Caroline Day and Louise Hodges, Kingsley Napley
This is an extract from the third edition of GIR's The Practitioner’s Guide to Global Investigations. The whole publication is available here.
Witness interviews are a key part of most corporate investigations. While documentary evidence can provide the underlying facts of a case, it is often the accounts given by witnesses that deliver the context and detail of what has happened. They can provide vital background information, shed light on the motivations of those involved and allow for an individual’s credibility to be assessed. However, the timing, preparation, record taking, content and use of the interviews need careful consideration.
Witness interviews can serve a number of purposes in the context of a corporate investigation, including:
- to scope the investigation;
- to understand the facts and issues;
- to understand accountability and defences; and
- to assess the credibility of individuals and their accounts.
Interviews in this context can present particular difficulties because of the myriad employment, criminal, civil and regulatory issues that can arise, and the fact that the interests of the company and the witness are often not aligned. These interviews are typically conducted confidentially and can be premised on a need to maintain legal privilege and the duty of confidence owed between an employer and employee. This can often be at odds with the expectations of some authorities for the company to provide details of the witnesses’ accounts. There is often a tension between a company’s right to conduct its own enquiries into allegations of wrongdoing, including interviewing its employees, and the suggestion by the authorities that its enquiries could (depending on how they are conducted) be detrimental to a criminal or regulatory investigation. In addition, following recent court judgments, the position surrounding legal privilege in the context of witness interviews has become more complex.
This chapter explores these issues, considers the practices that can be adopted when conducting interviews and highlights some of the benefits and risks of these different approaches. It considers the preparation and formalities that may be required for witness interviews in the United Kingdom, and identifies particular complexities that can arise in global investigations when multiple jurisdictions are involved.
Types of interviews
Broadly speaking, witness interviews in corporate investigations can be split into two categories: preliminary or scoping interviews, and substantive interviews. Generally, they should be distinguished from any employment or disciplinary interview.
Preliminary or scoping interviews may be appropriate at the outset of an investigation to seek background information, identify further sources of evidence, obtain a quick understanding and provide context to an allegation. These interviews will generally take place at the start of the investigation and, depending on the specific circumstances, may take place before any firm view has been reached on the terms of reference or extent of material that will be reviewed. They are more likely to be conducted with employees who may have knowledge of matters under investigation but are not at direct risk of any criticism. It may also be necessary to undertake interviews with whistleblowers at this stage.
Substantive interviews will generally take place after most, if not all, the relevant material has been reviewed. The purpose is to obtain a detailed understanding of what went on, to provide explanations of key documents in the case and, if necessary, to test the account given. These interviews will often be used to inform an understanding of any individual and corporate liability and any defences. The timing is important and can depend on a number of factors, including the available evidence, whether the authorities are already involved and whether civil and criminal proceedings are contemplated.
Deciding whether authorities should be consulted
The decision about whether to consult the authorities in advance of a witness interview is not dictated by statute; no statutory framework explicitly requires it and in general terms a company may manage its internal affairs and make enquiries as it sees fit. Therefore, this decision often rests on whether there is an implicit obligation on the company to notify the authorities under its regulatory reporting regime, or whether it is in the interests of the company to co-operate with the authorities by notifying them of any forthcoming interviews.
Regulated firms may be obliged to report a violation or allegation of wrongdoing. For example, the Solicitors Regulatory Authority’s code of conduct requires a law firm to report any allegation of serious misconduct promptly, fully co-operate with its investigation and report any material change about the firm. Accountants may hold similar obligations under the requirements of their regulators. There are reporting requirements under the Listing Rules for those companies admitted to trading on a regulated market, and those in the regulated sector are required to submit a suspicious activity report if they know or suspect (or have reasonable grounds for knowing or suspecting) that another person is engaging in money laundering or terrorist financing. Financial institutions regulated by the UK Financial Conduct Authority (FCA) must under Principle 11 of the FCA’s Principles for Businesses act in an open and co-operative manner and disclose anything relating to the firm of which the regulator would reasonably expect notice.
The FCA’s expectations under Principle 11 extend to requiring a firm to consider notifying it of a decision to investigate conduct concerns at the earliest opportunity. In November 2015, the Director in Enforcement at the FCA, suggested during a speech that self-reporting is the bare minimum that is required and that a firm should discuss the scope of its investigation with the FCA as early as possible. He identified witness interviews as a key area of risk, suggesting that firms be alive to the possibility that their own investigation could prejudice or hinder a subsequent FCA investigation, and that firms should discuss this with the FCA before taking action. A firm should therefore consider its regulatory obligations when assessing if, and when, to consult its regulator regarding any proposed witness interviews.
During a speech at the 2nd Annual GIR Live London conference, the then Director in Enforcement at the FCA recognised that there are sometimes good reasons for firms to carry out their own investigations and that the FCA encourages this proactive approach and does not wish to interfere with a firm’s legitimate procedures and controls. However, he reiterated that when conducting their own investigations, firms should ensure that they do not take steps that might prejudice or obstruct a subsequent FCA investigation and highlighted the importance of early communication in this regard.
The Serious Fraud Office (SFO) has similarly acknowledged that there are good and proper reasons for a company to carry out its own investigation but has also referred to the potential dangers of an internal investigation ‘churning up the crime scene’, which could include the taking of first statements from witnesses in a way that influences their testimony.
Camilla de Silva, Joint Head of Bribery and Corruption at the SFO, commented in a recent speech that, in the context of the company handling the evidence: ‘We need to understand the methodology, what’s been captured and from where, the use of search terms and be provided with the metadata. [We a]ppreciate it’s likely to be dynamic and not a complete set when you speak to us, so update us as you go along.’ On contacting the SFO and the timing of this, she said: ‘We will not be offering DPAs in cases of a late conversion to the joys of co-operating; DPAs are a reward for openness – the sooner you come in, self-report and the more you are open with us, the more you have to be rewarded for.’ On consulting with the SFO, she said: ‘We expect to discuss the scope of the investigation, to be notified of conduct which you uncover and what you ought to bring to our attention even if we don’t ask, the sequencing of interviews and media contact.
Where the authorities are not yet aware of the allegations under review, it is likely that preliminary enquiries will be necessary before the company is in a position to reach a view as to whether to self-report. Where this includes witness interviews, it may be inappropriate for the authorities to be consulted in advance. This can create a tension between the authorities’ expectations to be notified as well as the need for the company to bear in mind the risks of prejudicing a future investigation.
Where an investigating authority is already involved, it is prudent for the company to consult or inform it prior to undertaking interviews. Increasingly the SFO and the FCA have sought to impose restrictions on the conduct of interviews in corporate investigations or to prevent them from taking place. While a company cannot be prevented from undertaking its own interviews, there is risk of criticism if it proceeds without the consent of the authority, particularly where it could be suggested that it has prejudiced an investigation.
Providing details of the interviews to the authorities
The issues relating to co-operation with the authorities in the context of corporate investigations are explored in Chapters 9 and 10 on co-operating with authorities. When it comes to witness interviews, authorities often expect details of the interviews to be provided. It is therefore crucial to consider the purpose of the interview, its intended audience, record-keeping and, if appropriate, how this information is to be shared.
There is no statutory duty on a company to co-operate with the authorities with respect to its witness interviews. Instead there is published guidance in the form of codes of practice, speeches and guidelines. This varies between regulators but for the most part there is an expectation that details of witness accounts should be provided.
This issue is considered in the Code of Practice on Deferred Prosecution Agreements (the Code) jointly issued by the SFO and the Crown Prosecution Service. The Code states at 2.8.2(i) that co-operation with the authorities will include identifying relevant witnesses, disclosing their accounts and the documents shown to them and, ‘where practicable’, making witnesses available for interview when requested. The SFO has made clear its expectation that for a deferred prosecution agreement (DPA) to be considered, co-operation must be forthcoming. In 2016, one of the SFO’s Joint Heads of Bribery and Corruption at the time commented at a conference: ‘There really is a pronounced difference now in the way companies are routinely approaching us – “we think we’ve got a problem and we’re willing to work with you to find out, and if necessary resolve it”, not “there’s nothing to see here, good luck finding it.”’ The former Director of the SFO noted in a speech in 2017 that a DPA would not be available to companies under investigation unless they offer ‘genuine and demonstrable co-operation’. More recently, during a speech in 2018, Camilla de Silva commented: ‘the co-operation we want is with our investigation into the suspected offence, not the company. This means that, at the end of the process, the company will have helped us move that investigation forward and, in so doing, made it easier for us to investigate and, if appropriate, prosecute other suspects’.
While the SFO has clearly set out its expectations to be told what witnesses have to say in interviews with particular emphasis on ‘first accounts’, what is less clear is how the detail of the accounts should be imparted and the level of detail that is required. The SFO has been inconsistent in its approach. In the case of SFO v. ICBC SB it was sufficient for oral reports of first-account witness evidence to be provided by the bank to the SFO to enable full co-operation to be established. Alun Milford, then general counsel at the SFO, noted the bank’s commitment to supply all relevant non-privileged material and provision of summaries of witness first accounts as an example of its co-operation.
Summaries of witness interviews were similarly supplied by Rolls-Royce in the context of its DPA reached in January 2017. In his judgment, Sir Brian Leveson, President of the Queen’s Bench Division, noted that the company had demonstrated ‘extraordinary cooperation’, referring to the disclosure of interview memoranda (on a limited waiver basis) as an example of this. The judgment also made reference to the company ‘co-operating with the SFO’s requests in respect of the conduct of the internal investigation, to include the timing of and recording of interviews and reporting findings on a rolling basis.’ This was referenced further in a speech in 2016 by the then Joint Head of Bribery and Corruption: ‘they made available to us written accounts of interviews that took place during the evidence gathering exercise, enabling us to understand both what had happened and the strength of the various accounts given about that’. While the SFO acknowledged its acceptance of summary witness accounts instead of transcripts in the DPAs for Standard Bank and Rolls-Royce, at a conference in April 2017, Alun Milford refuted suggestions that it would be standard practice in all cases and similarly commented in November 2017 that it is not the case that summaries will always be sufficient.
In the case of SFO v. XYZ Ltd, oral summaries were provided without the company’s badge of ‘genuine co-operation’ being compromised. However, the SFO’s decision to accept oral proffers in this case has recently been subject to judicial scrutiny. In R (on the application of AL) v. SFO, a judicial review was brought against the SFO for failing to pursue XYZ Ltd for non-compliance with its DPA. The terms of the DPA required the company to disclose to the SFO all information and material in its possession that is ‘not protected by a valid claim of legal professional privilege or any other applicable legal protection’. Having accepted oral summaries, and following a number of attempts to pursue the full set of notes, the SFO decided to cease pursuing the full set of notes. The SFO’s position in defending the judicial review was that there was no need to obtain the interview notes because XYZ’s claims of privilege were ‘not obviously wrong’, and that it had exercised legitimate prosecutorial discretion in accepting the summaries. Although the application was quashed on the grounds that alternative remedies in the Crown Court were available, and therefore judicial review was not the appropriate action to take, the SFO was criticised in the judgment for not pursuing the disclosure. Mr Justice Green described the provision of summaries as an alternative as ‘highly artificial’ and questioned the SFO’s decision not to take a more robust stance. The SFO was similarly criticised for its failure to challenge the assertion of privilege and require the notes in circumstances where it believed the material not to be privileged. The observations made by the High Court will no doubt encourage the SFO to take a robust approach to the disclosure of interview notes and claims to privilege, and we anticipate that the SFO is highly unlikely to accept oral summaries for key witnesses in future.
Despite the inconsistency in how details of accounts have been disclosed to the SFO, the SFO has been clear that in order to be considered for a DPA, co-operation is required. Alun Milford said in a recent speech. ‘we have been clear and consistent that only co-operative companies will ever be offered the opportunity of entering into a DPA with us.’ In (SFO) R v. Sweett Group PLC (unreported), Sweett Group’s refusal to hand over details of the witness interviews undertaken during its internal investigation was deemed unco-operative by the SFO. The level and extent of co-operation with the SFO will ultimately be determined case by case.
The FCA similarly expects regulated firms to provide notification of any significant matters that occur in the context of an internal investigation, in accordance with its Principle 11 obligation. While this does not explicitly apply to witness interviews, the FCA Enforcement Guide makes clear that if the FCA is ultimately asked to rely on submissions or an investigation report in the context of its own decision-making powers, it would ordinarily expect the firm to provide the underlying material, which could include notes of witness interviews, in addition to the report itself. While the level of information will undoubtedly differ from case to case, the FCA has indicated that an oral report may not be sufficient and that information should be shared in a transparent manner, with a proper record. Furthermore, if an individual is suspended, a firm must submit a Form C explaining the reasons for suspension.
The guidance surrounding co-operation with the authorities and what is expected is evolving. In cases where the company or its employees are at risk of further investigation, prosecution or civil action, the company will want to consider the benefits that early co-operation may bring. However, whether it is in the interests of the company to co-operate will depend on the facts of each case.
Identifying witnesses and the order of interviews
Where interviews are to be conducted, the company or its representatives, or both, should seek to interview all company personnel who were involved in the facts under investigation, including those who should have been involved by virtue of their position. Reporting lines of those involved should also be considered. The witness list may expand as more information becomes known, and therefore should be reviewed regularly.
Employees generally have a duty to co-operate and are likely to owe a duty of candour towards their employer, and a failure to comply could result in disciplinary action.
Where there is a whistleblower, it may be preferable to interview him or her at the start of the process. The structure of an investigation is very fact-specific, but, broadly, the order of other interviews should be based on the level of risk that the witness poses to the business, beginning with those who present the least risk to the company. For the most part this is likely to follow levels of seniority, starting with lower-level employees and leaving senior management until later. Timing considerations sometimes mean witness interviews need to be taken out of the normal order. For instance, it is generally advisable to ensure that any employees who may be about to leave the company (either permanently or for temporary absence such as maternity leave) are interviewed beforehand and while they still owe a duty to the company to co-operate. In circumstances where there are a number of individuals to be interviewed, consideration should be given to the creation of a ‘leavers list’.
The benefit of this approach is that the company may be better positioned to obtain an overall sense of the extent of the issues before focusing on particular areas of risk. Lower-level employees are generally more likely to communicate openly, although it is important that sensitive or confidential information is not referred to unless strictly necessary as there is risk that information may be shared.
While it may be appropriate to conduct early interviews with senior employees to obtain initial accounts (particularly where there is likely to be more than one opportunity to interview), generally members of senior management should be interviewed when the investigation is further advanced. Typically, senior employees are more likely to pose a greater risk from the perspective of corporate liability and therefore it is important that any potential risks are identified beforehand. Under the principle of identification, in the United Kingdom a company can be criminally responsible for the actions of those employees that represent the ‘directing mind and will’ of that company, generally restricted to board directors, the managing director and other senior officers who carry out management functions on the company’s behalf. The principle of identification is explored in more detail in Chapter 1.
This can cause difficulties when interviewing board members and senior management who may be the ‘client’ for the purposes of the investigation but who may need to be interviewed in the context of their own involvement. For the most part this can be avoided by identifying the ‘client’ at the outset of the case as made up of a group of senior employees or board members with no involvement in matters under investigation. However, depending on the size of the company and the nature of the case, this is sometimes unavoidable and therefore the basis on which the interview is being conducted must be made clear to the witness.
There are a number of statutory exceptions to the principle of identification, and the government is currently examining the case for reform of the law on corporate liability for economic crime. Under section 7 of the Bribery Act 2010, a corporate can be criminally liable for failing to prevent the acts of its employees or agents unless it can show that it had adequate procedures in place to prevent bribery from taking place. Two new corporate offences of facilitating tax evasion under the Criminal Finances Act 2017 also adopt a failure-to-prevent model, with criminal liability attaching for the acts of persons acting on the company’s behalf unless the corporate can show it had reasonable prevention procedures in place. Similarly a corporate can be guilty of corporate manslaughter if the management or organisation of its activities causes a person’s death, and amounts to a gross breach of a duty of care owed by the organisation to the deceased. When the issues under investigation fall within the exceptions it can be difficult to identify the appropriate individual to interview on behalf of the company. Again, the purpose of the interview and the basis on which it is being conducted needs to be made clear from the outset.
Senior employees are also more likely to owe fiduciary duties to the company and potentially be liable for breaches of those duties and become defendants in civil proceedings by the company. As a result, these interviews should generally take place when the company is in a better position to identify the extent of any breaches.
Relevant information could also be sourced through interviews with third parties including former employees, customers and contractors. The obvious benefit is that these witnesses may be more forthcoming where there is no risk of disciplinary proceedings. However, third parties cannot be required to attend an interview, and unless there is a contractual obligation requiring their attendance, they could refuse to attend. Even in circumstances where a contractual obligation exists this could be difficult to enforce, as could a confidentiality clause. The interview process itself is likely to notify the third party of the investigation and the subject matter under review and depending on the nature of the relationship, it may not be appropriate to interview him or her at that time, particularly when the decision on self-reporting is outstanding. The timing of these interviews would depend on the facts of each case.
When to interview
The timing of interviews can be influenced by a number of factors, including the stage of the investigation and whether or not any record of interview would be covered by legal privilege. Scoping interviews usually take place at the outset of an investigation, most likely with a few individuals who have a general knowledge of the subject matter under investigation.
Substantive interviews are likely to be most effective once the bulk of any document review has taken place. This will allow for any key documents to be identified and put to the witness, and for questions to focus on the areas of risk. Furthermore it is best to plan for only one interview; while there may be circumstances where a second or third interview is appropriate, it is by no means guaranteed that the witness would agree.
Timing of the interviews can pose particular difficulties when there are competing considerations. For example, it may be necessary to delay when the company has a claim for injunctive relief against individuals, to avoid assets being dissipated in advance of a freezing order being granted. However, it could be that there is only a limited amount of time to interview an employee who is leaving the company or the company may need to speak to an individual at short notice to assist in an assessment of whether to self-report. Clearly such factors need to be prioritised.
It is important to allow for a degree of flexibility as certain factors outside the company’s control can dictate when an interview should take place. Where the corporate investigation is likely to remain an internal review, there is little risk to the company conducting interviews to a timetable that suits it, although the company will wish to consider whether legal privilege would apply. Where there is suspicion of a criminal or regulatory violation and a formal investigation has commenced, there are a number of risks associated with conducting interviews in parallel with these investigations.
As a general point, any interviews with individuals at risk of criminal exposure should be postponed until all evidence has been secured, to minimise the risk of evidence being destroyed. This is particularly important where a criminal or regulatory investigation is likely. Similar concerns apply where the individuals are potential defendants to civil proceedings by the company.
Both the SFO and the FCA place significant emphasis on the first accounts of witnesses, and take the view that they can help inform an understanding of what went on and allow for the accuracy or integrity of a witness to be tested. However, depending on the facts of the case this view can often be misplaced; the first account given by a witness is not necessarily always the best one, particularly in complex investigations that span a number of years and where there is extensive underlying material. The quality of a witness’s evidence can often be improved having been given the opportunity to review the evidence and recall the context. Nonetheless, the SFO and FCA have increasingly sought to place restrictions on interviews of key suspects in corporate investigations and may seek to prevent them altogether.
In such circumstances it may be prudent for a company to seek to agree an approach with the authorities prior to conducting any interviews.
The authorities are also increasingly sensitive to the risks of witness contamination, and a company whose conduct of witness interviews has caused prejudice to a criminal or regulatory investigation could be subject to serious criticism. At best this could involve comment or views that are unhelpful for the company; at worst this could include allegations of perverting the course of justice. In 2016, the then-Director in Enforcement at the FCA, observed that firms must take care not to take steps that might prejudice an FCA investigation and suggested that in certain circumstances it may prefer that a firm does not commission its own investigation, for example, in criminal investigations where alerting the suspects could have adverse consequences. Mark Steward, Director of Enforcement and Oversight at the FCA has commented on the importance of an ‘independent public body investigation’ being able to conduct itself without ‘the crime scene being trampled over.’ The SFO has similarly made clear that corporate investigations that ‘trample over the crime scene’ are unhelpful and that integrity of evidence, especially regarding witness accounts, should be respected, and has noted that internal investigations may result in first statements of witnesses being taken, delivered or recorded in a form which may be less than full and accurate, as opposed to recording the account by way of a transcript. Camilla de Silva, during a recent speech, commented: ‘The data needs to be identified, collected, preserved and analysed in a way that does not tip off potential suspects into deleting data and protects its integrity and continuity.’
Witness interviews should always be conducted in a manner that minimises the risk of contamination or prejudice.
When a criminal or regulatory investigation is anticipated or already under way, a company may wish to consider engaging with the authorities at an early stage to avoid any criticism that might follow. However, engaging with the authorities may not necessarily be appropriate in every case and runs the risk of loss of control. Each case will need to be assessed on its specific facts and surrounding circumstances.
Planning for an interview
Interviews in the context of a corporate investigation can be conducted by various people: internal or external lawyers, accountants, forensic experts, specialist investigators, HR or compliance officers, and others. Careful thought should be given to who is best placed to undertake them.
As a general rule, where a company is engaged in a corporate investigation into allegations of criminal or regulatory misconduct, it is preferable to have lawyers (internal, external or both) present at interviews to take notes and identify the key risk areas, to enable confidentiality, and for any claim to privilege to be strengthened. Generally it is preferable for the same person or persons to conduct the interviews of those witnesses who provide similar types of information. This will allow for consistency of approach and for the credibility of witnesses to be more readily assessed. It is also preferable to have two interviewers present to allow for one to take notes while the other asks questions.
Where external lawyers have been instructed, they should generally conduct the interviews. External lawyers often bring (and importantly are seen to bring) expertise, objectivity and independence, which can be very important when assessing the credibility of the investigation. Although it can bring a degree of formality that can make the experience more daunting for the witness, the use of external lawyers will strengthen a claim to legal privilege.
Where external lawyers have not been instructed, the company may consider resourcing the process internally either by using compliance personnel, internal auditors or HR officers or by using in-house lawyers. Either way, those conducting the interview should not have had any involvement in the allegations under review. While the use of non-lawyers may decrease the levels of concern among employees, in general they may be less skilled in conducting these types of interviews and less familiar with the issues that may arise. In-house lawyers will have a good understanding of the business and legal advice given to the company will generally be privileged in the United Kingdom. However, the protection of legal privilege will not apply to advice given by in-house lawyers in the context of European Commission related investigations, and it may be necessary in those circumstances to engage external lawyers.
Where forensic experts (internal or external) are also engaged it may be prudent to involve them in interviews with key individuals. If so, it is generally advisable for these interviews to be conducted alongside internal or external lawyers to ensure that the contents can be covered by the company’s confidentiality and privilege, as appropriate, and to strengthen a claim to this privilege.
Prior to the interview, a core bundle of documents relevant to the particular witness should be prepared. Consideration should be given to whether the witness is given access to documents, either before or during an interview, or as part of staged disclosure, and what documents, if any, should be put to the witness. Referring to documents can be a very useful tool to assist in refreshing a witness’s memory and to allow for specific comment. Key documents can be put to provide a better understanding of its content and to give an opportunity for the witness to provide explanation.
In general, copies of confidential or sensitive documents should not be given to witnesses where there is a risk these could be shared or used contrary to the company’s interests. In complex matters, providing pre-interview disclosure will enable the witness to prepare; however, where documents are provided to the witness, this should be done on a restricted and confidential basis with the requirement that they are either returned or destroyed at the conclusion of the interview. It is preferable that a witness is not given documents that he or she has not previously seen.
The provision of documents may give rise to data protection issues, particularly in light of the company’s obligations under the data protection principles and where multiple jurisdictions are involved.
A detailed interview plan can be useful to ensure that all relevant questions are put to the witness, although the interviewer should not feel restricted by this. In general, topics should be addressed in a chronological order that develops facts in a logical way.
Regarding the provision of topics in advance of an interview, it is generally helpful to indicate the main areas that may be covered to assist the witness to prepare, particularly where the subject matter is complex. However, giving a list of detailed questions is generally not appropriate, and a witness who has had the opportunity to script his or her answers is less likely to be considered credible. Furthermore, questions are likely to evolve as the interview progresses. There is also a risk that the questions might be shared.
Interviewers should ask questions in a measured and courteous manner with a clear and professional tone. There is little point in adopting an aggressive approach or engaging in lengthy cross-examination; this is unlikely to be effective and could give rise to criticism, or employment or personal injury claims. A skilled interviewer will seek to put the witness at ease before addressing the key topics. Where there are two interviewers, different interviewing styles can often be effective.