Is there a day that passes without some revelation that a well-respected company is under investigation for this or that alleged misdemeanour? Unexplained wobbles in share price, disclosures from whistle-blowers, industry-wide increases in prices, or the findings from routine visits by regulators commonly lead to suspicions of wrongdoing. In the current climate, the mere announcement that the company is being investigated, even if accompanied by a robust denial of wrongdoing, is headline news. But the news stories, and even the unpublished activities of regulators, are only the tip of the iceberg.
Every day, dozens of companies are conducting internal investigations and attempting to understand what is happening within their own organisation. Companies need to find out whether they have committed any wrongdoing and, if they have, find out what they ought to do about it. The benefits of internal investigations are obvious – they can provide an early warning of problems, identify control failures, demonstrate good corporate governance and help a company avoid the devastating consequences of a regulatory investigation, but there is little understanding of how internal investigations should be conducted. Getting it wrong can actually make matters worse, so here are 10 quick tips.
Above all else, common sense must be adopted. Being the subject of internal investigations is not a part of any company's core business and the investigation team needs to be flexible and attentive to the needs of business people. There can be no better way of taking a compliance snapshot of a company's risk profile and current practices than a fast and skilfully implemented investigation, conducted by those who understand the rules of engagement. The fruits of the investigation can be used to make voluntary disclosures to authorities, defend subsequent civil or criminal proceedings, clear the company's name in the court of public opinion and improve its risk management practices. However, like so many things, investigations require a set of core skills and the non-specialist should take advice or leave well alone.
Steven Francis is a partner and Rakhi Talwar is a professional support lawyer at DLA
1. Consider resources
Internal investigations require a range of specialist skills. Do not embark on an investigation until the necessary resources and skills are available.
2. Set the privilege ground rules early
3. Prepare for a widening scope
4. Adopt a fast track approach
5. Interview from the bottom up
6. Do not caution
7. Get HR involved early
8. One point of contact with regulators
9. Cull the distribution list
10. Preserve the evidence