Skip to content
Key Takeaways:
  • Taking corrective action during the course of an investigation can put a swift end to any ongoing misconduct and help a company avoid further losses or liability.
  • A company will often have enough information early in its investigation to take steps to mitigate the risk of continued harm to the company.
  • Promptly investigating and addressing identified risks can help to narrow the scope of the investigation and save a company time and money.

***

Even companies with the most robust compliance programs can expect to identify misconduct at some point. How a company responds to and remediates those issues can have a tremendous impact on the scope of its legal exposure and the collateral risks that come with compliance failures, such as reputational damage, debarment from eligibility for government or multilateral development bank-financed contracts, and other adverse commercial consequences.

Taking corrective action during the course of an investigation, rather than waiting until the end of the investigation, can help a company put a swift end to any ongoing misconduct and avoid further losses or liability that may be caused by control deficiencies underlying the misconduct. Swift action of this sort also aligns with the expectations of international enforcement authorities. For example, the U.S. Department of Justice (“DOJ”) may recommend reduced penalties or decline to prosecute a company based in part on the company’s “timely and appropriate remediation in [FCPA] matters.”

While identifying the root cause of a particular compliance issue may require a company to engage in a thorough analysis of its controls, operations, and culture—which is often not feasible midway through an investigation—a company will often have enough information during an investigation to take effective remedial action. For example, if a company determines early in an investigation that one of its business partners has made improper payments on the company’s behalf, but additional investigation is needed to determine who at the company was involved in authorizing such payments and the amounts at issue, the company can still take steps to mitigate the risk, such as putting a freeze on payments to the partner or even terminating the relationship with the partner altogether.

Companies can also narrow the scope of an investigation by taking swift action to mitigate risks identified in the course of the investigation. For instance, in the business partner example discussed above, by promptly freezing payments or terminating the partner, the company may be able to save itself the time and expense of having to take burdensome and potentially costly or impracticable remedial steps that might be expected if the company was to continue doing business with the partner (e.g., auditing the partner’s books and records, securing assurances sufficient to gain comfort that improper payments will not be made going forward, and conducting enhanced monitoring of future payments).

Remediating during the course of an investigation also may be essential in enabling the company to avoid the burdensome compliance measures that are sometimes imposed in enforcement actions, such as a requirement to engage an independent compliance monitor at the company’s expense.

Taking swift remedial action, especially against third parties, can be challenging in Africa due to a variety of factors, including local content and shareholding requirements that limit the pool of qualified partners or vendors as replacements. The challenges associated with taking remedial actions against a third party also may be particularly acute in Africa due to the fact that the business environment places a premium on relationships and collaboration. Terminating a particular third party may lead to significant adverse effects on a business, including operational disruptions, loss of goodwill in a community or with government stakeholders, and even physical security risks. Organizations may thus be required to weigh meaningful risks associated with ceasing to engage in business with a particular third party against the significant compliance risks that such a relationship may pose if they fail to take appropriate remedial action.

Notwithstanding the challenges that promptly acting to address compliance issues can present, doing so is almost certain to pay off in the long run as a company navigates the legal, commercial, and reputational consequences of identified misconduct.

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

Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Sarah Bishop Sarah Bishop

Sarah Bishop advises companies on compliance best practices and enforcement risks arising under the U.S. Foreign Corrupt Practices Act, the UK Bribery Act, U.S. and UK anti-money laundering laws, and other financial crime laws. Qualified in the United States and as a Solicitor…

Sarah Bishop advises companies on compliance best practices and enforcement risks arising under the U.S. Foreign Corrupt Practices Act, the UK Bribery Act, U.S. and UK anti-money laundering laws, and other financial crime laws. Qualified in the United States and as a Solicitor of England & Wales, she is able to help companies navigate risks arising in both jurisdictions. She also has experience of other anti-corruption laws (e.g., France’s Loi Sapin II) and works with trusted local partners to deliver coordinated advice that takes into account the requirements of multiple legal regimes. Sarah’s compliance advisory practice includes helping multinational corporations develop and test the robustness of compliance programs, conduct risk assessments, conduct transactional and third party due diligence, navigate post-acquisition compliance integration projects, and deliver compliance training.

As a member of Covington’s Business and Human Rights practice group, Sarah advises companies on evolving developments and best practices related to the corporate responsibility to respect human rights, including in relation to supply chain due diligence and responsible sourcing, reporting and transparency obligations, and strategies for integrating human rights elements into existing compliance programs.

Sarah also helps clients navigate internal and government-facing investigations involving allegations of bribery and corruption, money laundering, export control and sanctions violations, fraud, and other forms of misconduct. She has handled matters before major international enforcement authorities, and she has been recognized by the Global Investigations Review as being among the leading women investigations practitioners worldwide. In addition to government enforcement matters, Sarah assists clients in suspension and debarment matters before the World Bank and other international financial institutions.

Photo of Benjamin Haley Benjamin Haley

Ben Haley leads the firm’s White Collar and Anti-Corruption Practice in Africa and is a chair of the firm’s broader Africa Practice. With deep experience representing clients before regulators in high-profile white collar and disputes matters and a history operating on the…

Ben Haley leads the firm’s White Collar and Anti-Corruption Practice in Africa and is a chair of the firm’s broader Africa Practice. With deep experience representing clients before regulators in high-profile white collar and disputes matters and a history operating on the ground across the continent, he helps clients assess and mitigate complex legal and compliance risks in Africa and other emerging markets.

Complementing his investigations and dispute resolution practice, Ben has a broad-based compliance advisory practice, helping clients proactively manage compliance risk in areas including anti-corruption, anti-money laundering, fraud, and data privacy.

Ben represents corporate and individuals clients in a wide range of investigations and disputes, including:

  • Investigations under the U.S. Foreign Corrupt Practices Act (“FCPA”).
  • Investigations into anti-money laundering, financial crimes, anti-terrorism, and international trade controls issues.
  • Securities fraud and accounting matters.
  • Board investigations and shareholder litigation.
  • Insurance recovery.

Ben also regularly advises clients on a range of regulatory compliance and corporate governance issues. His compliance advisory practice includes:

  • Performing risk and compliance program assessments.
  • Leading compliance reviews on business partners and assisting companies with third-party risk management processes.
  • Conducting forensic accounting reviews and testing and enhancing financial controls.
  • Advising on market entry, cross-border transactions, and pre-acquisition diligence and post-acquisition integration.
  • Assisting companies in designing, implementing, and maintaining best-in-class compliance programs.

In recent years, Ben has steered a number of clients to successful resolutions and declinations in complex FCPA and corporate fraud matters with the U.S. Department of Justice and Securities Exchange Commission. In his advisory practice, Ben has served as lead compliance counsel on a number of major M&A transactions. He has developed special expertise assisting clients in leveraging technology in their compliance programs, including assisting one of the world’s largest consumer goods companies in the design and implementation of an award-winning compliance data analytics and monitoring system.

Ben has been described by the Chief Compliance Officer of one of his clients as “[a]n outstanding senior lawyer and advisor,” and “a guiding light for all things compliance advisory in Africa,” whose “advice is crystal clear, covers all angles and is business friendly.”