Authored by: Spiwe Jefferson, general counsel of ChristLight Productions Ltd., LLC

Our fictitious legal team is handling a thorny cross-border investigation, demonstrating considerations and steps in-house counsel can take when the complexity of a serious allegation meets the miasma of a matrixed environment.

Singita Patel, senior paralegal at Sunderland Manufacturing, Inc., slammed into her deputy general counsel’s office with a force that rattled the windows and caused his coffee to leap from his hand onto his keyboard.

“Barry, we have a problem!” she yelled before he could bellow in fury. Collapsing into a chair, she hastily explained that the company’s former Latin America regional VP had just reported a complaint from an external sales distributor — alleging that for years, he has been paying Sunderland’s sales manager bribes to keep his business with the company’s Indian subsidiary. He complained to the former VP because the sales manager told him there were others involved in this scheme, and the distributor couldn’t trust any existing employees.

The Brazil local office reports to the Latin America regional office in Argentina, which reports to a senior vice president located in Sunderland’s Atlanta headquarters. “So what do we do?” Singita demanded in a panic.

1. Get all the facts.

Often, an investigation is triggered by a report from an individual who has identified themselves, or who has chosen to remain anonymous, if this is an option. Whether the reporter calls the company’s ethics hotline or emails their boss, if possible, a follow-up is recommended to fully understand the facts.

In this case, the distributor admitted he has paid US$50,000 in bribes to Sunderland’s employee over four years in exchange for receiving continued business from the Brazilian subsidiary. He drew the line when Sunderland’s employee demanded employment with his company so he could better control the distributorship.

2  Define the scope.

Having the initial facts allowed Barry and Singita to define the scope of the investigation, which included determining what issues would be investigated, who would be involved, the time frame within which the investigation would be concluded, and the deliverables.

3.  Identify the rings of custodians.

The distributor reported the violation to Sunderland’s former Latin America regional VP because the employee told him others were involved in the scheme.

In identifying custodians who might have relevant information, Barry and Singita casted a broad net that included the sales manager’s peers in the inner ring, rippling out to include superiors all the way up to the senior vice president of the business unit. It is more efficient to start wide and then narrow the focus to the confirmed players than to start too narrow and discover later (perhaps after documents have been destroyed and accusations start flying) that the original scope was too narrow.

4.  Assemble investigative team.

Barry and Singita defined their investigative team — a tricky task since some of the individuals under investigation were also stakeholders interested in the execution and outcome of the investigation. Barry decided to provide these individuals with limited details until cleared.

The legal duo led an investigative team consisting of:

  • Information Technology (IT) members, who collected the custodians’ data and documents from company email and other servers;
  • The local subsidiary of a global document review company, which assigned individuals who spoke fluent Portuguese and English to review the custodians’ documents; and,
  • Lawyers from the local office of a global law firm, which had excellent command of local language, customs, and laws, as well as a similar appreciation of Sunderland’s ethical standards and the extensive web of anti-bribery and anti-corruption regulations with which the company was required to comply.

5.  Quarantine documents.

Singita worked with IT to collect all available data behind the scenes in addition to issuing a litigation hold to all custodians to preserve all relevant documents.

6.  Define reporting chain.

The legal team developed a communications plan to proactively report the investigation’s progress and findings. To preserve the privilege, only the company president and senior vice presidents of human resources (HR), finance, and the head of the Latin America operation were fully briefed once it was confirmed that the bribery scheme was limited to a few individuals in Sunderland’s Brazil office.

7.  Consider language and culture.

Critical conversations are best held in one’s native tongue, which captures cultural context and customs in addition to the spoken word. In this case, linguistic considerations influenced the selection of the law firm and document review company.

8.  Take decisive action.

Because the investigation substantiated the allegations against the sales manager and the distributor (who had paid the bribes without reporting to the company for four years), the sales manager’s resignation was accepted and the distributor’s contract was terminated. Three other employees were permitted to resign due to their involvement. The company chose resignations rather than terminations in the hopes of avoiding claims by the employees.

9.  Understand local laws.

Protective employee-friendly local laws may make it difficult to terminate offenders for ethical and other non-criminal violations. To resolve this dilemma, Barry ensured that his stakeholders agreed that the company’s commitment to high ethical standards meant they would be willing to risk being sued to address the ethical breach.

10.  Determine whether to report.

This list is not linear; thus, Barry and his stakeholders assessed whether reporting was required as soon as the allegations were substantiated. The speed was to avoid potential penalties if any of the relevant countries had reporting deadlines. They hired lawyers in Brazil, the US, and Argentina to address this question. Ironically, because the bribes came from the distributor to the sales manager instead of the other way around, Sunderland Medical had no reporting requirements.

For further reading, please download the ACC Docket article on “Unweaving the Dawn Raid Waive: Smart Prevention of Privilege Waiver for Multinational Corporations.”