Ethical Business Conduct
- WHAT IS THE COMPANY DOING TO HELP EMPLOYEES MEET CORPORATE EXPECTATIONS REGARDING ETHICAL BUSINESS CONDUCT?
- Management and the Board of Directors believe that it is critical for Talisman to maintain a workplace where concerns regarding questionable accounting practices, internal accounting controls or auditing matters can be raised without fear of any type of discrimination, retaliation or harassment. In 2005, the Audit Committee established accounting and auditing complaint procedures, which included the launch of a confidential, anonymous reporting hotline for employees. The Company also designed training to assist and educate employees in responding to ethical dilemmas generally. As a result, all permanent employees of the Company were required to complete the Online Ethics Awareness Training Program between May and July, 2005. In 2005, Talisman's Board of Directors also approved changes to the Company's existing Insider Trading Policy and a new Disclosure Policy. The Disclosure Policy, which applies to all employees and directors of Talisman, is designed to, among other things, prevent the improper use or disclosure of material information, give guidance on dealing with other confidential information pertaining to the Company, ensure timely disclosure of information relating to the Company and ensure compliance with legal and regulatory requirements.
Online Ethics Awareness Training
Talisman's ethical behaviour expectations are outlined in its PBCE. However, while having a written Policy does provide specific guidelines regarding the Company's expectations, the most commonly faced ethical situations are often dilemmas subject to a number of possible interpretations. In these instances, employees may be required to determine the spirit or intent of the Policy in their efforts to make the right decision. To assist employees in these efforts, Talisman formally launched an Online Ethics Awareness Training Program in May 2005.
The Online Ethics Awareness Training Program is an e-learning training program which provides users the opportunity to review the expectations for ethical behaviour, as well as human rights, bribery, community relations and environmental stewardship, as outlined in the PBCE. The Program helps to identify areas where an individual may face potential ethical issues and familiarize themselves with the resources available to help solve such dilemmas if they should occur. This training has played a critical role in developing a corporate approach to dealing with ethical issues across the Company's global operations. Completion of the e-learning training program was mandatory for all permanent full- and part-time employees and employee participation was recorded electronically as a component of our ongoing compliance efforts. In all, 2,069 employees and 415 contractors completed the program.
Accounting and Auditing
Complaints Procedure Established Talisman established an accounting and auditing complaints procedure and hotline to provide employees with a process and vehicle to report questionable accounting and auditing practices. These include all aspects of financial reporting, including transactional processes such as accounts payable and receivable and accounting control systems. However, because Talisman takes an expansive view of this phrase, related processes that affect financial reporting integrity, such as reporting of reserves, may also be included depending on the nature of the complaint.
The anonymous and confidential nature of the hotline ensures the continued integrity of Talisman's financial reporting processes and internal control systems. Matters such as fraud and theft, however minor, are also considered to be accounting and auditing matters. When in doubt, employees are encouraged to make a report in good faith if they believe the questionable practices relate to accounting and auditing matters. Certain members of Talisman's senior management are responsible for determining whether the complaint relates to accounting and auditing matters and must report their determinations to the Audit Committee of the Board of Directors.
Accounting and Recording Procedure for Facilitation Payments
As described in Talisman's Policy on Business Conduct and Ethics, directors, officers, employees and contractors must be aware of, and comply with, all applicable rules, laws and regulations as locally interpreted and administered in all jurisdictions in which it conducts business. These laws include the Corruption of Foreign Public Officials Act (the "CFPOA"), the Foreign Corrupt Practices Act (the "FCPA") and all other anti-corruption laws that apply to Talisman or its subsidiaries or affiliates around the world. Both the CFPOA and the FCPA contain comprehensive antibribery prohibitions and the FCPA also contains accounting and record-keeping requirements. Facilitation payments, however, are allowed under the FCPA and the CFPOA if they meet certain criteria, including proper accounting and record-keeping. In 2005, Talisman formalized its processes to outline the accounting and record-keeping requirements for facilitation payments.
Political Contributions
In 2005, Talisman made no political contributions at the federal level in Canada in accordance with the Canadian federal government's Bill C-24. At the provincial level, contributions totalling $34,600 were provided to both the governing and opposition parties in BC, Alberta, Saskatchewan and Ontario. Fortuna also made modest contributions totalling approximately $6,100 to New York state politicians. No political payments or contributions were made in other international operating areas. In accordance with the Company's established guidelines, Talisman's President and CEO must authorize all political contributions made on the Company's behalf.
Supply Chain Management
Talisman encourages suppliers providing goods or services to, and for, the Company to operate in accordance with the principles outlined within its PBCE. Most contracts for goods or services agreed to by the Company include a copy of the PBCE and a provision that the contractor has acknowledged receipt of the PBCE and agrees to operate by the provisions stated in it.
In Trinidad, Talisman conducted a review of its procurement procedures in 2005.
Procurement Procedures and Financial Records Reviewed
In Trinidad, accusations were made against two public officials in 2005 alleging that they had received illegal payments from a Trinidad based corporation that provides local labour services. This labour services company had been retained by an independent seismic contractor that Talisman (Trinidad) utilized in the course of its seismic acquisition program on its Eastern Block concession in Trinidad.
As a result of these allegations, Talisman (Trinidad) conducted a review of its procurement procedures and financial records, and those of its subsidiaries, to ensure that its prescribed corporate policies were followed with respect to the relationship with the independent seismic contractor. Nothing of concern was identified by this review.
Charges have subsequently been laid against the two public officials by the Trinidad authorities. Talisman (Trinidad) is currently working with the independent seismic contractor to review its records and interview its personnel to provide additional confirmation that the tenets of Talisman (Trinidad) PBCE were also adhered to by the independent seismic contractor.
I was pleased to learn that Talisman corporate governance practices satisfy all 14 of the existing guidelines for effective corporate governance established by the Toronto Stock Exchange. Congratulations on the standard your company has set. Correspondence from Hon. Donald H. Oliver, Senator, Government of Canada.