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5 Tips for Corporate Investigations

By Michael Volkov

As a colleague of mine always says, your corporate investigations are where the rubber meets the road for your legal and compliance program.  Investigations help to quickly gather information for decision makers, resolve potential Code and legal violations, and to help promote a robust “Speak Up” culture.  Federal regulators have even highlighted the importance of effective investigations in their guidance.  To make sure you’re conducting them effectively, here are five tips for corporate investigations.

Focus on Your Intake System

Compliance and legal professionals can too often get tunnel vision and solely focus on the investigation once the incident hits their radar, when they become directly involved. However, it is important to keep in mind that your investigation begins the moment the concern is raised.  The moment of intake can be an invaluable opportunity to gather additional information.  For some incidents, such as anonymous whistleblower reports through a third-party hotline, the incident report may be the only time you ever hear from the reporting party.

Considering many employees initially report to their direct supervisors, line managers should receive training on how to handle reports.  This presents the manager with an opportunity to obtain additional information, potentially obtain and preserve evidence, and an opportunity to gather impressions of the events.  Further, this touchpoint also provides an opportunity to show professionalism and competence.  A whistleblower who feels that his or her complaint is being appropriately handled will take comfort in that fact.  On the other hand, a whistleblower who believes his or her report is not being taken seriously is far more likely to seek out a regulator.

Additionally, your hotline reporting tool – especially the web portal – should be designed to elicit the information that could be relevant to your investigation. Rather than simply including a blank box to collect a statement of information, you should guide the reporter into providing important information. Who was involved, where did the incident occur, who else witnessed it or was involved, etc.  If this ends up being the only opportunity to speak to a reporter, you need to make sure you make it count.

Every Matter Must Be Taken Seriously

Building off the prior point, make sure that all matters are taken seriously and properly investigated.  This doesn’t mean pulling out all the stops for the smallest matter.  This also doesn’t mean trying to be a prosecutor and forcing some kind of result.  This does mean following the established procedures.  This also means asking the question, reading the documents, and evaluating the evidence.  If someone took the time to raise a concern, it usually means it was important to them.  Investigating properly helps to build faith in the overall program, and will build a better culture.  That way, when a big incident arises, your employees won’t think twice about reporting immediately.

Also, don’t forget that small matters can often mushroom into much larger matters once the investigation begins.  This is not uncommon and is something I’ve seen frequently when an organization has engaged outside counsel to conduct a corporate investigation.  If you don’t look deeper into that fraudulent expense report, you may miss that it was actually a government official at that restaurant.  Suddenly, the government is at your door looking into potential FCPA violations.  It’s not uncommon for small incidents can be indicative of larger, systemic cultural problems.  You’ll miss these warning signs if you don’t make sure to take all corporate investigations seriously.

guide to internal reporting and investigations

Create a Plan

This sounds so simple and obvious, but it’s too often overlooked.  Take some time at the onset of a corporate investigation to flesh out the important pieces of your strategy.  Doing this early on will save plenty of time and energy during the investigation.  Start defining the universe of documents that may be relevant, and identify whether any of those may be at risk of being destroyed. Begin to make a list of relevant witnesses and figure out what each may know.  Draft some initial topics to cover to make sure you get all the necessary information from these witnesses.  Importantly, define the offenses at issue here and identify the elements for each.  If necessary, review your relevant policies or the Code of Conduct for this information

Developing a plan up front is crucial, as it will provide a stable roadmap that you can return to whenever you’re lost or unsure of what to do next.  Having a plan will ensure that you are comprehensive in your review, and not forget to obtain some documents or interview certain witnesses.  It also helps ensure that all matters receive the same level of focus, even the small matters (and like we mentioned previously, small matters can sometimes become big matters really quickly).

Ask for Help

Almost every compliance department runs lean, especially with regards to its human resources.  Corporate investigations can take a lot of time and effort to properly complete, which can stretch compliance thinner than it may already be.  However, you surely have a lot of resources throughout your organization that you can rely on if needed, and those resources should be leveraged as necessary.

Firstly, if you are not already using a technology solution to manage your investigation process, this is something you might want to consider. With stretched resources, a case management solution can help your team manage evidence, conduct multiple investigations at once, and remediate your case closure procedures leveraging automation.

Secondly, one of your best friends during an investigation will likely be Human Resources.  The HR department, at the very least, will be able to provide valuable information regarding the subjects and witnesses, such as history of prior misconduct.  For some cases, especially those dealing with traditionally HR-related matters, HR may even take the lead on the investigation.  The HR department is often well trained on investigations, including conducting interviews and reviewing evidence.  The IT department will likely also be a huge help.  They can often identify, collect, and preserve important evidence, such as email communications from company addresses.

Further, don’t forget that there are external resources available as well.  Outside counsel can be engaged to lead the investigation or provide guidance on tricky legal issues.  Outside counsel may be necessary for high-stakes corporate investigations dealing with complex legal issues, or can be relied on if conflicts of interest arise.  Further, there are other external consultants or subject matter experts that can be extremely helpful.  For complex financial fraud, a forensic accounting firm may be necessary to track and unwind transactions to better identify the scope of wrongdoing.

Document, Document, Document

Always make sure everything is documented in writing.  A final report is a borderline necessity to document all the important pieces of the investigation – the steps taken, evidence collected, interviews conduct, etc.  Even for the simple or routine investigations, add something to the file that outlines the final disposition.  In addition to the final reports, it can be extremely helpful to create summary documents as the investigation progresses.  These may include timelines of events or a table of key witnesses or interviewees.  In addition to being a major help during the investigation, these documents become even more key whenever you need to refer back to at some point in the future.  Further, if regulators were to get involved at some point in the future, you’ll want to be able to prove that your investigation was properly conducted.  The best way to do that is to show clear and concise documentation of the steps you took, the evidence you reviewed, and the final outcome of the investigation.

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Michael Volkov

Michael Volkov specializes in ethics and compliance, white collar defense, government investigations and internal investigations. Michael devotes a significant portion of his practice to anti-corruption compliance and defense. He regularly assists clients on FCPA, UK Bribery Act, AML, OFAC, Export-Import, Securities Fraud, and other issues. Prior to launching his own law firm, Mr. Volkov was a partner at LeClairRyan (2012-2013); Mayer Brown (2010-2012), Dickinson Wright (2008-2010); Deputy Assistant Attorney General in the Department of Justice (2008); Chief Counsel, Subcommittee on Crime, Terrorism and Homeland Security, House Judiciary Committee (2005-2008); and Counsel, Senate Judiciary Committee (2003-2005); Assistant US Attorney, United States Attorney's Office for the District of Columbia (1989-2005); and a Trial Attorney, Antitrust Division, United States Department of Justice (1985-1989).

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