The increasingly global approach taken by enforcement authorities, notably by the US Department of Justice (DOJ), means that corporations and their in-house cousel need to take a global approach to compliance by looking beyond their borders. More than ever, in-house counsel and corporate executives must cope with international investigations and prosecutions regardless of their industry, location and nationality. The DOJ's increasing efforts to investigate and prosecute corporations and individuals do not stop at the US border.
For example, the DOJ's Antitrust Division had committed itself to uncovering and pursuing anti-competitive and cartel activities worldwide with increased resources and growing international cooperation. In January of this year, the Antitrust Division and the Federal Trade Commission issued updated Antitrust Guidelines for International Enforcement and Cooperation. In addition to antitrust, the DOJ is aggressively investigating and pursuing violations of the Foreign Corrupt Practices Act and violations of US sanctions worldwide. These investigations have the potential to result in heavy fines and even prison sentences.
White-collar investigations and prosecutions have become more international in nature because the DOJ has made the global fight against white-collar crime a priority as it reaches beyond the US to investigate and prosecute foreign companies and foreign nationals. International cooperation in the investigation and prosecution of white-collar crime has also increased dramatically. International authorities have and will continue to cooperate with the DOJ.
Given the increasing likelihood of a DOJ investigation, particularly of companies and individuals outside of the US, it is important to anticipate and prepare. Practically speaking, in-house counsel can get ahead of any potential investigation by being aware of the risks a company may face across multiple jurisdictions.
Compliance needs to be global
Robust compliance is key in preventing illegal conduct and avoiding a DOJ investigation. A company should review and revise its compliance programmes regularly, usually annually, to make sure that they are up-to-date with legal and industry developments. However, it is not enough to have a programme unless it has real teeth, real consequences and serious, active oversight globally.
In-house counsel should take a global view of compliance to be able to assess where the company is most vulnerable. In examining practices throughout the compnay, in-house counsel can develop an understanding of the various practices across regions and business groups and learn which may be more vulnerable to compliance issues and target them. Additionally, in-house counsel also need to be aware of the compliance issues throughout a company because if a proble appears in one location of area of a company, it could be just the tip of the iceberg and may indicate a more endemic compliance issue elsewhere in the company. A global understanding of the company will allow in-house counsel to anticipate and spot problems more quickly. This will give the company more options if confronted by the DOJ.
When serious issues are discovered in a company, it may be appropriate to consider the possibility of self-disclosing the conduct to the authorities before an investigation is launched. Self-disclosure and early cooperation can be a great benefit to a company. Amnesty, leniency or other cooperation policies, depending on the authority, could be quite beneficial to the corporation. However, when deciding whether to cooperate and share information, it is crucial to first consider which authorities may become involved and then whether to cooperate globally or only with select authorities. Keep in mind that authorities may share information. Cooperation in one jurisdiction could also affect investigations in other jurisdictions, so a global view is important. Finally, US sentencing guidelines explicitly provide for companies to get lesser sentences if they have effective compliance programmes.
Understand how the DOJ operates to react effectively
If in-house counsel as well as executives and employees have some understanding about the DOJ and how it operates, they will be more prepared in the event of an investigation. This education will also serve as a stark reminder of the risks and impact of a DOJ investigation on the company and individuals and may help to prevent bad conduct. This is particularly true for individuals and companies outside of the US, who may not be familiar with the DOJ or who may wrongly assume they are protected by being outside the US. What folllows are some examples of what to expect from a DOJ investigation and how to react.
When the DOJ investigates, it may do so aggressively by launching searches, seizures and even coordinated raids overseas. These may be accompanied by attempts to talk to employees on the spot to get information quickly. The DOJ's Antitrust Division is well known for doing this and has done it often with international cooperation, meaning that raids and searches can occur simultaneously across jurisdictions. Thus a company must understand these risks and be ready to react quickly and globally.
The DOJ systematically talks to key individuals as part of its investigative process. This can occur in a number of different ways, including with no prior notice. Therefore, employees and executives should understand their rights before they are faced with an FBI agent seizing hard drives from their offices or knocking on the front foor of their home to ask them questions. This is a key educational point that can save critical time and avoid major problems later. If a raid or search and seizure becomes a reality, then make sure counsel is notified and gets in touch with any employees and executives involved immediately.
Any interviews with authorities that may have started should be stopped or prevented at least until counsel is present. These interviews are typically written up by the FBI and could be used as leverage against the company or individuals, particularly if the statements are challenged, because they can form the basis of a prosecution for making a false statement. Counsel needs to request any statements made to the FBI or other authorities and debrief interviewed individuals. Counsel also needs to physically get to the sites of the raids and searches and find out what is being taken and who may be talking to the authorities.
In addition to witnesses, documents will play a central role in any DOJ investigation. In-house counsel should be familiar with document retention policies and make sure that they are compliant with any applicable laws and that the policies are actually communicated to employees and followed. The DOJ will ask the company and its employees about it once there is an investigation.
Significantly, once the corporation becomes aware of an investigation, document destruction must be prevented. Employees must be clearly instructed not to destroy any paper or electronic documents. This includes data in their phones as well. Company destruction of documents, as part of the retention policy, should be halted. The DOJ will ask employees about any document destruction by themselves or others.
A DOJ investigation can be long, disruptive and expensive, so a company needs to be prepared to juggle its ongoing business with the demands of the DOJ. The most efficient way to arrive at a resolution with the DOJ is to figure out what happened quickly through the corporation's own internal investigation with the assistance of external counsel. Gaining an understanding of what happened, who was involved and what and what the documents show is critical before determining hot to move forward with the DOJ. A plan should be put in place defining the scope of the investigation and determining who will be involved. When implementing the plan, be aware of local laws that may affect the investigatory scope or permissible techniques. Fact finding by talking to key employees and by collecting documents critical but must be undertaken carefully and within the limits of local laws, which may restrict employee interviews and access to data. Privilege issues under local law need to be considered as well.
The investigation should focus on the bad conduct at issue, but should not ignore the possibility that there could be even more egregious conduct lurking somewhere else in the corporation. Counsel needs to understand the extent of the conduct to determine how to respond to the DOJ. Furthermore, the DOJ does not investigate with blinders on and often directly asks about any other bad conduct during the course of employee interviews. For example, in criminal cartel cases, it is standard practice for the prosecutors to ask employees if they are aware of or even suspect any other anti-competitive in their company, in their industry, in other companies or in other industries anywhere in the world. Counsel needs to get to the bottom of any such issues bfore an employee is put on the spot by the DOJ.
Individuals and a company will often have diverging interest. Thus, early in the process it is important to be aware of possible conflicts of interest that could exist between the company and any of its employees or executives. This typically necessitates separate counsel for individuals who are key to the investigation and of interest to the DOJ.
The DOJ will continue its active pursuit of companies and individuals outside of the U.S.. Thus, understanding he DOJ and its international impact is now essential for in-house counsel wherever located. In-house counsel should make sure that company compliance is DOJ-proof and should educate individuals about the risks of a DOJ investigation. Nevertheless, in addition to improving compliance, companies should also anticipate and prepare for DOJ white-collar investigations.