Corporate or internal investigations are commonplace in corporations, and they typically stem from whistle-blower complaints, anomalies highlighted by regulators, findings of internal and external audit, or even media reports. These investigations are, however, often marred by pitfalls due to its time sensitive and unpredictable nature. Missteps in the heat of investigations are therefore unsurprising, although the consequences can be dire – from the perspective of a corporation, there are serious risks of litigation, reputational damage, monetary penalties or corporate liability.
This article outlines the key steps in conducting corporate or internal investigations, and recommendations to side-step potential stumbling blocks.
Once a decision is made to conduct an investigation, which needless to say should be made swiftly, it is vital that the corporation determines the investigation team. Whilst larger corporations may have dedicated investigation teams equipped to carry out investigations, it is recommended, especially for larger scale or complicated investigations, to consider the engagement of external counsel and subject matter expert not only for their expertise, but to also ensure the independence and credibility of the investigation. The added advantage of having investigations managed by an external legal team is the legal privilege that may be attached to matters uncovered.
Implicated individuals, high-level or otherwise, within the corporation should be excluded from the investigation team.
Project management is key in the conduct of investigations. Upon the establishment of the investigation team, an investigation plan should be immediately drawn up to at least cover:
- Scope of investigation
At the outset, the objective of the investigation should be clearly defined, be it to determine the veracity of an alleged misconduct or to respond to a regulator’s query. The issues to be investigated should also be ascertained.
Realistic timelines for the completion of the investigation should be determined from the get-go, but with some flexibility to deal with unforeseen impediments to the investigation such as the delayed production of relevant evidence or a global pandemic!
- Potential interviewees and relevant evidence
Based on the complaint or existing documents, the investigation team should be able to determine the potential interviewees or (potentially) relevant evidence, in the form of physical documents or digital copies, for the investigation. Preliminary interviews may be conducted to identify the main individuals involved in the wrongdoing, or the relevant data.
Immediate Remedial Steps
Depending on the nature of the alleged wrongdoing, it may be necessary to take immediate corrective measures to prevent its continuation pending the outcome of the investigation or to facilitate the investigation. This may include considering whether to temporarily cease all business dealings with an implicated external party, or to suspend the employment of the implicated individuals within the corporation. Any steps taken will have to be weighed against the business needs as well as the need not to jeopardise the investigation, and at all times aligned with the labour law and internal policies.
Preserving Evidence and Data Review
The investigation team should, at the soonest, obtain and preserve all relevant evidence which may be in the form of emails, text messages and documents. The investigation team may issue an immediate data-retention order and request for the hand-over of the individual’s mobile devices or laptops to the corporation, and should work closely with the internal information technology team or appointed forensic expert to image and process the relevant digital data. At the same time, the investigation team should also be wary of any data privacy requirements.
After the relevant evidence is secured, the investigation team would need to conduct a systematic review and analysis of the same.
Prior to conducting interviews, the investigators / interviewers are expected to be familiar with the key evidence. They would typically prepare preliminary interview questions and compile key documents for purposes of the interviews.
The sequence in which the interviews are conducted should also be carefully thought out, to maximise the information obtained in one interview for the next, and to prevent coordination between the interviewees.
During the interviews, it is pertinent to highlight its confidentiality to the interviewees. In some countries, it is also a requirement to provide interviewees with certain warnings. Investigators / interviewers should be polite and considerate, and short breaks are recommended if interviews are prolonged. They should also be prepared to think on their feet, especially when interviewees are being uncooperative or difficult.
Interview notes should be prepared concurrently with the interviews or shortly after its completion. Supplementary interviews may be conducted to address inconsistencies or obtain further clarifications.
Wrapping up the Investigation
The findings of the investigation team are usually documented in the form of an investigation report. The investigation report should set out the scope of investigations, gist of the steps taken to investigate, findings of fact, breaches of any law or policies, and recommended remedial actions.
Whilst there is no fixed formula, the above outlines the broad approach when conducting corporate or internal investigations. The general rule of thumb is to not lose your cool in the heat of investigations, and to be adept at improvising whilst putting out unexpected fires along the way.