Conducting cross-border investigations: practical tips

Sep 17, 2014
<p>Advice to help internal investigations run smoothly, starting with determining whether payment freezes to existing agents are in order&nbsp;</p>

The regulatory and investigative climate confronting multinational companies has never been more challenging. In cross- border internal investigations, legal, cultural and cost challenges may quickly multiply to the point where they threaten to undermine the company’s operations and even the investigation itself.

As a global investigative firm, Nardello is more and more frequently hired directly by corporate clients to conduct internal investigations on their behalf and in co-ordination with their in-house legal departments. Based on our experience, this article lays out a brief road map of the most common challenges that arise in such circumstances, and offers strategies and insights for how to overcome them.

1. Do no harm

As soon as the investigation commences, investigators should support the legal department’s efforts to prevent any conduct that could compromise the investigation or expose the company to legal risk during the inquiry.

For example, in anti-corruption investigations, investigators should move as quickly as possible to determine whether there are any existing agent relationships that give rise to concern, so the company can determine whether a payment freeze to those agents is appropriate.

Failure to identify the need for a payment freeze can have catastrophic effects in the anti- corruption space, as any improper payment potentially constitutes a criminal act and can serve to extend the statute of limitations (and the company’s exposure).

Similarly, if the investigation has been prompted by a whistleblower, it may be necessary to work with counsel to determine which employees need to be walled off from one another in order to protect the whistleblower’s line of communication to the investigator and his/her comfort with the investigation. When a whistleblower is in the mix, nothing can compromise the quality of an investigation faster than a failure to gain the whistleblower’s confidence in the process and ensure he/she feels secure in his or her position.

These and other similar prophylactic measures are all ‘day one’ objectives: they should be the first thing investigators, working with counsel, focus on.

2. Create an investigative plan

After taking any preliminary steps necessary to protect the integrity of the investigation, the next step is to create a detailed investigative plan. While it may be tempting to immediately jump into interviews, document collection and fact-finding, doing so without a thorough plan can create major problems for the investigation down the road.

For example, given the breadth of data privacy regulations, it’s very easy for an investigation to inadvertently violate the laws and regulations of European Union nations if adequate care is not taken. The investigative plan should, therefore, be drafted in close co-ordination with the company’s counsel and include all of the following:

  • Objectives. The objectives of the investigation should be plainly spelled out. In many instances, this may be as simple as ‘Investigate the allegations made by X’. Whatever the scenario, a clearly defined objective guides investigators, helps avoid ‘mission creep’ and ensures management buy-in – all essential to a successful investigation.
  • Witnesses. The investigative plan    should    identify,    to    the greatest extent possible, the witnesses with whom investigators should be speaking. The list of potential witnesses can be compiled through a mix of information provided by the client, a review of public records for the names of individuals associated with the investigatory target, and publicly available information about their job titles.
  • Document and data plan. The investigative plan should anticipate, if possible, what types of documents or data may be needed, as well as the location of such materials. While additional items are likely to be added to such a list once the investigation is under way, having an initial idea of the amount of potentially relevant documents – and their location – will greatly aid the investigative process. Having a document plan will also facilitate the location of documents as they are gathered; it is often advisable to keep documents in the jurisdiction in which they originated.
  • Security. Depending on the location of the investigation, and the subject matter of the inquiry, data security may be an issue. During the planning stage, the investigator should consider whether special measures or protocols (such as email restrictions or the use of encrypted communications) need to be adopted to protect the information developed during the investigation.
  • Reporting structure and point(s) of contact. It may be appropriate for the investigative plan to identify a reporting structure for the investigators. As investigators work with the company to carry out interviews and gather documents, having a clearly defined reporting structure and point of contact can be highly beneficial to the process.
  • Local counsel. In almost all cross-border internal investigations, it will be necessary to involve experienced local counsel to assist with practical, legal and cultural issues. These include local labor laws, data privacy concerns, potential issues under the blocking statute, cultural sensitivities that may affect the interview process, and any number of other challenges.

3. Conduct the investigation

While every cross-border internal investigation is unique, many share common themes such as the need to conduct sensitive interviews, the possibility of civil or criminal litigation in the future and the constant risk of disruption to the business (which is a problem in its own right, but also undermines the investigation). The execution of the investigation itself should be carried out with these concerns in mind.

In most instances, for example, it is advisable to have at least two investigators present at any interview, so that one person can serve as a witness in the event any issues arise – including recantation – related to the interpretation of the interview.

Similarly, the investigative team should be sensitive to the business needs of the company and its employees. This does not mean investigators should slant their inquiry, but rather that they should be fluent in the language of the company, be able to express sensitivity to the needs of the business and be constantly mindful of any creative ways to make the investigation less burdensome on the business while still accomplishing the objective.

4. Report the investigation

The investigators should work closely with company counsel to determine the best way to report the investigation’s findings. In most instances, a written report prepared at the direction of counsel and in anticipation of litigation is the best approach. Such a report should directly address each of the previously identified objectives of the investigation. It must be grounded in fact, not speculation. The report is often as important as the rest of the investigation – a great investigation can be undone by a shoddy report.

In other cases, an oral report to the company’s management may be appropriate. This can particularly be the case when the subject matter is highly sensitive, when litigation is anticipated or when there are serious questions about the applicability of attorney- client privilege. For example, in most continental European countries, regulators may be able to inquire about the results of an internal investigation and obtain the investigation’s records.

By following the road map outlined here, a company can place itself in the best position to get to the bottom of any allegations, defend itself from future inquiry and ensure the business can continue to grow.

Hilary Lister is a senior analyst in Nardello's Washington, DC office. Ryan Sparacino is managing director of the Washington, DC office.

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