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fulfilled the role of Company Secretary during the 2006 reporting period. Mr Glanville ceased acting as Company Secretary on 19 February 2007.


Information in respect to indemnity and insurance arrangements for Directors and senior executives appears in the Directors’ Statutory Report on page 52 of this Annual Report.

The Board Guidelines set out the circumstances and procedures pursuant to which a Director, in furtherance of his or her duties, may seek independent professional advice at the Company’s expense. Those procedures require prior consultation with, and approval by, the Chairman and assurances as to the qualifications and reasonableness of the fees of the relevant expert and, under normal circumstances, the provision of the expert’s advice to the Board.

Pursuant to a deed executed by the Company and each Director, a Director also has the right to have access to all documents which have been presented to meetings of the Board or to any committee of the Board or otherwise made available to the Director whilst in office. This right continues for a term of seven years after ceasing to be a Director or such longer period as is necessary to determine relevant legal proceedings that commenced during that term.


The Board is responsible for overseeing the implementation of, and ensuring there are adequate policies in relation to, the Company’s risk management and internal compliance and control systems. These systems require management to be responsible for identifying and managing risks to the Company’s businesses.

A description of the Company’s risk management system is available from the corporate governance section of the Company’s website.

An Enterprise-Wide Risk Management approach forms the cornerstone of Risk Management activities of the Company and is based on the relevant Australian Standard (AS/NZS 4360 : 2004). This approach is incorporated in the Company’s Risk Management Policy, and aims to ensure that major business risks facing the Company have been consistently identified, analysed and evaluated, and that active management plans and controls are in place for the ongoing management of these risks. Independent validation of controls is undertaken by internal audit as part of its risk- based approach. The internal audit function is independent of the external auditor and reports to the Audit Committee.

As part of the risk management system, the CEO and CFO are required to advise the Board annually in writing whether:

  • the Company’s risk management and internal control systems, to the extent that they relate to financial reporting, are operating efficiently and effectively in all material respects.

The Board has in place a number of arrangements and internal controls intended to identify and manage areas of significant business risk. These include the maintenance of:

  • Board committees and Board reporting – all significant areas of Company operations are subject to regular reporting to the Board and Board committees. Regular reports on the performance of each functional area are prepared, including: operations; gas marketing and commercialisation; liquids marketing; corporate and people; legal and secretariat; geoscience, exploration and new ventures; development and technical services; finance; safety; government; investor relations and environmental matters;

  • detailed and regular budgetary, financial and management reporting;

  • established organisational structures, procedures, manuals and policies;

  • audits (including internal and external financial, environmental and safety audits);

  • comprehensive insurance programs; and

  • the retention of specialised staff and

external advisors.

  • the Consolidated Financial Report is founded on a sound system of risk management and internal compliance and control systems, which implements the policies adopted by the Board; and

Examples of management of specific risks are as follows:

Type of Risk

Method of management

Environmental and safety risk

Environmental and safety risk is managed through:

  • a comprehensive Environmental Health and Safety Management System based on Australian

Standard 4801 and International Standard 14001;

  • safety, health and environment committees at Board and management levels;

  • the retention of specialist environmental, health and safety staff and advisors;

  • regular internal and external environmental, health and safety audits; and

  • imposing environmental care and health and safety accountability as line

management responsibilities.

40 Santos Annual Report 2006

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