An effective internal corporate investigation can benefit a company in a number of ways. Not only does it assist a company in uncovering compliance failures and putting remedial measures in place, it also assists the company, when faced with evidence or allegations of potential wrongdoing, to respond deliberately and thoughtfully, ensuring that it understands all the facts. Effective internal investigations can also benefit the company by influencing the amount of a criminal fine, the type of government resolution potentially available, and protecting the company’s reputation. To maximize these benefits, corporate defendants need to be able to show prosecutors that the internal investigation was independent, reliable, and credible.

In a previous article, we have outlined the unique challenges of conducting effective internal investigations in Africa. Here, we revisit some of the lessons learned from our investigations practice (in Africa and elsewhere), outlining five universal considerations for effectively handling sensitive internal corporate investigations.

  • Define the Scope of the Investigation

Investigations can be initiated for a multitude of reasons, from allegations of wrongdoing by the media, civil litigation, whistleblower complaints, regulatory inquiries, or even findings in an unrelated investigation. The potential issues to probe can be just as varied. Defining the scope of the investigation is therefore a crucial step to be taken at the outset of the inquiry. Among the questions to ask in order to ensure that the investigation is appropriately scoped are the following:

  • What are the specific allegations?
  • What is the company’s potential legal exposure?
  • Who are the potential perpetrators?
  • What are the relevant timeframes?
  • Who are the potential witnesses?
  • Who may possess documentary evidence relevant to the inquiry and where can these documents be found?

A written investigation plan is a useful tool to outline the goals of the investigation and the investigative steps, and more generally to keep the investigation on track. The contents of the investigation plan and the proposed investigative steps will of course have to be determined on a case-by-case basis, but it should generally include at least a review of documents and interviews with key individuals and witnesses. Bearing in mind that it is never possible to predict the entire course of an investigation, from the outset, with mathematical precision, it is important to ensure that the investigation plan allows for a degree of flexibility, providing the investigation team the ability to adapt the plan as the investigation progresses and evidence is reviewed.

  •  Preserve All Potentially Relevant Data – Documents, Devices and Testimony

Document and data preservation is a vital consideration in any investigation. Generally, companies should consider issuing a document hold (sometimes called litigation hold) to all individuals who potentially have relevant documents. There are, however, sometimes strategic reasons for not publicizing an investigation through a document hold, such as where there are concerns that notice of the investigation may raise the risk that employees will make efforts to destroy relevant documents and data. In such cases, companies can mitigate this risk of spoliation through advanced imaging of employee devices, disabling deletion functionality on company platforms, and other preservation measures as may be appropriate.

To the extent that preserving witness accounts by interviews is concerned, there may be instances in which the investigation team is faced with the imminent departure of an employee from the company. In those instances, it will be important that the employee’s account is obtained as quickly as possible. If a government agency is or becomes involved in the investigation, the company is likely to be called upon to explain what steps it took to preserve potentially relevant data, and it is therefore essential that all steps taken to do so are well documented.

  • Interview Witness At The Right Time

Companies need to be thoughtful about the appropriate timing of witness interviews. In an ideal world, interviews would not take place until a company has been able to review and digest all of the relevant documents necessary to have a full picture of the written record. Documents not only provide the interviewer with context to ask targeted questions, they also serve as a vital tool to jog forgetful interviewees’ memories, or to confront witnesses with facts they may be reluctant to acknowledge.

But investigations are often fast-moving, with real-time implications for the company and unique circumstances that merit accelerating certain witness interviews before a full document review can be completed. These situations include instances where an employee is imminently departing the company, where misconduct may be ongoing, or where they are necessary to meet the demands of government agencies.

Additionally, to account for circumstances where witnesses may speak to one another regarding the substance of the interviews (despite instructions not to do so), the company should consider the order and timing of interviews, including potentially conducting simultaneous interviews.

  • Consider Whether To Voluntarily Disclose

Deciding whether or not to make a voluntary disclosure to prosecutors is often a vexing question for the company, with the potential for significant ramifications. Depending on the laws of the relevant jurisdiction, there may be significant incentives to making a voluntary disclosure in the form of a more favorable resolution of an enforcement action, or a declination from prosecution altogether.

While there is no magic formula to make these decisions, some of the factors a company should take into consideration include the likelihood that enforcement authorities will come to learn of the investigation findings in the absence of voluntary disclosure, the seriousness of the alleged conduct, and the risk posed to the company should the allegations come to light.

  • Remediate

With the benefit of a credible and reliable investigation, a company will be well positioned to make effective decisions about how to remediate any issues identified.

The critical element of any remediation plan is that the actions taken be appropriate and proportional to the conduct identified. The appropriateness of the remedial steps taken by a company, including initiating disciplinary action against the responsible employees and potentially terminating their employment, and implementing and/or enhancing existing practices, policies and procedures, are critical factors taken into account by government agencies when assessing an appropriate resolution of potential civil or criminal charges.

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Conducting an effective corporate internal investigation that is well-designed, with a specific work plan that addresses key elements such as document preservation, witness interviews, and prompt remediation, can yield many benefits for a company facing allegations of misconduct.

While no two investigations will ever be the same, building an investigation with these five building blocks in mind will provide companies with a solid foundation from which to move their organizations forward while minimizing disruption to the extent possible.

© 2019 Covington & Burling LLP. All rights reserved.

This post can also be found on Cov Africa, the firm’s blog on legal, regulatory, political and economic developments in Africa.

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Photo of Benjamin Haley Benjamin Haley

Ben Haley leads the firm’s compliance and investigations practice in Africa. With deep experience representing clients before U.S. regulators in high-profile matters and a history operating on the ground across the continent, he helps clients assess and mitigate complex legal and compliance risks…

Ben Haley leads the firm’s compliance and investigations practice in Africa. With deep experience representing clients before U.S. regulators in high-profile matters and a history operating on the ground across the continent, he helps clients assess and mitigate complex legal and compliance risks in Africa.

Clients often call upon Mr. Haley to assist in the resolution of complex government enforcement matters and commercial disputes. For more than a decade, Mr. Haley has handled complex government enforcement matters and internal investigations, with particular expertise in anti-corruption, anti-money laundering, fraud, and financial crime matters. He has guided clients across a range of industries to favorable outcomes in government investigations, as well as parallel shareholder litigation, insurance recovery matters, and employment disputes.

Photo of Mark Finucane Mark Finucane

Mark Finucane’s practice focuses on representing institutions and individuals in high-stakes investigations involving issues relating to anti-corruption, money laundering, securities enforcement, and other matters presenting significant criminal and civil risk. Mr. Finucane regularly acts for clients in major multi-lateral investigations involving U.S. enforcement…

Mark Finucane’s practice focuses on representing institutions and individuals in high-stakes investigations involving issues relating to anti-corruption, money laundering, securities enforcement, and other matters presenting significant criminal and civil risk. Mr. Finucane regularly acts for clients in major multi-lateral investigations involving U.S. enforcement authorities. In addition to Mr. Finucane’s investigations practice, he regularly advises clients on compliance program obligations under the U.S. Foreign Corrupt Practices Act.

Photo of Sarah Crowder Sarah Crowder

Sarah Crowder advises clients on a variety of ethics and compliance matters, including compliance with the U.S. Foreign Corrupt Practices Act and the UK Bribery Act, compliance with anti-money laundering laws, and adherence to international human rights standards. She has helped clients in…

Sarah Crowder advises clients on a variety of ethics and compliance matters, including compliance with the U.S. Foreign Corrupt Practices Act and the UK Bribery Act, compliance with anti-money laundering laws, and adherence to international human rights standards. She has helped clients in various industries develop compliance programs, conduct risk assessments, conduct transactional and third party due diligence, navigate post-acquisition compliance integration projects, and deliver compliance training.

Photo of Ahmed Mokdad Ahmed Mokdad

Ahmed Mokdad is an associate in the firm’s compliance and investigations practice in Africa. As a seasoned investigative specialist with deep experience representing clients across various sectors, he regularly assists clients across the continent navigate and mitigate a broad spectrum of regulatory and…

Ahmed Mokdad is an associate in the firm’s compliance and investigations practice in Africa. As a seasoned investigative specialist with deep experience representing clients across various sectors, he regularly assists clients across the continent navigate and mitigate a broad spectrum of regulatory and compliance risks and challenges.

Adding to his on the ground investigative, regulatory and compliance advisory experience, Mr. Mokdad has also extensively advised on litigious matters and financial transactions. Mr. Mokdad has been involved in several high profile litigious matters and international arbitrations relating to, amongst others, tax disputes and exchange control violations, corporate and commercial disputes, public procurement and white collar crime. He regularly performs risk and compliance program assessments, third-party risk due diligence, advising on pre-acquisition diligence and post-acquisition integration.