In response to increased enforcement action by regulators, there has been a substantial increase in investigations in many of the jurisdictions in the Middle East and globally. Indeed, 2016 was widely considered to be the biggest year for FCPA enforcement action on record for the US authorities with 53 combined actions and USD2 billion in corporate fines. Almost all this enforcement action was focused outside the US.
This article provides 10 recommendations for managing internal and regulatory investigations. What you should do in a "crisis situation" when misconduct in your organisation arises and the risk of enforcement action is on the cards.
1. Identify the purpose of the investigation
Identify the purpose of the investigation and any alleged misconduct at the outset so that the focus is clear and informed decisions can be made. For example, what happened? who was involved? is the activity ongoing? Review the purpose of the investigation periodically as the investigation develops.
2. Form an internal investigating team
Appoint an independent team of senior personnel to manage the confidential investigation. The team must be clear with whom they can discuss the investigation, and the permitted content of those communications. Not only will this make the investigation run more smoothly, it is important in terms of a claim to legal professional privilege.
3. Consider the involvement of experts
Appoint external lawyers as soon as practicable. It may also be appropriate to engage forensic accountants, or private investigators. Lawyers will advise on the conduct of the investigation, the weight afforded to evidence, the legal ramifications of the wrongdoing and your reporting obligations. Should there be an external investigation conducted by the regulators or the Police, these enforcing agencies will want to see that your organisation has sought professional advice. Furthermore, you will want experts engaged in the event that the regulators or Police attend your premises (or even worse, employees are arrested or detained) to provide you with advice as to how to deal with the situation.
4. Avoid making it public
Communications regarding the subject of the investigation should be tightly controlled to avoid "tipping-off" others involved in the wrongdoing.
5. Should you let involved personnel go?
Employment law advice should be sought and disciplinary procedures should be followed. Irrespective of the nature of the investigation, termination of employment may not be permitted and losing a case in the labour courts may lead to fines and other sanctions.
6. Safeguard key documents
Original documents that may be material to the investigation and may be required in court litigation should be identified and safeguarded. It may be appropriate to seize material that belongs to the organisation from employees, particularly information held on work issued laptops and mobile devices.
7. Conduct interviews of key individuals
Interviews should be conducted by experienced interviewers and should be accurately recorded (subject to obtaining the prior consent of the interviewee). Recordings of interviews may not be privileged and may need to be disclosed to the regulator or courts in any future legal proceedings.
8. Consider disclosures and reporting obligations
Reporting obligations to external bodies such as the Police and regulators will vary widely depending on the nature of the wrongdoing. Legal advice should be sought on the nature and the extent of any reporting obligations. Reporting obligations may or may not be mandatory under the law. Insurers, auditors and shareholders may also need to be notified.
9. Maintain control of external communications
Confidentiality will likely be waived by reporting the wrongdoing to the enforcing regulator. The enforcing regulator will likely wish to "name and shame" the offending organisation. External public relations agencies should be appointed to manage press coverage.
10. Prepare reports, learn lessons and prevent future misconduct
Notwithstanding the finding of the regulator, it is important that the organisation addresses the undesirable behaviour that has been uncovered, learn lessons, and ensure that similar behaviour is prevented in future.
The investigating team should report internally on the scope and extent of the internal investigation, and outline any conclusions reached, and the steps taken as a result of the findings. It may also be appropriate that new policies are implemented to prevent similar activity in future.