An extract from The International Investigations Review, 10th Edition
In general, there is no obligation for a business to self-report its misconduct. There are also no benefits enumerated in the laws or written policies for a business that self-reports its misconduct. Nonetheless, there may be incentives for a business to self-report. If the business in question is being subjected to a special investigation, the authorities may narrow the scope of the investigation, the number of charges or the entities to be indicted, or may close the investigation early, if the authorities determine that self-reporting has substantially assisted the investigation process. Any benefits are provided or negotiated on a case-by-case basis, rather than being prescribed in accordance with formal procedures. In terms of sentencing, self-reporting is a mitigating factor.
In cartel investigations, there is a written leniency policy for self-reporting; in fact, self-reporting has become a trend. A self-reporter, with some preconditions, may be eligible for mitigation of or exemption from administrative sanctions. To be eligible for exemption from administrative surcharges and restraining orders, the self-reporter must meet all the following requirements:
- the self-reporter must, voluntarily and independently, be the first person to provide evidence necessary to prove the existence of a cartel;
- the KFTC must have insufficient evidence to prove the cartel and must not have initiated the investigation;
- the self-reporter must remain cooperative until the investigation is complete; and
- the self-reporter must have suspended its collusive practice.
A business that provides the evidence necessary, regardless of whether the KFTC has initiated its investigation when self-reporting was conducted, to prove the existence of a cartel voluntarily and independently but second-in-order (i.e., another business has already self-reported) is eligible for a 50 per cent reduction of the administrative surcharge and mitigation of the restraining order, provided it remains cooperative until the investigation is complete and it has suspended its collusive practice.ii Internal investigations
Generally, internal investigations are led by internal counsel, and the advisement from or representation by external counsel begins when a criminal or a civil complaint is filed against the wrongdoers. Therefore, it is relatively uncommon for an internal investigation to be conducted by external counsel.
Businesses have no obligation to share the results of an internal investigation with the government. Interviews with witnesses and examination of emails, documents or financial transactions are the typical means used during an internal investigation. Although there is no established law or practice regarding an employee's retention of legal counsel during an internal investigation, employees tend not to retain their own counsel insofar as they are not in an adversarial position against their employer.
According to precedent set by the Supreme Court, attorney–client privilege or attorney work-product privilege for communications between an individual and his or her counsel is not recognised prior to the commencement of a criminal investigation or criminal proceedings. It is not clear whether the Supreme Court recognises this privilege if communications are made after criminal proceedings have commenced. In any case, an attorney has a duty not to disclose confidential information and has the right: to refuse seizure of objects that come under his or her custody in the course of providing legal services and that are related to another's confidential information; and to remain silent before the court on matters regarding confidential information. The aforementioned duties and rights are only afforded to attorneys. The client cannot assert these rights once he or she has been requested to produce such information. There have been a few incidents in which the Prosecutors' Office has requested external legal counsel to submit materials produced by or exchanged between a client and its external legal counsel upon obtaining a search and seizure warrant from the court. Following these incidents, the South Korean legal industry has been making attempts to formally introduce attorney–client privilege into legislation.iii Whistle-blowers
Although whistle-blower reports have always triggered a number of government investigations, they have not been very common to date. However, with an increase in incentive programmes and a shift in public attitude towards whistle-blowers, there has been a rise in the number of reports. The major statutes guaranteeing protection for whistle-blowers are as follows: the Protection of Public Interest Reporters Act (PPA), the Act on Protection of Specific Crime Informants and Article 84-2 of the Framework Act on National Taxes. There are more than 50 guidelines declared by government agencies regarding incentive programmes for whistle-blowers. This legislation provides for prohibition of retaliation against whistle-blowers, provisions of personal security, monetary compensation to whistle-blowers and formulas for the calculation of compensation.
The major incentive programmes set forth in the PPA are as follows:
- retaliation against or interference with whistle-blowing is prohibited;
- if a whistle-blower is involved in a criminal violation with regard to the subject of reporting, mitigation or exemption of punishment may be provided;
- compensation is to be provided where whistle-blowing has led to a direct recovery of or increase in the revenue of the government or public institutions through the imposition of criminal or administrative sanctions on the business;
- a whistle-blower's disclosure of confidential business information to the authorities is not deemed a violation of his or her employment agreement or any other laws or regulations;
- a business may not claim damages against a whistle-blower even if it suffers damage as a result of the whistle-blower's reporting, unless the reporting was a false claim, the whistle-blower requested money or undue favour in the workplace in connection with the reporting, or the reporting was for other unlawful purposes; and
- the personal information of the whistle-blower may be treated on a no-name basis