Thursday 18 th October 2007 Canberra ACT Don Larkin Chief Executive Officer

1. Professions Australia Workshop – Complaints and Disciplinary Processes Thursday 18th October 2007 Canberra ACT Don Larkin Chief Executive Officer Australasian Institute of Mining & Metallurgy

2. “Can a self regulatory complaints and ethics disciplinary process be effective in today’s litigious society?”

3. What is a professional? Professions Australia defines a profession as a disciplined group of individuals who adhere to ethical standards and uphold themselves to, and are accepted by the public as possessing special knowledge and skills in a widely recognised body of learning derived from research, education and training at a high level, and who are prepared to exercise this knowledge and skills in the interests of others.

4. The definition implies • A Code of Ethics governs the activities of each profession • These codes are enforced by the profession and are acknowledged and accepted by the community • Special knowledge and skills • Derived from research, education and training at a high level • Applied to the service of the community.

5. A Code of Ethics should stress • The independence of the practitioners • That their responsibility for the welfare, health and safety of the community shall at all times come before their responsibility to the profession, to sectional or private interests or other members of the profession • Members shall perform work only in their areas of competence • The professional body shall encourage its members to continue their professional development throughout their careers • The professional body shall encourage its members to actively assist and encourage professionals under their direction to advance their knowledge and skills.

6. The AusIMM as a professional body • Professionals in the Minerals Sector • Tertiary qualified Geologists, Metallurgists, Mining Engineers and others • Ethics, Codes of Conduct, JORC, Valmin • Fellows and Chartered Professional Recognition • Member Services, Branches, Careers, Employer Support • Advocacy and Representation • Continuing Professional Development • Employer Base Diverse • Dealing with an Informed Client

7. Challenges in a global industry • Globalisation and centralisation of ownership • Investment options increasing in a cyclical industry • Increasing emphasis on social and environmental impacts • High technology and productivity • Exploration and R&D vital – Sustainability of Industry • Attractiveness and careers – Skills shortages/Demographic destiny • Increasing emphasis on risk management and governance

8. Ethics and The AusIMM • 1955 Royal Charter • By-Laws last updated 2005 – ACCC requirements • Supplemental Royal Charter 2007 • Code of Ethics (2007) – principles based • JORC Code, Valmin Code – ASX Best Practice • Members to observe and be bound by

9. Complaints and Ethics Processes • By-Laws amended 2005 • By-Law 26 - Complaints Committee - Ethics Committee • Complaint defined and must be in writing • Complaints Committee - alternate dispute resolution - judicial process - relevant regulatory authorities - deal with complaint - refer to Ethics Committee - dismiss (commercial)

10. Ethics Committee After due process and consideration • No further action • Dismiss • Warn or reprimand • Suspend membership (12 months maximum) • Expel member • May name.

11. Appeals and processes • Independent third party • Acceptable to Board and appellant • All deliberations priviliged and confidential • May be represented by duly qualified legal practitioner

12. Analysis of ethics complaints 1985-2006 • 1985 – end 2006 – 55 received • Approx. 2 per annum although during 1990’s increased to high of 10 in 1997 (industry cycle low) • 30 (55%) not proceeded with, commercial or withdrawn • 20 received warnings or reprimanded (none named) • 4 suspensions without naming (all became unfinancial) • 1 named, suspended and subsequently reinstated.

13. Impressions • 80’s and early 90’s – gentlemen’s agreements • 1992 – 2000 - numbers increased to average 4.2 pa - consultants prominent - of seventeen found guilty - 14 reprimanded or warned - 2 suspended and one suspended and named - of seventeen - 8 non compliance with Valmin or misleading valuation - 6 misrepresentation of cv - conflict of interest not declared, not returning documents & unprofessional conduct

14. Impressions (cont.) • 2000 – 2006 - 11 complaints, 6 withdrawn or not proceeded - 5 - misrepresentation of qualifications - unauthorised disclosure - misleading statements in prospectus - prospectus containing factual error - failure to comply with JORC • 2007 - potential conflict of interest in advising of takeover and gain (firewalls) – under review - unprofessional language in published article - reprimand

15. Challenges for self-regulatory ethical procedures and professional institutes • Potential anti-competitive practices as seen by the ACCC. • Potential increase in liability for the professional (or less – should have known!) • “Cheaper” way to pursue commercial interests or personal vindictiveness • Is a breach of a Code (Valmin, JORC) automatically a breach of the Code of Ethics?

16. Challenges for self-regulatory ethical procedures and Professional Institutes • How do you prove intent? • Once lawyers get involved how do non-legal professionals manage the process? (qualifications of Ethics Committee members and distance from the Board) • Natural justice takes a long time (fishing expedition not appropriate) • Who is responsible, the legal entity, the Board, Individual Directors, or individual “competent” person?

17. Challenges for self-regulatory ethical procedures and Professional Institutes • What penalties? – fine, warning, publication, suspension, cancellation of membership, legal action • Lack of support from regulatory bodies that codes are industry best practice • Whose role to monitor compliance? • Whose role to teach fundamentals – Ethics in Education?

18. What The AusIMM has done • Reviewed and modernised its Codes and By-Laws • Applied for and received ACCC exemption under the Trade Practices Act • Streamlined process and introduced a Complaints Committee separate from Ethics Committee • Composition of Ethics Committee more distant from Board of Governance (appeals not to Board) • Persuade ASX/ASIC to recognise formally Codes as Industry best practice and to police • Global industry – internationalisation of codes • Document processes and procedures, legal advices and precedents • Encouraged Professions Australia to establish, website, principles, links, papers, workshops and study – Ethics in Education.

19. Conclusion • Due process is essential – natural justice • Takes time • Professionals name and livelihood at risk • Lawyers will find loopholes in process • Reluctance to complain formally • How far do (or can) professional bodies go in raising the conduct bar beyond what is required by law?