Responsible Sourcing Report 2021
Section 17: Whistleblowing and Incident Review Process Procedures
It is vital that Good Delivery List (GDL) refiners develop and publicise a mechanism allowing any employee or external stakeholder to anonymously voice concerns about the precious metals supply chain. LBMA encourages stakeholders, including GDL refiners and their employees, third-party service providers, members of civil society, affected communities and other interested parties (GDL stakeholders), to anonymously report information against an organisation in the GDL supply chain.
LBMA’s Whistleblowing Policy enables GDL stakeholders to report illegal activities, wrongdoing or malpractice occurring throughout the GDL supply chain.
However, where GDL stakeholders are directly affected by the matter in question, or where GDL stakeholders feel victimised for escalating the concern, the matter may be raised to LBMA confidentially under the whistleblowing process, anonymously.
Stakeholders also have the option of filing a case with the Mineral Grievance Process (MGP), an online cross-industry platform to screen and address grievances linked to smelters and refiners present in global supply chains. The MGP is a collaboration between LBMA, the Responsible Minerals Initiative (RMI) and the Responsible Jewelry Council (RJC).
The purpose of the platform is to create a connected and efficient grievance review system that benefits a wide range of stakeholders and builds on existing relationships and mechanisms. The platform aggregates grievances associated with in-scope supply chains, provides a forum for supply chain actors to address these grievances, and provides a log of grievances that have been received and addressed for transparency and stakeholder communication. For more information, or to submit a grievance, please visit the Mineral Grievance Platform.
Incident Review Process
The Incident Review Process (IRP) is invoked in response to serious and credible incidents of a reputational nature. Information can come from a variety of sources, including but not limited to trade associations, law enforcement or media agencies, non-governmental organisations and market intelligence.
An IRP comprises 11 steps for LBMA to take in response to any incidents
Refiners and Members can raise concerns about the process directly with LBMA. Complaints must be made in writing and be accompanied by supporting evidence. The Responsible Sourcing Manager will first review the details of the complaint and escalate the case to senior LBMA leadership and the Compliance Panel.
Led by the General Counsel, the process is designed to ensure a thorough and fair review of refiners’ activities and involves follow-up communications with the auditor, refiner and any other relevant stakeholder related to the incident.
All GDL refiners are monitored continuously; therefore, the IRP is an effective tool to address issues that arise between the annual audits. During an IRP, LBMA will seek corroboration wherever possible; however, due to the sensitivities involved, LBMA may keep the information received under the process confidential.
Each step within the IRP is a high priority for LBMA. Upon receipt of information indicating any incident that may impact the credibility of the Good Delivery List and the wider precious metals market, the Compliance Panel reviews whether to instigate the IRP. The refiner, as well as LBMA’s Physical Committee and London Precious Metals Clearing Limited (LPMCL), will then be notified of the identified issue before LBMA publicly notifies the market via its website. LBMA may also contact pre-identified stakeholders, NGOs, press contacts and downstream market participants to help with the review.
LBMA will urge the refiner to demonstrate transparency on the allegations reported, publicly. LBMA requests the refiner to disclose the challenges and identified risks, and how those risks have been mitigated, as well as what further action the refiner is taking. All refiners are obligated to co-operate fully with the investigative process.
Following these initial communications, LBMA will undertake another thorough review of the refiner’s audit report, contextualised by the alleged incident. LBMA will then communicate closely with the refiner and the auditor as part of an extensive information-gathering exercise to determine whether there is any evidence of the issues raised. Should it be required, LBMA will engage external counsel to advise on any legal implications raised by the incident.
Given that the process involves numerous stakeholders to verify the information (including those within LBMA’s Responsible Sourcing, Good Delivery, and Membership teams), it is difficult to conclude an average lifespan of each incident reviewed under the IRP. However, it must be viewed as an iterative process, particularly in situations where new information is produced or a situation escalates. In this scenario, LBMA may revisit an IRP to ensure that the issues identified are reviewed prudently.
The outcome of an IRP can involve a refiner being suspended or removed from the Good Delivery List. Other outcomes include an independent auditor developing a Corrective Action Plan for the refiner’s future activities or a re-audit of the refiner’s activities that were originally reviewed.
Once an outcome has been agreed, LBMA will mirror its earlier communications strategy to ensure all relevant parties are informed of the decision made. Due to the consideration of confidential commercial information during the adjudication stage, LBMA does not publicly disclose the comprehensive IRP report.
IRP Supports the Review of Issues in Between Audit Reports
The ultimate sanction that LBMA can impose is to move the refiner to the Former List.
The Former List includes GDL refiners whose bars are no longer accepted as Good Delivery by the London bullion market. You can find out more about the Former List here.
It is important to note that any bars produced by these refiners prior to their transfer to the Former List on the date given continue to be acceptable as London Good Delivery.
A refiner may also face suspension from the GDL in instances where serious breaches of the RGG have been raised and an IRP has been initiated. In these instances, the refiner will be prevented from trading on the London Market and the suspension will last until an investigation makes its final adjudication. If a refiner is cleared of any wrongdoing, or satisfactorily completes any Corrective Action Plan, the suspension will be lifted.