effective system of corporate governance. The Board continuously endeavours to ensure that policies, structures and mechanisms are periodically reviewed and adapted to reflect applicable best practice.

Risk Management

Both the Shareholders and the Board recognise that addressing risks to the business is key to Debswana’s performance and that risk taking is a choice in pursuit of objectives.

Debswana and its operations are governed by a risk framework through which risks are engaged in an informed manner and pro-actively identified and managed. This includes identifying and taking advantage of opportunities as well as protecting intellectual capital, income and assets by mitigating adverse impacts of risk.

Debswana management is fully committed to the importance of effective risk management in ensuring that business objectives are met and that continued, sustained growth and profitability are achieved.

The company’s Risk Management Policy addresses risks in areas of strategy, operations, finance and compliance. All significant risks are reported to the Operations Executive Committee bi-annually, and to the Board at least on an annual basis, and the policy is subject to review by the Board on an annual basis.

Insurance policies, in place to address those risks that must be transferred, are reviewed by the Audit Committee of the Board annually.

Awareness and understanding of Debswana’s risk management framework is established at all appropriate levels of the organisation.

A process of identifying significant risks with reference to strategic, business or process objectives has been established. Management is responsible for identifying, evaluating and managing these risks.

Code of Ethics

Debswana has a formal Code of Business Conduct and Ethics.

This code commits the Group to the highest standard of compliance with laws, regulations, integrity and ethics in dealing with all its stakeholders

Corporate Governance Structures

On 30 March 2005, the Debswana Board approved the introduction of additional structures to further enhance the company’s corporate governance framework. As part of these changes the Management Committee of the Board was disbanded to be replaced, in part, by the Technical Committee in order to clarify roles, responsibilities, agendas and accountability. The company has the following sub-committees of the Board:-

Remuneration & Nominations Committee

A Remuneration & Nominations Committee (Remco), one of the sub-committees of the Board, was established to make recommendations on the compensation, incentivisation and performance targets of executive directors, as well as salary scales for executive management. In addition Remco’s remit is to review and recommend for approval by the Board, the structure and funding levels of any executive bonus and incentive schemes. The Committee also recommends proposals for directors’ fees to the shareholders, recommends for approval by the Board, Senior Executive Management appointments, and endorses, prior to action being taken, decisions by the Managing Director to dismiss Senior Executive Management and provide assurance, if necessary, to the Board on disciplinary processes followed.
Audit Committee

The Audit Committee is an important element of the Board’s system of monitoring and control and comprises directors who do not hold executive office within Debswana, with terms of reference determined by the Board.

The Audit Committee meets at least three times a year to monitor the adequacy of financial information reported to shareholders, to monitor internal controls, accounting policies and financial reporting, and to provide a forum for communication between the board and the external and internal auditors.

The Audit Committee meets the Group’s external and internal auditors and executive management regularly to consider risk assessment and management, review the audit plans and review accounting, auditing, financial reporting, corporate governance and compliance matters. In particular, it reviews the annual financial statements prior to submission to the board and considers any matters raised by the auditors.

Both the Audit Committee and the Board are satisfied that there is adequate segregation between the external and internal audit functions and the independence of the external and internal auditors is not in any way impaired or compromised.
Technical Committee

A Technical Committee, the third sub-committee of the Board, was established to consider, inter alia, technical issues, mining plans and proposals, capital expenditure, and budgets in addition to providing overall technical assurance to the Board and making appropriate recommendations for approval by the Board.
Tender review committee

The Tender Review Committee (TRC) is a governance body that ensures that tenders are awarded in line with fair practice. It looks to governance as well as proper alignment with business imperatives. The TRC reviews tenders over P 2 million from all the Debswana operations.

The TRC meets monthly and issues quarterly reports of all tenders reviewed to the Board.
The following Terms of Reference were advised for the TRC:
- 1. To address issues specific to Citizen Empowerment and capacity building matters.
- 2. To review and recommend to the Deputy Managing Director, for ratification, all tenders with a value exceeding P 2 million.
- 3. To review and to recommend to the Deputy Managing Director and Managing Director, for ratification, all tenders with a value exceeding P 3.5 million.
- 4. To ensure adherence to the Private Trading Policy.
Safety, Health and Environment (“SHE”) Committee

A decision was made that the Board shall appoint a representative on the De Beers Board “SHE” sub-committee, which will provide assurance to the Company on “SHE” matters.

Structure of the Board

The Board is made up of 5 government directors, 5 De Beers Directors and one Ex Officio Director being the Managing Director of the Company who does not have a vote. Decisions are unanimous.

Current Directors are:

Government:

DR. AR Tombale (Deputy Chairman)

LK Mohohlo

EM Molale

SSG Tumelo

Athaliah Molokomme

Ex-Officio member:

B Marole Managing Director

De Beers:

NF Oppenheimer (Chairman)

S Khama

EC Dowling

D Fanarby

S Brown